The United States and China are locked in a tariff war with no end in sight. The conflict began when US President Donald Trump imposed massive tariffs on Chinese imports in April, prompting China to retaliate with its own tariffs on US goods. The economic costs of this trade war are already being felt, particularly in high-tech sectors such as electric vehicles and solar energy.
China’s economy, which has been heavily dependent on exports to the US market, is facing significant challenges. The loss of access to the US market, coupled with mounting uncertainty in the global trading system, has dealt a blow to China’s export-driven sectors. This has led to concerns about economic decoupling between the two largest economies in the world.
The impact of this trade war goes beyond China and the US, however. It is causing instability in the global trading system and has shaken the foundations of regional arrangements. Regional blocs such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are emerging as alternatives to the US-led trade regime.
However, experts warn that this trend towards economic fragmentation could lead to rising geopolitical and military tensions that no region can contain. The Kindleberger Trap, in which no power steps forward to provide leadership necessary to sustain global public goods or a stable trading system, is becoming increasingly relevant.
In this volatile landscape, nations must cautiously advance the shared interest in restoring a stable, rules-based global order. A more coordinated effort by states could ultimately help bring the US back into the fold and create a more multi-polar and collaborative system.
Source: https://theconversation.com/the-global-costs-of-the-us-china-tariff-war-are-mounting-and-the-worst-may-be-yet-to-come-254583