The action taken
by Trump driven government secures that they want to protect the American
workers, businessmen, employees and farmers. The idea behind imposing tariffs
is to make American companies more competitive with their foreign counterparts.
The economic development of the UAE
and China make these developing nations excellent choices for overseas
expansion, globalization and foreign direct investment. Globalization of
developing nations strengthens their economies and global distribution channels.
China is fast becoming an economic leader and manufacturer in the world, famous
for its cheap labor factory workers. The UAE’s wealthy economy has been
increasing at a rapid pace due to its real estate boom attracting huge FDI.
China has eliminated many of its trade barriers and now has an open free trade
economy that appeals to many global nations seeking new target markets and
consumers for their products. Both the UAE and China are quickly becoming
significant growth economies that attract global FDI from countries all over
the world wanting to expand and find new import/export partners for their
goods. The import of Chinese goods has badly affected the American companies.
The action will adversely affect the economy as a whole. The Chinese has
retaliated by saying that since US will impose tariff in return China will do
the same. This immediately affected the Chinese currency.
taken by Trump is not only going to affect the Chinese makers but it will also
affect the other markets. The Japanese has also hit back at US after US imposed
a border tax on Toyota. With US closing their doors and making it difficult to
trade, china will dump the outsourced goods in India. In 2017 India imposed
anti-dumping duties on 93 Chinese products which would create a war between
china and India in upcoming years. It was greatly observed that India’s exports
reduced by 12.3% while its import from china rose by 2% resulting in trade
deficit of USD 47 Billion. It imposed tariffs
of 35% on Mexican imports and 45% on Chinese imports to protect American jobs
from unfair foreign competition. Companies that import those goods would pay
tax at the border. A 45% tariff on Chinese-made goods could drive up U.S.
retail prices on those goods by an average of about 10%. Consumers would find
it hard to escape the price squeeze.
Tariffs are meant to give American-made products a price advantage by
making their foreign competition more expensive. China exported about $482
billion in goods to the United States in 2017, more than any other country
exported to the U.S.
What Trump has
not anticipated is that with solar panels, imposing a tariff on imported solar
panels will cost the US solar industry jobs decrease the growth of clean energy.
Around 18% of China’s imports and 4.5% of its GDP comes from trade with the US
whereas trading with china is only 7% of US exports which works up to 1% of its
GDP due to which china will end up being at bottom which will be a big blow on
The US has since
evolved further into an intellectual and service-based economy, driven by
market dynamics and the choices businesses made the service sector is presently
predominant and manufacturing has shrunk to 12% of GDP. Trump intends to employ
punitive tariffs on cheap merchandise entering the US to encourage domestic
manufacturing and bring back lost jobs. His primary tariff targets, as he has
frequently indicated, are China and Mexico but one cannot rule out the effects
of his action on other countries that export similar products. Of China’s solar
module manufacturing capacity, estimated to be around 70GW per year, the major
markets are the US, India and China itself. With green energy activity expected
to slow down in the US, China’s solar equipment makers may adopt a more
competitive stance on pricing to drive demand. This will help India’s plan to
add 100GW of solar power capacity in future.
The tariffs are
in response to the claims of US solar-panel makers who find it tough to compete
with Asian manufacturers. They are being levied to safeguard the domestic
industry, promote innovation, and increase US jobs. Trump’s move helps US
solar-panel manufacturers, such as First Solar, Tesla, and Solar-World. But
manufacturing only constitutes 14% of jobs in the US solar industry, and it is
becoming more automated. The tariffs are just the latest action trump has taken
that undermine the economies of renewable energy. The import taxes, however,
will prove to be the most targeted strike on the industry yet. By buying
Treasury’s, China helped keep U.S. interest rates low. If China were
to stop buying Treasury’s, interest rates would rise which will eventually
throw the United States and the world into recession. But this wouldn’t be
in China’s best interests, as U.S. shoppers would buy fewer Chinese exports.
In fact, China is buying almost as many Treasury’s as ever U.S. companies
that can’t compete with cheap Chinese goods must either lower their costs or go
out of business. Many businesses reduce their costs by outsourcing jobs to
China or India, which adds to U.S. unemployment.
Trump’s tariffs are better than expected. The
companies were already planning for even higher tariffs by hoarding panels.
The companies that will benefit from Trump’s tariffs are mostly not American,
although they manufacture in the US. Example, SUNIVA an Chinese brand is
majority-owned by a Chinese investor. Also, implementation of GST since July
2017 could affect Chinese imports. With GST putting a stop to unregistered
interstate supplies, the Chinese products will come under radar.
owners will benefit most, even if some jobs are added. In effect, Trump’s move
will likely decrease China’s huge advantage in solar-panel manufacturing. Trump’s
stance could also open up options for China and its Asian neighbors to
retaliate. They could complain to the World Trade Organization, which has in
the past rebuffed US import tariffs. Anticipating a trade war, the stock market
would fall and interest rate would rise. There’s no way to know for certain how
big a problem tariffs or a trade war would be, but mostly it would represent a
significant hit to the economy.