Business

The Possible Fallouts From The U.S. And China’s Trade War

45116200775_a07323bc49

Just last June, there was a ray of hope at the G-20 meeting in Osaka, Japan with the announcement by the leaders of China and the United States that their trade war was thawing out. According to the U.S. President Donald Trump, the two countries had set negotiations “back on track.” 

This led to the U.S jettisoning any idea of new tariffs on Chinese goods and also suspending the embargo placed on U.S. companies from trading with Huawei, the Chinese IT giant that the U.S has blacklisted. Nations across the globe heaved a sigh of relief, markets picked up, and the media was abuzz with “cease-fire” reports.

But alas, it turned out to be a “false flag,” just like many diplomatic on and off between Beijing and Washington. The outcome of the “jigsaw puzzle” was to have the Trump administration increased tariffs on another $125 billion worth of Chinese imports in September. 

It’s a war and there is no going back, China retaliated by announcing further tariffs on $75 billion worth of U.S. goods. Nobody knows how the U.S. will respond to this but there are feelers that further tariffs will be issued in December, in an attempt to possibly raise the total value of Chinese goods subject to punitive tariffs to over half a trillion dollars. 

If this happens, it will cover almost all Chinese imports. China too will not be expected to take it lying low and will definitely respond to the tune of 69 percent of its imports from the United States. 

What we are about to get is that if the U.S. and China are successful with all these diplomatic face-offs, the average tariff increase will move up from three percent to 24 percent on U.S. imports of Chinese goods, while that of Chinese imports of U.S. goods will be at nearly 26 percent, that has been 6.7 percent for all other countries.

Now that both countries have gone back to the trade war path, what are the likely consequences?

A full-blown out war 

While this may be the last option, we can not completely rule out the possibility. China and the U.S. are two of the most powerful countries in the world, each known for their military might.

There have been some skirmishes especially with the claim of the South China Sea by the Chinese government. The busy waterway is one of a number of flashpoints in the US-China relationship, which includes a trade war, US sanctions, Hong Kong, and Taiwan.

Another issue that may indicate a possible full-blown war as a fallout of this trade war is the nuclear arms race that has been recently launched by both the U.S. and China. On 8 August, about 200,000 people who live in the northern Russian city of Severodvinsk were exposed to very severe cases of radiation emanating from an explosion at a nearby top-secret missile testing range. 

Russia’s weather service, Rosgidromet, was said to have recorded radiation levels up to 16 times higher than the usual ambient rate. Experts from the West attributed the explosion to the launch failure of a new nuclear-powered cruise missile, one of many advanced weapons being developed by Russia, the US, and China in a nuclear arms race that is daily and globally on the acceleration. 

We may want to ascribe this view to the suspicion of Russia by the Western experts but it’s a clear pointer to the inherent dangers a full-blown out war portends for the whole world.

Colonization

The scares of the slave trade and colonization have not completely disappeared but we may be heading for another form of colonization with this trade war. While the U.S. did not really play any major role in the past colonization and China was even a colony of Britain, what we may get from such a scenario now will be completely different.

The two countries have the financial resources and military might that can make them embark on such moves and funny enough, there is little or nothing the world can do about it. What the different embargos put in place by the U.S. and China can ultimately lead to is to seek other markets for their goods.

In a situation where the competition gets so rough, countries may be cajoled and indirectly colonized in an effort to outbid, outmaneuver, and secure better markets or dumps for the would-be banned goods. 

Terrorism and cyberattacks

In a war of this nature, expectedly, no holds will be barred; all things and everything will be deployed to make sure the war is won. The two countries have advanced tremendously in technology and will be expected to fully utilize all the knowledge they have acquired over the years.

Where we may not be able to indict any of them for acts of terrorism previously, nothing, however, stops any of them from using this means as a way of enhancing a “positive” outcome to the war. Winning a war is all about bringing your enemies to their knees and this can be achieved by targeting and destroying their properties as well as people anywhere in the world.

One good means of effecting this is through acts of terrorism and cyberattacks. The Nation States like Iran, Russia, and North Korea have been one time or the other accused of state-sponsored cyberattacks.

Though nobody has fingered China in any form of cyberattack, the outright banning of VPNs and even free VPN (while some services, like Urban-VPN’s popular platform, still operate there successfully), however, suggests that even the poor masses can resort to as a line of defense in the country may look suspicious. In a full-blown war, nothing stops any of these two nations to engage in cyberattacks against each other and what is more, is that both of them are well-equipped technologically to do this very successfully.

Cripple the UN

Both China and the U.S. are members of the United Nations Security Council which have veto powers that can enable them to prevent the adoption of any “substantive” resolution. Also, as major contributors to the funding of the UN, each of them wields a lot of power.

The cold war era saw the functioning of NATO and the Warsaw Pact Organization (WPO). Though China was not an outright member of the WPO, the country was committed to the aims of WPO through its alliance with the defunct Soviet Union.

An all-out full-blown war has the potentials to cripple the workings of the UN. Each of the two nations can muster enough support to initiate a breakaway from the UN and even forming another body in the like of NATO or WPO.

The fact that the UN depends on member countries for funding does not help matters here. In a situation like this, we may have Russia and North Korea tilting towards the side of China as there is no love lost between the two nations and the U.S presently.  

Though it’s still possible for both parties to this trade war to have a rethink and call it quits. More dedication should be put into all these rounds of high-level negotiations with the mindset to proffer a means of settlement. 

The thinking from Trump that tariffs will serve as a means to make China see the reason for the country to change its allegedly unfair trade practices may not work eventually. It’s possible that at the end of the day China may be willing to let go on some issues such as buying more U.S. goods, opening its market further to U.S. companies, and improving intellectual property protection, as a bargaining hand for the removal of all new tariffs, but we may not definitely expect the country to swallow all the demands of the Trump administration line, hook, and sinker. 

In the interim, what China is doing presently is to use its retaliation to inflict economic pains on the U.S. and, therefore, bring Washington to capitulate as well as reconsider its stance. If all these political gimmicks fail, we may end up witnessing a third world war.

Photo Credit: scootergenius02 Flickr via Compfight cc

Tagged , , , , , ,

About John Ejiofor

John Ejiofor is a curious life-researcher, whose quest to finding answers to life's pertinent questions has led to founding Nature Torch. This blog aims to debate and explore many questions about our earth -- including those a lot of people are uncomfortable with asking. He has been published on some of the internet's most respected websites, which you can find online.
View all posts by John Ejiofor →

Leave a Reply