US-China tariff crossfire
Amidst tariff crossfire between the two economic giants of the world, i.e. the US and China, a stark economic uncertainty is gripping the global economy with a potential to eventually leading to an irreversible economic meltdown, thus bringing the global economy to a grinding halt.
US-China tariffs trade war underscores the importance of exercising reason and restraint as treading the path of collision will bring nothing but disaster on both sides. However, China’s action may be termed as a retaliatory or to be more precise a reactionary act.
This ominous tariff war has global ramifications. It’s likely to engulf the entire world with smaller global economies caught in the crossfire. They say, if two buffaloes fight in the mud, frogs become the casualties. Somewhat similar situation is with smaller economies of the world in the current belligerent scenario when two largest economies of the world are poised for a trade war and are grappling with each other in an undesirable economic showdown, both sides with their heels dug in deep as both of them have a grim realization that none of them can afford surrender. Both of them are making desperate attempts to knock each other down, with US making a frantic move to maintain its century’s old status as world’s number one economy not ready to yield this status to its arch rival, and China determined to snatch this prestigious status from the US.
In an attempt to deny China the coveted status of world’s number one economy, Trump administration has thought it prudent to take shelter behind heavy tariffs using it as a weapon. China, however, has the ability to snatch victory from the jaws of defeat, and it sounds pretty determined to turn the tables on the opponent and transform an impossible task into a possible one. President Trump knows that the US is the world’s superpower by dint of its status as world’s number one economy; the day it loses this status, it will be extremely hard for the US to retain its status of world’s lone superpower. This is evident to even a man in the street. So, the US, in a way, is fighting the crucial battle to save its status as a superpower.
In an attempt to stem China from becoming world’s number one economy, President Trump has precipitously resorted to impose heavy tariffs on China, thereby eliciting China’s intense reaction which Trump seems to have miscalculated. But soon after imposing heavy tariffs on more than a dozen countries, including China, he realized the gravity of the situation and decided to announce a 90-day moratorium on tariffs imposed on these countries except China, thus giving an impression to the world that all this tariff drama was staged to penalize China economically in order to deter it from turning into a future top economy snatching the status from the US. However, this impetuous move isn’t without perils, and is likely to backfire. But President Trump sounds adamant to acting on the famous English dictum which goes: “Be prepared to lose if you want to gain”.
China watching all this development carefully, finally decided to go for a tit-for-tat action in response to 145 % tariffs imposed by US and reciprocated with 125 % tariffs on US goods. However, it remains to be seen what all other actions China is going to take in the days to come in order to completely neutralize Trump’s reckless move.
It may be recalled that this isn’t the first time the US has engaged in a trade war with China.
According to Dr Manzoor Ahmad, who served as Pakistan’s ambassador to the World Trade Organization (WTO) in Geneva, back in 2018 during President Trump’s first tenure, the US had singled out China and imposed tariffs on it. Though, initially, other countries were also included in Trump’s tariff list, but were dropped later focusing on China only.
According to economic experts and seasoned analysts, China wouldn’t hesitate to go for an economic crusade against the US and might flood the European markets with the cheapest but quality goods in order to offset the financial loss it might be incurring due to US tariffs.
Analysts are of the firm view that the heat of a highly negative spillover effect of an all-out US-China trade war would be globally felt as it’s destined to bring about a global economic recession. The stock market crash witnessed by different countries during the past few days clearly indicate the devastating effects of the US tariffs on the global economy.
As for Pakistan, amid the escalating trade war between the US and it’s largest trade partner China, Pakistan’s teetering economy will be badly impacted by this tariff war that has caused the US and China standing eyeball to eyeball with each other. Pakistan’s chances of getting caught in the tariff crossfire between the US and China increase manifold. According to analysts, China could go for dumping it’s products elsewhere, particularly in European markets which may adversely impact Pakistan’s share there. According to economic experts, Chinese firms will most likely divert their excess products to Europe, the biggest importers of Pakistan textiles. Since we have a free trade agreement with China besides our close strategic relationship, we can’t stop or restrict Chinese imports. The financial gurus are of the view that China’s likely strategy could also bring Pakistan’s other industries besides textiles and clothing under intense pressure.