In the midst of all these floating opinions by experts, Mr. Trump has pushed through with the policies anyway. And as previously expected, China, the primary target of the trade war has put in place countermeasures like, increase in import tariffs for US goods. And also as expected the Chinese Communist Party(CCP) has expressed 'concerns' in their usual propaganda language.
The implications of this trade war has acquired a new dimension with the recent outbreak of the 'Wuhan Novel Coronavirus' (or COVID-19, if you want to avoid any stigmatism, according to the WHO). Chinese people are now battling this deadly virus everyday for the last 3 months and the CCP is trying their best to keep information leakage to the bare minimum by arresting almost anyone who speaks out. We are all forced to accept the data coming out of China knowing that it is heavily adjusted by the regime. 20+ countries have been affected around the globe to this day.
Now let us look into the economics of all this. China's Economy is poised to take a hit from the social impact of this virus. People are unable to return to work after the CNY holidays due to the lockdown put in place by the government. It was a necessary step to take. But an export dependent country like China cannot afford to shutdown the majority of it's manufacturing sector. In the coming weeks, we would begin to see how reliant the world is on China and it's economy.
In the case of India, the effects are quickly evident. Some reports by mainstream media predict that the essential medicine stock of the country will run out by February end. This is primarily due to the raw material shortage faced by Indian pharmaceutical companies. Most of these raw materials are sourced from China. This includes medicines for diabetic patients.
The US and China have coupled their economies to a great extent in the last decade. But the recent trade war combined with the effects of the Coronavirus may decouple them significantly. The blessing in disguise is that some investors and companies have pulled out of China fearing the trade war, and based their operations in either the US itself or other Asian countries like Vietnam. So when the Coronavirus hit the Chinese manufacturing sector, US concerns were mildly affected as they had been less reliant on Chinese manufacturing in the last few months.
One possible outcome of this economic turmoil is the decoupling of the Chinese economy from the global economy. This may lead to the rise of some other country like Vietnam, which is ready to take the slack. Or this may hurt the principle of globalization as a whole. Anyhow, we are once again humbled and reminded of the capability of a microscopic organism to wreak havoc to the society and our way of life.
Image courtesy:
https : // news. stanford. edu /201 8/ 08/09 / global-trade-war-may-produce-recession-u-s- economist-says/
