Political and Economical issues that impacted each other

The world has seen numerous occasions when Politics influenced the economy and vice-
versa. Four of these issues are:

 US CHINA TRADE WAR

 REDUCTION IN THE CORPORTE TAX IN USA
 INTRODUCTION OF GST
 THE LOAN WAIVER SCHEME BY THE GOVT.

THE US-CHINA TRADE WAR

On July 6, 2018 U.S. President Donald Trump imposed tariffs on $34 billion worth of Chinese
goods, which then led China to respond with similar sized tariffs on U.S. products. The
Trump administration said the tariffs were necessary to protect national security and the
intellectual property of U.S. businesses, and to help reduce the U.S. trade deficit with China.
Trump had already, in August 2017, opened a formal investigation into attacks on American
and its allies' intellectual property, the theft of which had been costing America alone an
estimated $600 billion a year.

The United States and China seemed to have reached a breakthrough previously, only for
that agreement to come quickly undone. As The Diplomat reported previously, on May
20 U.S. Treasury Secretary Steven Mnuchin declared the trade war to be “on hold.” But
just nine days later, a White House statement declared the U.S. intention to place a 25
percent tariffs on $50 billion worth of Chinese imports, focusing on technology products.

Timeline:

On January 23, 2018, President Trump placed a 30% tariff on foreign solar panels, to be
reduced to 15% after four years. China, the world leader in solar panel manufacture, decried
the tariff. That same day, tariffs of 20% were placed on washing machines for the first 1.2
million units imported during the year. In 2016, China exported $425 million worth of
washers to the United States.

On March 22, 2018, President Trump had the United States Trade Representative (USTR)
apply tariffs of US$50 billion on Chinese goods. He relied on Section 301 of the Trade Act of
1974 for doing so, stating that the proposed tariffs were "a response to the unfair trade
practices of China over the years", including theft of U.S. intellectual property.

On April 2, China responded by imposing tariffs on 128 products it imports from America,
including aluminum, airplanes, cars, pork, and soybeans (which have a 25% tariff), as well as
fruit, nuts, and steel piping (15%).

On May 20, it was reported that Chinese officials had agreed to "substantially reduce"
America's trade deficit with China by committing to "significantly increase" its purchases of
American goods. As a result, Treasury Secretary Steven Mnuchin announced that "We are
putting the trade war on hold". White House National Trade Council Director Peter Navarro,
however, said that there was no "trade war," but that it was a "trade dispute, fair and
simple. We lost the trade war long ago.

On June 15, Trump declared in a short White House statement that the United States would
impose a 25% tariff on $50 billion of Chinese exports. $34 billion would start July 6, with a
further $16 billion to begin at a later date. China's Commerce Ministry accused the United

States of launching a trade war and said China would respond in kind with similar tariffs for
US imports, starting on July 6. Three days later, the White House declared that the United
States would impose additional 10% tariffs on another $200 billion worth of Chinese imports
if China retaliated against the U.S. tariffs.

COUNTER MEASEURES BY THE CHINESE

China retaliated almost immediately with its own tariffs on $50 billion of U.S. goods, and
claimed the United States had "launched a trade war." Import and export markets in a
number of nations feared the tariffs would disrupt supply chains which could "ripple around
the globe.

China unveiled tariffs on $3 billion of U.S. imports in response to steel and aluminum duties
ordered by Trump earlier this month. The White House then declared a temporary
exemption for the European Union and other nations on those levies, making the focus on
China clear. Though Beijing’s actions so far are seen by analysts as measured, there may be
more to come.

GLOBAL IMPACT

As the conflict broadens, shipments are slowing at ports and airfreight terminals around the
world. Prices for crucial raw materials are rising. At factories from Germany to Mexico,
orders are being cut and investments delayed. Suppliers to Apple Inc. were among the
hardest hit in Hong Kong and mainland markets on Friday, as investors focused on potential
losers from the trade spat. U.S. farmers are losing sales as trading partners hit back with
duties of their own.

In anticipation of tariffs going into effect, stock prices in the U.S. and China sustained
significant losses for four to six weeks prior. Trade war fears had led to a bear market in
China where by late June the total value of the country's stock markets was 20% lower than
it had been at the beginning of 2018 when it reached record levels.
The move caused further turmoil on markets already unsettled by Italy’s political crisis. The
Dow Jones industrial average dropped 260 points, and the S&P 500 and Nasdaq also fell, by
0.7% and 0.3% respectively. Shares of companies likely to be affected by tit-for-tat
responses, such as Harley-Davison, the iconic motorcycle manufacturer, and automobile
manufactures on both sides of the Atlantic, also fell. The Euro, Mexican peso and Canadian
dollar all dropped versus the dollar, though the Euro recovered in later trading.

FUTURE IMPACT

The European Union and China are teaming up to rewrite global trade rules, their latest
move in a wider fightback against the trade war Donald Trump has launched as part of his
"America First" agenda. The two powers usually find themselves on opposite sides in
economic disputes. The EU has long blamed China for flooding its markets with cheap steel,
and has imposed its own steep tariffs on Beijing. But on this issue they have been driven
together by Trump's increasingly aggressive push to levy tariffs both on rival powers - like
China - and also longtime allies like the EU.

China might also pursue legal action against the U.S. at the World Trade Organization in
response to the U.S.’s planned tariffs on steel and aluminum imports, the statement said,
and called for dialog to resolve the dispute. With Beijing’s response to the tariffs aimed at
intellectual-property abuses -- enacted under Section 301 of the U.S. trade law -- as yet
unannounced, the relatively limited value of trade curbs may be just the first stage of its
response. Later, China’s Commerce Ministry said that a comprehensive plan to counter the
301 action has been prepared.

It is hard to overstate the damage that the U.S.’s behaviour is doing to international
relations. The U.S. will no doubt get what it wants from Canada and Mexico, and it may even
succeed in wringing some concessions out of the EU. But in so doing, it will alienate its
closest allies. It may gain trade advantage, but at the cost of trust and friendship