Economic development

Trump’s “slapping tariffs” War- China and Others slaps back, while France sends a hidden message to the US.

Last month an undocumented immigrant from Mali, Mamoudou Gassama, saved a four-year-old child dangling from an apartment balcony, when he scaled the four-story building façade as a crowd screamed at the foot of the building in Paris. Aside from it going viral on the internet, his one of a kind demonstration which lead to a sensitive rescue got the attention of the French president, Emmanuel Macron. Subsequently, the national hero now known as “Paris Spiderman” was at the presidential Elysee Palace where he visited the Head of State. During his meeting, Gassama said he was not thinking when he scaled the apartment building, whereas Macron described his action as “Frenchman”- an exceptional act and thanked him saying,

“You saved a child. Without you, no one knows what would have become of him. You need courage and the capability to do that and you have become an example, because millions have seen you on social media”

Airing his gratitude he promised to recognise the Malian’s immigration status and invited him to apply for citizenship. He was also presented with a gold medal for his act of courage and was offered a job with the fire department. Gassama was rewarded for his heroism instead of being rebuked for his illegal standing.

However, I am still puzzled as to how a toddler would have such a mighty grip and how he climbed up the balcony in the first place, as it still remains unclear as to how the child ended up on the balcony’s ledge. To me, I think this was staged, a message intended for the US. A desperate attempt from the French to pass a message to the world, but particularly to the United States. In recent times the United States under the ruling of President Donald Trump have started a trade war which has conveyed a negative impression to his allies and the commencement of a retaliation. Some of the world’s largest economies are concerned and disappointed in the newly proposed taxes of 25% on steel and 10% on aluminium imports imposed by US. President Donald Trump, which will commence on July the 6, 2018. His actions which are mostly not intended to be favourable will cause a trade war that is already at its inception. Hence, prompting constrains from the likes of Canada and China, who will also slap heavy tariffs on certain goods and raw materials that are exported to the United States.

France had warned the US against starting a trade war with its allies. Allowing favourable conditions to exchange goods and services between two or more countries are one of the benefits allies enjoy. An ally is a friendly state that cooperates and stands by another, whether in military or prompt decision making. A primary purpose intended to have an advantage over other unfriendly nations. But with the trade war Trump is initiating with his allies, it is likely that the message the French is putting out to the open suggests a reminder which interprets;

“Do not forget the many times we stood by you! We have supported you when you almost fell to your demise. Hanging on the brink of death, we swiftly came to your rescue against all odds. We risked our lives on your behalf and made unfavourable decisions just to give you another chance to life and this is how you want to repay us. Also, you must remember that aside from the benefits we both have enjoyed, our hospitality and compassion is inherent, but not to be taken for grated. This is who we are and we will not allow a fickle misunderstanding deter our nature. Nevertheless, be sensible and do not start what you cannot finish.”

There is absolutely nothing wrong for Trump to demand a better stake in trade deals, since his primary purpose for starting a trade conflict is to negotiate better trade agreements for his country and for its allies to support the US. However, I think he is going about it the wrong way. During a joint press conference with Swedish Prime Minister Stefan Löfven, President Trump said a trade war would hurt other countries more than it would hurt the US and that it is good and easy to win because his economy is looking great. Adding that the US has be taken for granted, mistreated by friendly and unfriendly nations. Furthermore, he said that due to poor negotiation from former leaders, the US losses $800billion a year on trade and a deficit of approximately $5billion a year with China, whereas other countries make it impossible to export US products. He went on to say that at the end of the trade war the allies would love the US even better. Then forged on to say that he has to straighten the problems which his predecessors imposed to the detriment of the US economy and at this point he has no choice despite the consequences. The EU according to Trump, has been highly unfair and if the EU takes off a lot of its barriers which makes it impossible for US products to go into their economy, then he will start renegotiating, otherwise he would leave the reform the way it is, affirming that trade wars are not that bad. If this is what he really thinks then Americans are in deep trouble, especially the people who voted him in. His request to increase the importation of US products into the EU seems very daunting, as the demand for US goods in these nations are very low, because its products are perceived as inferior quality and overpriced.

This statement- “A trade war would hurt other countries more than it would hurt the US”, as stated by President Trump to some extent is true for EU countries, as most of the EU nations depends on open trade, as exports mostly equals 50% of its GDP. Therefore, it is important for an open and free trade. The EU has limited options to fight back and their economies will loose in an unfavourable scheme, since most of them are highly dependant, less industrious, experiencing declining population and in an enormous deficit. However, EU leaders have already chosen their target for retaliation on iconic American goods such as Levis jeans, Jack Daniels whisky, Holly Davis and motorcycles, and Florida oranges as reported by Al Jazeera. Despite that, the European allies are calling on Washington to make a move to deescalate tensions over tariffs, as Trump’s actions were thought to be contained by other members of his administration. All the same, president trump is not backing down. Also, they think that the US is so far abolishing its leadership in the global economy, even though the action is seen as rebalancing the trade relationship and deficit, allies think it is inappropriate and have asked for a reversal, a tariff relief. Few days left to avoid the trade war between EU and the US, Canada and the EU have both lodged complaints with the World Trade Organisation (WTO), questioning tariffs of 25% on steel and 10% on aluminium imports from the US as announced by Washington. After a three-day meeting of the G7 finance ministers in the ski resort town of Whistler, Canada, the French finance minister Bruno Le Maire said,

“We still have a few days to take the necessary steps to avoid a trade war between the EU and the US and to avoid a trade war among G7 members. The ball is in the camp of the United States and it is up to the American administration to take the right decisions to smoothen the situation and to alleviate the difficulties.” when he addressed reporters.

