A hot debatable topic, doing rounds since the past couple of years – the US-China trade war began with washing machines and solar panels in 2018, before escalating to imposing tariffs on thousands of billions of dollars’ worth of Chinese and US exports. Investment markets demonstrate a panicked response as a consequence of each escalation in the dispute. While the economists data across both the countries illustrate signs of strain. This is particularly concerning, keeping in mind the position of both the countries on the global economy index and the struggle of world economy facing to find growth.
Even subtle changes in trading arrangements can lead to ripple effects throughout economies on the global stage, we can presume how trade wars between superpowers affect the world economic base. Shifts in pricing, increased trade barriers and supply-demand conundrum; the impacts are far-fetched and extend to everyone in the economy.
From theoretical perspective, trade is defined as an activity which has a mutual benefit. However, history is littered with instances where trade was rather used as a weapon of destruction than a vehicle of development. The infamous ‘Boston Tea Party’ lit the flame of American Revolution, leading to the independence of US from the UK.
Quoting an excerpt from President Trump’s speech in 2018, “trade wars are good, and easy to win”.
However, the evidence suggests that in reality, they are neither good nor easy to win. Although, imposing of restrictions and regulations are inevitable, going all explicit for a full-fledged trade war is not justifiable from any perspective.
One positive which we found upon researching about the subject was that a trade war might be used as a proxy for physical confrontation, averting the need of an outright open warfare. However, this has not been the case always (e.g. the Opium Wars included armed conflict).