The Casualties of the U.S.-China Trade War

As the U.S.-China trade war continues to simmer, experts are concerned about the casualties this could end up creating. (Image: William Chen  via  flickr  CC BY-SA 4.0)
As the U.S.-China trade war continues to simmer, experts are concerned about the casualties this could end up creating. (Image: William Chen via flickr CC BY-SA 4.0)

As the U.S.-China trade war continues to simmer, experts are concerned about the casualties this could end up creating. And it’s not just a few businesses and their employees in the U.S. and China that will be hit. It will be the consumers of both these countries and several Asian nations that will also have to bear the negative consequences of the trade war.

The consumer

The first causality will be the consumers, who will be hit by rising prices. As such, they will have to spend more to buy their daily essentials. This will not only stress out the household budgets, but will also lead to a severe decline in savings, particularly if the price rise is not kept in check.

The consumers in the U.S. are already worried about how the trade war will affect them. A consumer confidence survey conducted by the University of Michigan says that the major worries for U.S. consumers were rising inflation and declining growth.

And the U.S. imposition of tariffs on Chinese goods plays a major role in this. “The darkening cloud on the horizon, however, is due to rising concerns about the potential negative impact of tariffs on the domestic economy,” Business Insider quotes the survey’s chief economist.

However, it is not only the U.S. consumer that has been hit, Chinese consumers have also started to feel the pain of the trade war. “We buy imported goods because we feel they are safer to eat… If there were domestic substitutes, then tariffs would be okay. But domestic products can’t keep up, so we’ll just have to accept higher prices,” The New York Times quotes a Chinese consumer who was worried about rising costs.

The consumers in the U.S. are already worried about how the trade war will affect them. (Image: Mike Mozart via flickr CC BY 2.0 )

The consumers in the U.S. are already worried about how the trade war will affect them. (Image: Mike Mozart via flickr CC BY 2.0 )

The Chinese government is also monitoring the situation closely. If the inflation of the food items goes out of control and people start becoming agitated, Beijing will have a big problem on their hands. The government can drum up the nationalistic pride to survive the initial inflation. But once the disposable incomes of the people start shrinking considerably, nationalism will be of no help to the Communist Party.

Other Asian countries

In addition to the customers, the other main causality of the ongoing U.S.-China trade war will be the Asian nations like Taiwan, Singapore, and South Korea, since China forms a big part of the manufacturing supply chain that keeps their own economies running.

Components that are produced in these countries are often sent off to China, where they are assembled and exported to the United States. As such, if the increase in tariffs on Chinese goods forces U.S. consumers to ditch them, then these Asian nations will also get hit pretty badly.

“You start with protectionism and isolationism… And then you don’t just beggar your neighbor, you beggar yourself,” the BBC quotes Victor Mills, chief executive of Singapore’s International Chamber of Commerce.

Asian nations like Taiwan, Singapore, and South Korea will also become victims, since China forms a big part of the manufacturing supply chain that keeps their own economies running. (Image: Steve Jurvetson via flickr CC BY 2.0 )

And even though the manufacturing can be shifted from China to some other country that does not face the wrath of the U.S., such a procedure will take several months to complete. Even then, there is no guarantee that the new manufacturing plant will be able to match the scale and efficiency with which the Chinese plants have been operating.

Given such widespread negative consequences, it will definitely be better for the world if the trade war between the U.S. and China comes to a close, hopefully with the Chinese agreeing to U.S. demands for a fair trade practice. 

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