Martin
Wolf, the chief economics commentator at the Financial Times, wrote an article on Financial Times,
"Donald Trump declares trade war on China" (https://www.ft.com/content/dd2af6b0-4fc1-11e8-9471-a083af05aea7). He pointed out that no sovereign country would accept such
humiliating demands from the US. If his opinion is true and China does not
accept the demands from the US and enters a trade war with the US (what I think
is likely), then what will face the world economy?
When a
trade war starts, both countries will increase their tariffs on each other, and
the volume of trades between the two countries will drop dramatically. The US
will create more opportunities for countries like Vietnam which also export
relatively cheap products to lower the cost-pulled inflation within the US
economy. Meanwhile, China will create opportunities for other developed
countries who have high technologies, as China needs to seek alternative
companies that also provide high-tech products other than American companies.
The trade war between these two countries actually create more opportunities
for other countries, since both countries have enormous sizes of markets. The
US has some political influence on other countries; however, it does not have
the power to limit other countries not to export high-tech products to China.
To
conclude, when China and the US are fighting a trade war, it opens more
opportunities for other countries.
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