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A trade war happens between two countries when one country retaliates against another country. It happens as one country increases the import tariffs or introduces some restrictions on the opposing country’s imports of goods. The United States and China are engaged in a trade war since last year.
The trade war between US and China came to the light in June 2018. According to Vanzetti & Do (2019), the tariff war was inflicted by the Trump Administration in the US to impose a 25% additional duty on Chinese imports in the country. And the Chinese counterpart in retaliation inflicted a bilateral tariff which is supposed to complicate the matter to the next level at the global platform. The US government has the power of unilateral sanctions to countries like China (Li, He, & Lin, 2018). Similarly, Handley & Limão (2017) stated that this global trade scenario is supposed to face a tumultuous situation as the US is striving to threaten its Chinese counterpart through the imposition of import duties. Meredith (2019) provided a new perspective on the trade war between the US and China. He stated one of his news article that China is supposed to reduce the import of US crude oil heightening the trade tensions. Horowitz, (2019) showed a different dimension of the trade war by providing a fact that China is considered as the biggest creditor to the US administration running unto a worth of $1.1 trillion and the country can have the power to devalue their currency, Yuan.
Therefore it can be concluded that the trade war between these two countries can affect the economic condition of these countries.
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