In A Trade War, Everyone Loses

WITH Trump tearing up Trans-Pacific Partnership and pledging to impose a 45% tariff on Chinese imports, are we looking at a potential trade war? Or is this just another rhetoric by Trump?

A trade war refers to two or more states raising or creating tariffs (or trade barriers) on each other. For instance, Country A raises tariffs on Country B’s imports in retaliation for Country B raising tarrifs on Country A’s imports.

Unfair trade deals have been heavily used and critised by Trump; but an interesting observation by Jack Ma dispels USA not reaping any benefits. Jack Ma highlighted: “IBM, Microsoft, the profit they made was larger than the top four banks in China put together. … But where did the money go?”

Hmmm, where ah? In the same interview, Jack Ma added: “The other countries steal jobs from you guys — that is your strategy. You did not distribute the money in the proper way.”

China is the obvious target of Trump but China won’t be bullied. Other countries have suffered ‘the Dalai Lama effect’. In 2010, the University of Gottingen in Germany coined the term “the Dalai Lama effect” after its study found countries whose top leadership met with Tibet’s exiled spiritual leader lost on average 8.1% in exports to China in the two years following the meeting. Interesting.

Recently, the ‘infamous’ Global Times claimed: any new tariffs would trigger immediate “counter measures” and “tit-for-tat approach” from Beijing.” “A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the US.”

But US is not just any other country.

Will Titians clash? If they do, trade wars can lead to shooting wars but while there will be heightened geopolitical tensions, the nuclear factor will ultimately hold the peace.

We don’t have a crystal ball but in a trade war, everyone loses.

Jamie

Pursuing protectionism is like locking oneself in a dark room. Wind and rain may be kept outside, but so is light and air” – Xi Jinping

Related reads:
1.http://www.businessinsider.sg/alibaba-jack-ma-davos-america-history-globalization-2017-1/#iQrH5cFJGL7Pm2dz.99

2.http://www.voanews.com/a/china-xi-warns-of-dangers-of-trade-war/3680895.html

 3.https://www.theguardian.com/business/2016/dec/10/china-trade-war-trump-tariffs-exports

 4.https://www.theguardian.com/world/2016/nov/14/china-threatens-to-cut-sales-of-iphones-and-us-cars-if-naive-trump-pursues-trade-war
 

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Categories: China, Singapore

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