The Effect Of The USA Trade War On The Global Economy

When looking into global economic uncertainty, it is important to note that there is more than one contributing factor that can lead to major fluctuations in prices of fuel and other valuable commodities. However, with ongoing political issues between the US and China as well as the ongoing negotiations between the UK and the European Union, this can lead to the slowing of economic growth over time. In this article, we will be looking into the effect that the US trade war with China is having on the global economy.

The Beginning Of The Trump Presidency

Following his inauguration in 2017, the 45th president of the United States has been somewhat of a controversial figure. With a past in reality television and business, the republican was met with a vast amount of backlash following his controversial win. Following his inauguration into the Whitehouse, there was the highest turnover that the staff had seen in years with a number of staff being replaced almost instantly. With a number of promises made in his presidential campaign, Donald Trump had a lot to live up to and he was very quick to begin making changes to the US and the policies that we set by 44Th president Barack Obama.

The Changes To Government Policy 

As we surpass the mid-way point of the president’s four-year term in office, there is no denying that there have been a number of controversial changes throughout a number of policies. With some more controversial than others and mounting tensions with other world superpowers such as Russia and China, this was the beginning of ongoing controversy with the president and the rest of the world.

Foreign Policy 

One of the biggest changes thus far from the Trump administration is the change to foreign policy. With the controversial move to back troops in Syria and Afghanistan as well as his reluctance to criticise Vladimir Putin leading to speculations about the ties between the president and the Russians to win the election.

Environmental Changes

By far one of the most controversial changes by the Trump administration in recent years is the withdrawal from the Paris agreement in June of 2017, just 5 months after his inauguration into the white house. Trump withdrew from the agreement stating that it would “undermine” the US economy and puts the US at a permanent disadvantage. This comes after the US president stated that climate change is a Chinese Hoax and the withdrawal will help American businesses as well as workers. Though this will not come into effect until 2020, this angered a number of people with many looking at the president with disgust. However, with the implementation of the US fuel industry, this is contributing to the negative impact on the environment.

The Begin Of Global Tension 

As part of his campaign to “make America great again,” Trump began to renegotiate a number of trade agreements that had previously been agreed in the past. With this came the tensions between the US and China as the US president deemed this as unfair. His aim of renegotiating the deal was to bring more production back to the US and create more jobs as the Chinese impose high import taxes that are unfair.

However, these words soon turned into action in July of 2018 as both sides retaliated with levied tariffs on $34bn worth of goods. As political uncertainty begins to rise, there are many that resort to trading with online currencies as these remain unaffected by any sort of political change due to their decentralised nature. This makes social trading platforms such as Etoro popular as trading success can be replicated with a relaxed approach despite ongoing political uncertainty. Additionally, deep learning algorithms and CopyProfiles make it easier than ever to monitor markets and ensure that the investment is still beneficial. Since the implementation of phase one of the US market Capability within Etoro in 2018, this has continued to expand. This offers access to 14 of the most popular US cryptocurrencies as well as a number of traders allowing copiers to replicate the success of a number of investments across the USA despite this ongoing uncertainty.

A Timeline Of China and US Negotiations 

As the negotiations heated up, a number of tariffs were imposed making it increasingly difficult for both economies as well as the impact it was having on the global economy as a whole. Below, we have created a list of key events that have affected the international economy as a whole.

May 5th 2019 – Trump reactivates his threat to escalate tariffs as originally proposed

May 8th 2019- China threatens to retaliate

May 19th- the US raises Tariffs to 25% on $200 billion of Chinese goods

May 13th 2019- China raises its tariffs to 25% also

September 1st 2019- New US tariffs of 10% come into effect

September 11th 2019- Beijing Begin to exempt some US goods causing Further disruption

During this time, there are a number of talks taking place with the potential of a deal between the no nations being very close to a conclusion.

December 3rd 2019- The most recent development in this ongoing trade war is the comments made at the NATO summit. Donald Trump spoke to the media during the summit stating that a deal between the two nations may not be met until after the 2020 elections.

This led to a vast amount of disruption with the stocks as well as international trading as the potential for disruption is significantly higher as more trade tariffs and no resolution leads to a number of businesses being hesitant to invest in the long term.

The Impact On The Global Economy 

As the idea of a resolution between the two nations slips further and further away, there is a significant impact on the economy that cannot be reversed. With the world economic growth plummeting by half, this is a risk to the economy that we cannot afford at this time. With growing tensions around the trade agreement as well as other friction areas such as intellectual property rights and other social and political issues, there is no sign of resolution as we head into the new year, making this a problematic start to the new financial year. This is evident in the current state of economic prospects as the year has barely improved, remaining at between 3.5-3.9%.

With this in mind, there are a number of ways that the China and USA trade war has affected the economy in both of these countries as well as on a global scale making this one watch as we head into 2020.

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