Question

Research the current trade war with China. Why has the Trump administration decided to stick it to China ---all of a sudden? How did we get here? What does it mean for both sides of the dispute? Who's “winning”? How is affecting consumer prices and/or current marketing practices?

Answer 1

The President decided to stick with China all of a sudden because the United States was running large amount of current account deficit with China and the country's products were being replaced by products from China which was hurting the domestic production and was also reducing labor demand increasing unemployment rate in the country. Thus, Trump decided to stick with China to correct the huge deficit in its current account and also reduce unemployment rate of the nation. It was dome by increasing tariff rate of Chinese products imported in the US which has increased their prices significantly and reduced demand for Chinese products.

The only winners in this case are domestic producers of the US who will see an increase in their production level and also sales because of lack of competition from Chinese products in the market. On the other hand, it has increased prices for the consumer due to lack of competition and reduced consumer surplus in the market. The current marketing practices are also affected because of lack of competition in US.