Tariffs are basically put forward by the Trump administration because Chinese goods are flooding the American and World markets at cheap prices. This is a threat to the American and World economies because their own industry is waning away slowly and it may pose a challenge to the labor force and industries of America. We try to solve the issue in this article.
Every Economy has to play by its strengths
If the world started putting tariffs and producing goods within their own country, it would be neither good for the world economy nor the country itself. How? If Country A produces a product for 10 dollars and Country B produces a product for 25 dollars, Isn't it better for Country B to get goods from Country A for 10 dollars? Isn't it efficient? The reason they won't do is Country B has a labor force and industry that depends on the price of 25 dollars to survive. How to solve this issue? Country B has to trade with Country A with another product they are good at producing at a lower price than Country A. Then both will benefit. Everyone gets products at cheap prices. The world economy flourishes. This is called globalization. Every economy has to play by its strengths. Chinese strength is manufacturing and American and European strength lies in Intellectual Property Innovation. Everyone has to play by their strengths.
Reason for President Trump's Tariff Plan
The reason for President Trump's Tariff Plan is there is only one-way trade happening between China and America. Americans are importing products from China at a larger scale than exports. These products are cheap and American businesses can't compete with the price of Chinese products. It affects their foreign reserve. Trade imbalance arises because of that issue. If this issue persists, in the future America may be in huge debt to foreign countries and it will affect the whole world economy because America is the largest economy in the world. A huge amount of trade is happening with America.
Joint Venture with American Companies
Trade balance can be brought between America and China only if there is a Joint Venture between these country's industries. Joint Venture brings both countries' industries to work in tandem and increase world trade. It is beneficial to both countries. We can make both these countries come together by sharing the Intellectual Properties of American workers and the Manufacturing abilities of Chinese Companies. This will result in producing great products at a lower price, which results in the efficiency of producing goods. The World Economy will grow if these two countries share their abilities and form a joint venture.
American and Chinese Companies' Strengths
Americans can produce great IPs, and have good Design, Engineering, and Software Skills. They have skills which is best in every field from Pharmaceutical, Electronics, and Programming to name a few. Chinese Companies are best in producing Batteries, Hardware to name a few. Basically, Americans have intellectual skills and the Chinese have more manufacturing skills. If both of them come together, it will be beneficial to the whole world economy. The Chinese companies will be able to put all their workforce to work, giving all the Chinese employment. This will improve the economy of China as a whole. Americans will be able to execute their inventions at a faster pace in a cheap and efficient manner. This will not only grow American economy but the whole world economy.
No Tariff or very low Tariff only for Joint Ventures
It becomes imperative that both countries' industry leaders agree to the joint venture between them. Otherwise, America has to put tariffs and protect its own industries, which is very inefficient for the world economy, even for America itself. But Trump will have no option to proceed with Tariffs. Because in the future, America will be in huge debt and trade deficit.
Geopolitical tension's safety net
If America thinks there could arise some geopolitical tension with China, it only has to add other partners for manufacturing like India, Vietnam, or Thailand. It should not go back to manufacturing everything by itself, as it is an inefficient way of doing trade and business. Joint Venture between American and Chinese companies itself ensures that there will be no tension between the two countries, as their trade will be affected otherwise.
Unskilled American Workers
It is recommended that American unskilled workers concentrate on the Services sector like Retail shops, Hotels, Tourism, Food and beverages, and so on. Because with every Skilled Worker getting Paid well, he nurtures many unskilled laborers like child care and domestic workers. This will increase the salary of the unskilled workers.
Affordability
When everything is produced efficiently in every country through joint ventures, the affordability of products will increase manifold. Even the lowly-paid American Worker will be able to afford good products. If all the products are produced within the country, their price will be high, and not all will be able to afford them. This is called doing business inefficiently. World Trade and Globalization are keeping the price low for everyone, and improving the standards of all the citizens of the World.
Advantages for Chinese Companies
Chinese companies can increase the production of goods through advanced technology, which will increase their output and economy as a whole. Economic progress will come with new American industries venturing into China. They can now set foot on high-tech products, got by putting Joint Ventures with American and European Companies. Now Chinese do produce more products, but they are cheap and of lower quality. If they put joint ventures with American and European Companies, their products will have more value and profits. The credibility, dependability, and durability of its products will increase along with great design for its products from Americans. This will hugely increase the trade and business of Chinese companies.
Defense Sector
The Defense Sector of any country cannot depend on efficiency or inefficiency and should be self-sufficient. Every country should procure its arms and ammunition indigenously as much as possible. Defense Technology cannot be shared.
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