The difficult path demands much more efforts. But in the meantime not only benefits your own country for the long term but other countries as well. It also ends up boosting bilateral relationships with the countries involved but it seems that the current U.S. administration headed by President Donald Trump has decided to do things the easy way even if it leads to a trade war. No country is adept at building and selling everything on its own so it sells products and services its good at to other countries while buying products and services other countries are good at providing. This import export of products and services adds to the trade deficit of the countries involved. Trade deficit is a term meaning the difference between how much your country buys from another country compared with how much you sell to that country and all that is required to do is maintain a healthy balance of trade deficit with the countries you are trading with. It might often happen that a country may find itself running a negative trade deficit with other countries which means that the country is buying more products and services from other countries then it ends up selling them. In simple words in case of a negative trade deficit. Other countries make more money from you rather than you making money from them.
The image shown on screen displays the top 15 countries America is running a negative trade deficit with. Running a negative trade deficit with other countries should not be a problem if the difference is in the acceptable range. If it's not then you should take measures to restore the balance. As mentioned earlier in this article there are two ways to maintain the balance in trade deficit. The hard way is promoting domestic companies to increase exports thereby not hurting the trade sentiments of other countries and the easy way is imposing restrictions on importing goods and services forcing domestic companies to compensate for the demand as well as hurting the trade sentiments of other countries which could also take retaliatory actions as a reply. Which is exactly what is happening right now. The American president chose the easier way of maintaining America's trade deficit by imposing tariffs on goods and services being imported from other countries making them cost higher and forcing the affected countries to take retaliatory measures similar in magnitude thereby sparking a trade war U.S. President Donald Trump has already slapped tariffs on imports of billions of dollars of Chinese goods as well as imposing steep import taxes on steel and aluminum from other countries not even exempting its neighbors. Rattled by this move the European Union, Canada, Mexico, China and India have responded with retaliatory measures by imposing their own tariffs on American imports officially starting a trade war between America and other powerful economies of the world. Not only that the trade war has offered an opportunity to these nations of forming trade allies amongst themselves.
Europe, Canada and Mexico are already in talks of making one as well as India and China. Other countries like Australia and Russia will join these trade allies soon if the trade war intensifies. On the macroeconomic level it is estimated that these tariffs will knock half around 0.1 to 0.2 percent of each country's growth rate this year not including effects from rising business uncertainty decreased private sector confidence and supply chain destruction which can exacerbate the economic shocks. A full blown global trade war could end up giving global GDP by 2.5 percent over three years while the U.S. would actually be the biggest loser with a 5 percent hit. This can easily push the world into recession and send us stock markets tumbling around the world a perfect recipe for a global economic crash. President Trump's approach to trade seems to be based on a false understanding of how the global economy works. One that also plagued American policymakers nearly a century ago. Essentially the American administration has forgotten an important lesson from the Great Depression. In which to ease the pain of the Great Depression of the year 1930 the American administration passed a bill meant to protect American industry and agriculture from foreign competition. The act instead help prolong the downturn. Many U.S trading partners reacted by raising their own tariffs which contributed significantly to shutting down world trade with countries blaming others for their struggles. All of that eventually escalated turning a trade war into a real war. When World War 2 began. What are your thoughts about President Trump's trade war policy. Feel free to share with us in the comments section below.
This is dummy text. It is not meant to be read. Accordingly, it is difficult to figure out when to end it. But then, this is dummy text. It is not meant to be read. Period.
ConversionConversion EmoticonEmoticon