SHIKARPUR: Following the trade war with the US, China’s yuan has drastically fallen against the dollar. As the US has recently imposed tariffs on the machinery and electronic products from China in retaliation, China too has imposed tariffs on American products. The US claims that China has been practicing controversial trade practices.
If we analyse the Chinese economy, it is easy to conclude that the tariffs will affect China to an extent. Donald Trump has religiously followed his policy of “America First” since his election as the President. Initially, he withdrew from the UN Migration and Refugee Organisation. Secondly, he denied ratifying the Paris Agreement to address the climatic challenges. Thirdly, the rejected the UN Educational, Scientific and Cultural Organisation. Last but not least, the US withdrew from UN Human Rights Council as well.
Moreover, most of the international historians have depicted the possibility of the US repeating its history of Smoot-Hawley Tariff Act of the 1930s. The act garnered similar impact on the American economy as American national income fell by 36 per cent, and 40 per cent banks were permanently shut down and trade and investment declined drastically. Currently, America under Trump follows isolationism and protectionism policies which can be traced back to the 1930s. The trade-war waves will immensely shake the economic foundations of both the countries, China and the US. We live in a globalised and interconnected world, where no country can live in isolation. If a country follows isolationist approach by imposing tariffs on consumer, it cannot completely protect its own economy from the impact of the counter-measures.
Published in The Express Tribune, September 10th, 2018.