According to credible reports, for every three years the US is losing $1 TRILLION to the benefit of China. With regards to trade reforms, Trump is at least trying something rather than do nothing unlike previous Presidents, but I for one think that this trade war is a big mistake. He seems confident but his decisions cannot always be appropriate with consideration to magnitude and timing, and he himself should be fully aware of the repercussions of wrong decisions, since his company had to file eight times for bankruptcy. I am certain that he is trying to keep his campaign promise of making America great again, but it should not be to the detriment of America’s consumers, sellers, farmers and industrial workers, and friendly nations who have fought alongside America both in wars and sensitive issues. He is taking on the world at the same time, a battle of “slapping tariffs” that he is more likely to loose. He would have at least focused on China and not taken on the EU, Mexico, especially Canada- the US strongest ally.

Focusing on China alone will still show signs of an unhealthy trade war, as China is almost as strong as the US or an even greater contender. Its military spending is the second largest in the world and with the completion of their ambitious projects they will soon become a first-class world trade centre. In addition, China is an $11 TRILLION growing economy. A country which rose from ashes to a global player in this century through smart and hardworking individuals. People who are willing to improvise in other to overturn any limitation on their production power. This insinuates that China can buy from the EU or other countries that are willing to utilise the opportunity to sell to them. When and if the trade sanctions begins or become highly unfavourable, Europe and Asia will slowly start trading largely with each other and also with other countries. Consequently, if the US starts to upset the rest of the world, they can definitely trade without the US, but can the U.S trade without the rest of the world? Also, the US has a ridiculous amount of debt which China buys. That being so, if China stops buying the interest on the debt it will cripple the US economy into darkness.

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Some argue that China’s economy is dwindling rapidly regardless of its favourable but falsely published data that makes it seem as though the economy is still waxing strong and that the US has a better standing in this trade war that is intended on cutting better trade bargains for the state. But how can this be when major consumables and devices are made in China. In the world, 80% of flat screens, 75% of phones, 85% of electronics, 95% of computers and 60% of shoes are made in China. For example, if the US charges more on food the rest of the world is more than willing to occupy their position. Whereas, China could charge more for electronics and this would be unfavourable to the US and the rest of the world because China so far is a top player in electronics manufacturing. Therefore, I am not convinced that the Chinese economic data is mostly fabricated with an intent to mislead. Correct me if I am wrong.

The US has started a war that will be very difficult to undo, since a great amount of trade exist between these two countries and even if the Chinese economy has slowed down by 6%, the US economy is still not in a better position for a trade war since it is growing at 2%. When scrutinised, does these low percentages mean that the US economy is speeding up and Chinese economy is slowing down uncontrollably to warrant such a costly action from Trump? Aside from the family separation border crises, I think this is by far the worse decision president Trump has enacted. There is no way American consumers will benefit from a trade war with China since most of the products in the US are “Made in China”. Both ways, products will become more expensive depending on how China slaps backs. Unless there is another seller to replace the Chinese, ordinary American consumers are going to lose and companies in the US will not be able to compete in the global market due to high price of materials, not forgetting that is was inflated prices that sent US companies over to China in the first place. Also, if China stops purchasing America’s debt, the debts will heap up, unless the economy grows higher and to a reasonable point annually.

Many economist have disagreed with Trump, saying that everyone losses in a trade war because a vicious cycle of tariffs makes goods more expensive everywhere. Some US companies say they fear a trade conflict could end the global economy extension, as they expect more than a 15% drop. On that account, American companies cannot survive only on the local market. Sanctioning American companies from doing business with other countries will only lead to a retaliation on American companies from working productively and successfully with other nations. For example, what will happen to GM, Boeing, Facebook, and Google when their services and products are no longer required, hence blocked abroad.

Nevertheless, there are no winners or losers because the people will suffer from the added tariffs as imported products from either china or the US will at this time become more expensive. Nobody wins a trade war as it only increases the price of goods and services, which ultimately causes discomfort for the people, as there are no real compensation for their tremendous loss. The US has so far proven to be an unreliable business partner and has demonstrated an act of unfairness. Trump’s actions would cause major disturbance for the US, if possible eliminating the US as a major global trading partner. What is evidence is that power is shifting towards Asia and it is very likely that the US will share their extraordinary and influential power status with China in the nearest future, since the EU nations such as France and the UK, and even Russia, are already loosing their powerful status. That being the case, Trump must not particularly fail to recall the current relationship between the US and China, which have been described by world leaders and academics as the world most important bilateral relationship of the century because of their extremely large economic partnership. Thus, it will be unwise if rivalry occupies this position in the nearest future.

X pj

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