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Rising prices damage consumers and the economy

An inevitable result of the trade war is increased tariffs on necessary consumer goods - making life harder for consumers.

China Economics IR Trade

Context

The tariffs levied on China span a huge range of agricultural, industrial, energy and technology fields. Their impact on the Chinese economy will be large, but the resultant tariffs that China will have to lobby on US imports may well be more impactful.

The Argument

The China and US trade war creates an inevitable rise in tariffs places upon imports from both countries. When the US places a tariff on Chinese goods, and China responds with a tariff on US goods, to which the US must respond and relaunch the cycle anew. The result is a vicious cycle of continually increasing prices for Chinese and American consumers and businesses alike. This is particularly bad for China given the areas that it targets range from soybeans to crude oil - often because these products are exported from areas where a decrease in exports and wealth would be most damaging to supporters of the incumbent president. In the event of an escalating and unchecked trade war, economic realities for consumers might be put on the back-burner while China is forced to pursue a political show of strength.

Counter arguments

The counter-tariffs that China levies will be calculated to be as harmless to the Chinese economy as possible. Furthermore, China is a net exporter rather than importer to the US, so will not be as impacted by consumer prices increasing as the US will be. In the worst case scenario, China can branch out to sources for imported goods.

Premises

1. A trade war necessitates a continually expanding range of tariffs from both sides. 2. China will be forced to raise tariffs on things that will make life for Chinese consumers and businesses more expensive. 3. More expensive imported goods hurts quality of life and is bad for China. 4. Therefore, the trade war will be bad for China.

Rejecting the premises

2. China will be forced to raise tariffs on things that will make life for Chinese consumers and businesses more expensive. China can raise tariffs surgically, avoiding the most crucial arteries of the Chinese import economy.

References

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Proponents

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This page was last edited on Thursday, 19 Jul 2018 at 17:05 UTC