How the US-China Trade War Could Change the Economy

Business experts say that the possibilities for consumers, businesses and even American manufacturing are likely to be casualties in the growing trade war between the US and China.

Last week, the President punished China and shifted tariffs to temporarily take some pressure from other countries, which retaliated against the US with their own tariffs. Till Monday, China faced a tariff of 145% on its products, with a temporary repetition for electronic devices.

Economists predicted that the trade war between the world’s two largest economies would be serious consequences for American consumers and workers.

Price of import taxes

Starting from this month, tariffs may increase the prices of popular online and brick-and-mortar retailers.

“Most things that you can see inside the store on a target or walmart or Amazon, an associate professor of economics at the Sturn School of Business at New York University, said,” I think we will expect immediate increase in a significant price. “

They will be among the first products to see clothes, toys and plastic items (such as vacuum, toaster and small equipment) with small electronics. Conlon estimated that about 50% to 60% of Amazon’s offerings would be affected, and many would grow with the same amount as tariffs.

Conlon had some advice for consumers that economists usually do not give: it may be understood to buy some items before prices rise.

“If you have cash on hand and you are actually concerned about buying some of these things, it could not be the worst idea to stock them,” he said, looking at the big-tick items that will make the most understandable to buy now, like a longer, like equipment, now. “Big warning, of course, next week, we can have a completely different conversation about tariffs as this situation is developing very quickly.”

Will the cost be worth it?

Eventually, manufacturers may be suited to tariffs by carrying forward production from China in countries such as Vietnam or Mexico, which is low in the tariff rate, for the least time, the Connalone said.

But can all short -term pain result in long -term benefits? Tariff means that to restore American manufacturing in the days of its pride after WWII, when America, not China, was the world’s factory, by encouraging businesses to install plants in the US instead of abroad.

There are some obstacles in the way of that result, Sina Golara said, Assistant Professor of Supply Series and Operations Management at Robinson College of Business of Georgia State University.

For one thing, even the more tariffs are there, even then it can still be more cost effective to build many things in China, Golara said. Companies expecting to establish in the US will not only have to manufacture a factory, but also to repeat the infrastructure and supply networks manufactured for decades. At its top, American employees are paid more than their Chinese counterparts, which add production costs.

Golara said, “The cost difference is so high that even tariffs are as high as they will not make it expensive even today, which is worth carrying everything in the United States.”

In addition, tariffs themselves are a barrier as they make it more expensive to import parts and materials of other countries for a factory located in the US.

What is the best result from this trade war?

Another headwind for the American economy is that China has some benefits to harm American consumers and companies with its trade policies.

China can cut imports from American companies and prevent the export of some important minerals used in advanced manufacturing, of which China is the main or only supplier, Conn said.

Experts said the best possible result of performance for the economy would be that the two sides reached a deal to reduce the tariff on each other. However, the vast nature of Trump’s business war complicates that task, as is again, the pattern of tariff declarations again.

“There is another case where you are engaged in a war, and then you dial half of your tariff back,” Golara said. “In that case, you are really hurting everyone, except that you are hurting everyone a little more … it’s like a mutual destruction tool.”