US first policy and trade war

“Everything is being done for global dominance…” 

“US first policy” is well known due to trade war.The ongoing tussel between two leading economies isn’t the only product of trade imbalance but the culmination of decades old dormant struggle for global dominance. Considering the domain of influence of both superpowers, decoding the underlying causes of this issue deserves greater attention.In this blog, “America first policy and trade war “you will understand true reality. 

USA’s mortgage crisis and rise of China

American decline

Mortgage crisis and subsequent recession was the death blow for the US economy. American idea wasn’t bad to help everyone to attain home ownership but it was too risky. It is responsible to tumble the worlds largest economy with 2 trillions dollars loss and around 30 percentage stock market crash in the globe.Subsequently,recession engulfed economic growth paving the way for huge vaccume.

Rise of China and uncomfortable US

China, however, maintained healthy growth rate with fair market share and strong domestic market. In the last decade, its economy was trippled from 4 trillion dollars to 12 trillions.Meantime,per capita income rose around three times from 3500$ to 9000$.Apart from this, the global presence was impressive as it pumped surplus capital into resources rich nation of Africa and Asia.

China’s export driven growth strategy is the bone of contention between US–China bilateral relations 

Export driven growth model

Since, 1980s onwards,chinese leadership went for export driven growth strategy to capture market share, generate surplus and raise standards of living of people. Now,China is the biggest manufacturing hub with 12 trillions economy, highest rate of employment generations and lifted 800 millions of people out of the clutches of poverty highlights the success growth story.

Tension over market share and trade imbalance between two superpowers 

Meanwhile, the trade relations with trading partners were strained due to rising trade imbalance.As a matter of fact, the trade imbalance with USA is around 400 billion dollars and neighbours like India no exception.Countries are struggling to offset the impacts of trade imbalance as it is responsible for job losses, fiscal deficit, and standards of living.

In this race of trade deficit,US is the leader with 650 billion dollars.This is the major reason why the leading economy is at make or break mood.

US first polpolicy–why ?

Loss of jobs and market share

President Trump aggressively implemented this policy to recoup the market share and job losses with tariffs treatment. It is evident that the MNCs are mushrooming in China to reap the benefits of incentives with lower rate of factors of production.Obviousely,there is job drain in USA.Consequently, tension is rising over the rate of unemployment.Trump is blaming for liberal trade ties and immigration policies. He argues that the immigrants and trade imbalance are responsible for the ongoing problem.Hence,according to him American deserve priority.Here,intent is clear to bring back industries and jobs onto American shore.

Renegotiation Of trade deals

Trump’s agenda is to renegotiate trade deals with trading partners to regain lost ground. Imposition of tarrifs on the goods of Chinese and other nations is the means to reach at the expected destination.

Economists point of view

None is advocating the idea of Trump to impose tarrifs to compel others to renegotiate trade deals. Instead, they are warning of depression like situation in case of further escalation.Slowing down global economic growth,rising unemployment are enough to understand the symptoms of forthcoming situation.

Conclusion

Now, it is clear that the ongoing tarrifs tussel between two leading economies is much more than the mere trade imbalance.Both should come together at the negotiation table to figure out workable solutions.Being the global powers they should think beyond theirs individual interests.Logically,the tarrifs treatment will not bear fruit for both.But, in case of further escalation,the chances of depression cannot be ruled out in near future.

Trade war disadvantages for consumers.

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Linking and helping auxiliary verbs

https://www.youtube.com/channel/UCTkyAZY15L6UOEUl3y85XYw/