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US-China trade war saps world economy, affects livelihoods globally

"The US-China trade war is threatening the health of global economy as world trade is deteriorating rapidly. During the current year, trade is expected to expand by only 1.2 per cent, its weakest growth since 2009. The WTO has warned that intensifying trade conflicts may pose a direct threat to jobs and livelihoods, besides discouraging companies from expanding and innovating. Two of the world’s largest economies, the United States and China —witnessed a rapid decline in their commercial activities in the recent months, a development intensified by the tariffs they imposed on each other’s exports which not only raised their business costs but also discouraged investors."

 

US China trade war saps world economy affects livelihoodsThe US-China trade war is threatening the health of global economy as world trade is deteriorating rapidly. During the current year, trade is expected to expand by only 1.2 per cent, its weakest growth since 2009. The WTO has warned that intensifying trade conflicts may pose a direct threat to jobs and livelihoods, besides discouraging companies from expanding and innovating. Two of the world’s largest economies, the United States and China —witnessed a rapid decline in their commercial activities in the recent months, a development intensified by the tariffs they imposed on each other’s exports which not only raised their business costs but also discouraged investors.

No-deal Brexit threatens trade growth across Europe

European trade is affected by the fear of Great Britain exiting the European Union without a proper dealUS China trade war saps world economy affects livelihoods globally governing future commerce across the English Channel. Even an American company closed down in September. This was the second company to shut shop in the US. It also affected the reading on the Institute for Supply Management’s manufacturing index which recorded its lowest reading since June 2009. Not only did stocks drop but money also shifted into Treasury bonds which indicated investor’s willingness to accept the prospect of smaller rewards in exchange for refuge from risk.

Another effect of the trade war was the significant decline in prices. The exchange rate of the dollar also increased significantly making American goods more expensive. President Trump blamed Jerome H Powell, Chairman of the Federal Reserve Bank for this increase. Trump also accused the Central Bank of keeping interest rates too high. Triggered by these concerns, the bank dropped its interest rates twice this year after raising them four times in 2018.

Bleak economic outlook

Few people believe President Trump has the power to restore economic vigor himself. Even the WTO forecasts trade will grow only 2.7 percent next year. When the organisation released its last forecast in April, its sentiments were buoyed by hopes that Washington and Beijing were nearing a deal to resolve their trade disputes.

However, in September, Trump increased tariffs on $112 billion worth of Chinese imports, threatening American consumers with higher costs for shoes, apparel and electronics. As China slapped retaliatory tariffs on $75 billion of American imports,

Though the president last month delayed a planned increase in tariffson $250 billion worth of Chinese goods by two weeks, experts are skeptical that an agreement will be struck, amplifying concerns about a range of indicators that the global economy is weakening — including a slowdown in freight and quieter factories.

Impact on other countries

The trade war is also threatening other economies like Singapore, Japan, South Korea and Taiwan who have suffered diminished sales due to a slowdown in China. Germany noted a slowdown in factory orders in September as Chinese companies reduced purchases of German-made machinery. German companies are threatened by tariffs on German cars sold in the United States. This is dampening consumer spending in the country, contributing to weakness in other European economies like Spain and Italy.

A potent risk that could threaten future trade in Europe is the exit of Britian from the EU without a proper deal. The situation could further compound the uncertainty that Europe faces over its future trade dealings. Prime Minister Boris Johnson, who has vowed to exit EU on Oct. 31, with or without a deal, has demanded a scrapping of a provision negotiated by his predecessor, Theresa May, to prevent the reimposition of a hard border separating Northern Ireland from the independent Republic of Ireland to the south.

The British Parliament also adopted emergency legislation last month that would force Johnson to seek an extension of the deadline if he failed to strike a deal. However, none of this is tempting companies to invest in Britian. The spectacle of Britain getting poorer and stuck in the Brexit quagmire is feeding into the weakness of trade growth for other European countries.

 
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