Trade between China
and the United States has fostered large economic benefits for Americans. Their
trade with the United States has triggered by keeping the yuan consistently
weak against the dollar resulting in making Chinese products cheaper and has
allowed China to achieve a substantial
share of the American
China exports about $482
billion in goods to the United States each year, which is more than any other
country exports to the U.S.
Over the past 15 years, China has
been a manufacturing hub for giant technology companies like Apple and Microsoft
that is more inclined towards hardware and software.
Manufacturing many goods in
China has kept their prices lower than they would be if made here. That’s been
a boon to American consumers.
Now the Tariff levied on Chinese goods has
caused depreciation of Chinese currency Yuan from USD = 6.40 Yuan to USD=6.90
To many people, Trump’s decision on
imposing tariff on Chinese products may seems to valid since limiting those
imports and saving jobs would strengthen American business.
would reduce its exports to the United States could lead to another setback to
an economy as well. In the long run, increasing the cost of doing business in
China would probably compel manufacturers of basic consumer items to consider
moving out of China.
High tariff on a range of goods made
in China could also propel multinational companies to re-consider whether their
business exposure to China makes it lucrative, or if it is time to cut down the
The tariffs imposed will not merely
be confined to the exports of these companies. This will equally impact the
foreign direct investment (FDI) that flows to their manufacturing sector. As
imports become less beneficial to US businesses, they will prefer domestic
manufacturing in low-wage countries, ending up buying fewer Chinese things, and
several things from anywhere else ultimately reducing the FDI.
Slashing down the
sales of Chinese products would certainly hurt American businesses and workers.
A product “Made in China” is not necessarily 100 percent Chinese, since many
goods are assembled in China with parts from the United States and others.
Sluggish purchases of Chinese products would reduce the sales of their American
If sources are to
be believed Fifty-five cents of every $1 spent by an American shopper on a
“Made in China” product goes to the Americans selling, transporting and
marketing that product. Reducing Chinese imports would harm shopkeepers and
to the tariff, China is most likely to retaliate by imposing tariffs of its own
on American goods and services rather than lowering barriers for American
companies doing business in China.
Earlier yuan has
contributed to a surge of Chinese imports into sectors such as raw silk. At
another level, China is increasing its mark in strategic sectors, including
power where Countries like India had failed to optimize this situation.
economy, Devaluation of Yuan makes it easy for Indian exports to compete with
Chinese exports as in textiles, apparels and to name a few. On the contrary
impeding Chinese economy also means lower commodity prices globally which hurts
Indian commodity producers though aid the overall inflation levels to come
The depreciation of
Yuan will help China to dump goods into the Indian market, which will impact
Indian Rupee is
already falling sharply rupee. Since India runs a trade deficit, chances are
the current account deficit will also rise, which will further pressure the
rupee. Falling rupee is bad for those companies that have dollar-denominated
loans and for foreign flows because stock market returns turns unattractive.
Talking about UAE,
Depreciation of Yuan would provide a
boost to UAE imports of now cheaper Chinese goods. China
is Dubai’s biggest trading partner about bout 80 per cent of that involved
imported textiles, clothes, machinery and products made from gold, silver,
copper and iron.
The currency devaluation aims to stimulate Chinese growth by
triggering exports, which could prove positive for the UAE economic growth.
Higher Chinese growth could also lift global oil
prices, which have fallen by about half since the middle of last year. s.
Declining oil prices have hit the UAE government’s energy revenues as well as
spending in the non-oil economy