US-China Trade War 2.0: There is a debate and discussion on the impact of Donald Trump's return to the US presidency on the world. Every country is assessing whether this return will improve or spoil business, mutual relations,, and interests. If there has been a change in the world's oldest democratic and most powerful country, then obviously its effect will start showing everywhere. America has the biggest role in the international system of running the world. It is still the most prosperous and powerful country on the economic and military front, that is, if Trump has come, he will see and run things according to his own. Changes are bound to happen in foreign policy, diplomacy, business, war,, and conflict. This change may be beneficial for some countries and a loss deal for others. It is fine for those countries that are happy with Trump's arrival and who have been getting along with him, but those who had a rift with him or who had a conflict with him in the previous term i.e. from 2016 to 2020. Such countries are scared, they are afraid of what will be Trump's next stance.

China conflicts with America on many fronts.

The biggest name among the frightened countries is the People's Republic of China. China has conflicts with America on not one but many fronts. There is a tug-of-war between the two in every field, from foreign policy, security, military, business, human rights, and space. The scope of conflict is spread from the South China Sea, and Indo-Pacific to Taiwan, that is, if America is facing the biggest challenge from any country, it is China. China is constantly challenging its superpower status. Since Trump has taken many steps to rein in China during his first term and his attitude and approach towards China, it will increase the deadlock and conflict between the two countries afresh. Especially, business is such a sore spot where Trump can hit first.

There was a time when there was no trade between China and America.

There was a time when there was no trade between China and America. After the formation of China in 1949, there were no trade relations between the two countries for three decades, i.e. 30 years. After about three decades, Deng Xiaoping started economic reforms in China, and then in 1979 both the countries normalized their relations. In the year 1986, China joined the General Agreement on Tariff and Trade. Then after this, in December 2001, it became a member country of the World Trade Organization, which is called WTO. Even before the WTO, trade between America and China was increasing, but after joining this organization, the business relations between the two countries started normalizing and growing rapidly. The result of this was that companies from America and Western countries started investing in China in large numbers in the lure of cheap labor and low cost. Then gradually China became the largest hub of manufacturing.

Trump raised tariffs on Chinese goods during his first term.

Cheap goods manufactured in China started reaching the markets of the entire world including America. Over the years, trade between America and China increased manifold but there was a huge imbalance in this trade. Currently, America exports goods worth around $200 billion to China while China's exports to America are $448 billion. This means that China benefits more from the trade. Before 2020, around 2018, when the Trump Administration increased the tariff on Chinese goods, China's exports which were at $558 billion at that time, fell to $449 billion in 2020. After this, under the Biden administration, China's exports to America started increasing again and then it started decreasing.

The world's supply chain is dependent on China.

Both countries have benefited from this trade. China is one of the biggest markets for American goods and services. At the same time, America is also one of the biggest markets for China. In a way, both countries need each other. The arrival of Chinese goods in America reduced the price of goods there and this benefited American companies a lot but America had to pay the price of these cheap goods. Due to cheap goods, millions of people lost their jobs in America. People had to become unemployed, secondly, the investment of Chinese companies also created a threat to national security in America. In 2001, there was a trade of 100 billion dollars between America and China and it increased to 400 billion dollars in 2023. China started making all kinds of goods in its country and then later it became the most important player in the world's supply chain. In a way, the world's supply chain became dependent on it.

Chinese companies have made huge investments in America.

Now let's talk about what America buys from China, and electronic goods are number one in this. China sells electronic goods worth $ 100 billion to America every year. Apart from this, China earns a lot from products like machinery, appliances, toys, games, textiles, chemical products, metals, plastic, rubber,, and furniture. After Canada and Mexico, American products are consumed the most in China. The 2023 report of the US-China Business Council states that more than 1 million people got jobs in America due to exports to China. American companies have been earning hundreds of billions of dollars every year by selling goods in China, while Chinese companies have invested thousands of billions of dollars in America. This matter of earning is two-sided but it is more inclined towards China. Trump can increase tariffs on Chinese products to bridge this trade imbalance.

Telecom company Huawei blacklisted

In his first term, Trump blacklisted China's giant telecom company Huawei citing national security. This time during his election campaign, Trump has promised that he will impose a 60 percent tariff on all goods coming from China. After such a heavy tax, the price of goods coming from China will increase significantly. Will any American spend so much money to buy Chinese goods? The answer is no. If Trump goes ahead with his election promise and imposes a 60 percent tariff on Chinese goods, it will be a big blow to China's economy. China's economy has gone through a critical phase. Its economy suffered a lot during COVID-19. Then, after recovering from the storms like the decline in real estate, weak demand in the country, falling prices, and increasing debt of local governments, it is slowly bringing its economy back on track, and in the meantime, Trump has come in front of it.

China's growth will come down by two points

Investment bank Macquarie believes that if a 60 percent tariff is imposed on Chinese products, the growth of China's economy will come down by two points. This can have a very bad effect on China's economy. China has expected that its economic growth will be at the rate of five percent for the whole year, but a reduction of two percent in it will completely ruin its hopes. Larry Hu, China's chief economist at Macquarie, even says that Trade War 2.0 with America will end China's growth model. Overall, after Trump's arrival, a new trade war is sure to start between America and China on the business front. Trump is a politician later, a businessman first. He looks at things from the prism of profit and loss. To further his America First policy, he will not back down from his intention to increase tariffs. Therefore, the world should be ready to see Trade War 2.0 between America and China.