China - United States Trade War

What is a trade war??

It is an economic conflict between two countries where countries tries to damage each other's trade by imposing certain restrictions and taxes on their companies.

This kind of economic conflict occurs when a country tries to shield it's domestic companies from foreign competition and trade by taxing imports.

Some terms to understand-
1. Tariff
A tax which is charged by the government on the goods entering or leaving the country.
2. Joint Ventures or JV
It is a business arrangement where two or more parties agree to supply their resources for the purpose of accomplishing a specific task.

3. Intellectual Property Rights
Intellectual property rights include patents, trademarks, copyrights and in some jurisdictions trade secrets.

U.S. - China trade war (biggest trade war in the history)

United States of America and people's Republic of China are engaged in a trade war since 6th July 2018.

The main reason behind this trade war is the mutual replacement of tariffs.
Donald Trump, President of US, unilaterally (without any agreement if others) imposed tariffs(taxes) on $250 billion of Chinese goods. It was done when their trade representative determined that China's trade practices were unfairly limiting U.S. exports and hence the biggest trade war in the history began.

Trump also claimed that Chinese policies put US patent holders at a disadvantage in Chinese markets by encouraging foreign companies to engage inJoint Ventures with Chinese companies.

This gave Chinese companies access and permission to use, copy, improve or illegally develop their technologies.

China then claimed that it has strengthened it's intellectual property right protection and US has ignored it.

Consequences-

Global economic growth is peaking and vulnerable to a trade war.

This trade war which is being initiated by U.S., would do serious damage to global economy.