Hey Steemians, Today we are going to discuss this topic and resolve the arduous queries of our friends regarding Trade War. 💰💰
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War with the weapons is an ancient way to conquer any place or to enslave any country in which armies combat and the shedding of blood determine the fate of any country. However, with the passage of time, a regular alteration in the techniques of war and artillery has been observed.
After World War 2, the Cold War started between United States Of America and the Soviet Union which brought the introduction of cyberwar in the whole world. Whilst, in this contemporary world the technique of war has disguised the form of trade. Trade War is the battle of the modern era which demolishes the system of export and import of any country, it is the only type of combat which does not require any weaponry.
Trade War is the game of export and import between rival countries, export is the international exchange of commodities or services produced in one country to another country whereas, import is the acceptance of goods from other countries. For example, if the cost of a mobile phone in the USA is $500 but China is providing the same featured gadget at the rate of $400 so automatically masses will be engaged more towards the low-cost products and these situations may vandalize the domestic market of USA and to get rid of this situation the USA authority will suggest China for plummeting the cost of the commodity but in the circumstances of ignorance of the condition the US authority will surge the tariff rate on that product so to stabilize the rate with according to the market and in return China will also enhance the rates of tariff on the products which were imported from the US and the repercussion of this chain reaction will lead to the rise of trade war. The predominant cause of trade war is to bring domestic companies back into regulation and to hurt the economy of the rival nation and the heinous outcome is the drop in the amount of import which will dampen the GDP growth of any country and profit margins of its industry and with this unemployment and poverty will emerge and the clouds of civil war may also completely shatter that nation in a barbarous way.
Now let us understand that why the cost of exported goods is lower than its usual market price and to speculate this situation let us take an example of China which is the has world's second largest economy after America but still the worth Chinese Yuan is far lower than American Dollar. This is because China's economy is much dependent on its export so they do not want a reduction in the amount of export with the fluctuation in their currency due to which China always try to devalue its currency by purchasing thousand billion dollars from the market so that amount of the value of yuan will never surge.
What are the disadvantages occurring, when China is purchasing a thousand billion of dollars form the market?
With this purchase, the value of dollar automatically surges and this impact the economy of the entire world as the value of the currency of numerous nation also gets devalued with it resisting their economy to grow.
IMF(International Monetary Fund) had introduced the yuan into the reserve currency basket as these currencies are considered to be more reliable and could be freely used all around the world which means that currency of China is also as reliable as the dollar, euro, yen, pound. Due to which it is becoming an irrefutable fact that if there will be any downfall in the currency of China then the economy of numerous nation all around the world will also get equally affected out of that.
WHO WILL WIN IN THE TRADE WAR?
According to numerous famous economists, the country who least dependent on the export will be facing inconsiderable loss in this war but if rivals are the dominator of the whole world than it will unquestionably affect the economy of the entire world.
As the trade war is surging at its rapid pace and apart from America and China there are some other countries also entering into the trade war but it is believed by numerous economist that it may dampen the economy of the more developed nation as because of trade war they will not be able to sell their innovations at competitive prices to other countries.
Thanks, friends for reading the post :-)