“We can’t continue to allow China to rape our country, and that’s what we’re doing… We’re going to turn it around, and we have the cards, don’t forget it”. This was one of the most popular declarations that Donald Trump had delivered in one of his election speeches for the post of US President for 2017- 2020. And Trump’s promise to remedy this imbalance in the American-Chinese trade balance seems to be executed.
Indeed since January 2018, Trump has started the procedures and made the decisions that will allow absorbing the deficit of this trade balance, it is a deficit of 375 billion dollars owed annually by the United States to the Republic of China.
This multitude of decisions started with the implementation in January 2018 of a tax on products from China, including household appliances, namely washing machines and solar panels, over a period of 4 years old.
This first decision was the cause of the outbreak of a trade war between the two countries, according to the principle of reciprocity
America did not stop with the taxation of the products mentioned above (solar panels and washing machines) but amplifies the situation by applying more customs taxes in early March on other products from China, such as aluminum and steel, then the proposal of a list of 1300 products to be imposed at the end of the same month.
China obviously did not sit idly by but responded from the start of the threats from the US president, and it started, first, by the devaluation of its currency so that Chinese products remain cheaper in the United States and even become cheaper than American products produced locally, and therefore the balance of trade will remain in favor of China because the latter’s exports to the United States will remain more important than in the opposite direction.
This devaluation of the Chinese Yuan was perceived by Donald Trump as an unfair and voluntary practice.
China is not only satisfied with the devaluation of its currency but also applies customs taxes on certain products from America, and even decides to suspend its imports of US agricultural products, and in this way, it has succeeded well in hitting where it hurts.
This trade war between the two world powers had serious repercussions on the economy of the two countries, on their companies and on the employees of these companies, such as the Chinese company operating in the USA “HUAWEI” suspected of spying.
And it cannot be concluded which of the two powers is in a position of strength and which of them is playing its last card because in truth the two lose seriously.
China will lose a large part of its export earnings, and the US will lose its 50 billion agricultural exports, and in addition it will have to find a solution quickly to produce locally the products normally imported from China, such as auto parts.
Finally, the two countries should expect slower growth and an increase in the unemployment rate if they do not find a compromise.
