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The US-China Trade War Truce Leaves Uncertainty in the Air

The recently announced deal between the US and China hasn’t cleared up the uncertainty that has plagued the global economy lately.

The trade truce has helped to lower tensions for the moment. However, the battle between the world’s two biggest economies still lingers on. What is the current situation and what changes can we expect to see in the future?

What Is the Deal?

The compromise has been called an “agreement in principle” between the US and China. It has yet to be fully ratified. However, we already know that it wouldn’t remove the increased tariffs that each country has applied to products coming from the other.

These tariffs have added billions of dollars onto the cost of buying a wide range of products. This process started in 2018 and has steadily escalated since then. There have been signs of a breakthrough before now, but proposed deals have always fallen through.

The new deal would see the Chinese purchase as much as $50 billion in farm products from the US. The Asian giant is also said to be ready to let more American financial service companies enter their country.

What About Other Trade Wars?

While the trade war between America and China shows signs of cooling down, others appear to be ready to heat up. For example, President Donald Trump has already spoken about adding higher tariffs on Turkish products. The first step in this looming trade war has been to increase the taxes on Turkish steel by 50%.

It also seems that the US is set to add huge tariffs onto European goods. The latest reports suggest that $7.5 billion of cheese, wine and other products from Europe will be hit by this additional tax. There is also a possibility that European cars receive increased tariffs in the near future. 

Trump has said that these additional charges are needed because of the current trade imbalance between America and the EU. For the moment, the President said that he is looking for less harsh ways of resolving the situation.

What Is the Effect of This?

The on-going global trade war and the threat of more of them have added uncertainty to the global situation. Businesses have been forced to increase prices and global supply chains have suffered. This has also led to international debt recovery becoming a more important subject.

While the US and China are the countries that have been most affected, the damage has spread far beyond their borders. Indeed, many financial analysts point to this long-running trade war as being one of the main reasons for the current global economic slowdown.