What is the purpose of the US-China trade war, and why is it affecting Huawei?
The Head of the United States of America, Donald Trump, is, for quite a while now, after the Chinese. According to President Trump, China is causing the US to lose billions of dollars each month. Trump asserts that he will make America great again by bringing the industry home. Any country needs products and services to export to other countries to earn revenue so they can import the materials they need. And by bringing the industry back to America, President Trump means that he will eliminate the American trade deficit.
As we know, China is the biggest exporter to the United States. The US imported $557.9 billion worth of goods and services in 2018. On the other hand, China is the 3rd biggest importer of US products. In 2018, the US exported $179.3 billion worth of goods and services to China. The trade deficit being $378.6 billion in 2018.
US-China Trade War:
Now, since, July of last year (2018), China and the US are engaged in a trade war that involves the mutual placement of tariffs. The US alleges that China is using “Unfair trade practices”. Furthermore, president Trump is using Section 301 of the 1974’s Trade Act to impose tariffs on the trade with Chinese companies unilaterally. The US also claims that China undermines intellectual property laws and cheats with foreign companies to steal their products, and/or technologies. China responded to these allegations by claiming that it has reinforced the Intellectual Property laws and that the US is ignoring the World Trade Organization’s rules and its own peoples call to decrease tariffs.
What is actually happening is that the US sees the growing economy, industry, and technology of China as a threat to the US, which honestly, it should. Though, other countries like Japan, Canada, Mexico, and E.U. countries also allege China for market distortions.
The reasons behind the tariff sanctions are that the US, Japan, and EU feels that there shouldn’t be any more unfair subsidies of countries that create non-competitive conditions through, leak and theft of intellectual property, state-owned enterprises, and local content requirements, which means China by all that.
Why? Well because Huawei’s growth rate has been an astounding 50% and it has gained the value of a major player in the technological world in just a few years. It is the World’s Number One telecom supplier and the World’s Second Largest smartphone maker. The Chinese manufacturer’s troubles with the US is that it is a Chinese company. The US fears that the Chinese government will spy on them using Huawei’s products and technology. Huawei is not the only company that is barred from doing business with any US company. There are ZTE and also other 70 affiliates on the list. It caused many companies including, Google and ARM, to stop their business with Huawei. It has caused trouble for Huawei phones as they run Android. Many app developers like MSpy UK worry about how they are going to update their apps on Huawei without the App store.
Additionally, some claim it is also a 5G war. With Huawei being the best player in the 5G game right now and America trying to develop its own 5G. With Huawei out of the scene, it is quite possible that America will win the 5G race. If that happens, it is estimated that it will create 3 million jobs and add $500 billion to the GDP. As mentioned above, the US’ current deficit is about $500 billion.
What do you think about this trade war? Is it really just about the trade, or are there other factors involved too? Let us know in the comments.