The US waged trade war against China was started due to several allegations against the Chinese government and traders. These allegations stated that China has been stealing intellectual property and that its economic policies favor their domestic companies unjustly. The resulting policies on the end of the US government doubled the tariffs on Chinese goods to influence trade. In addition, the US has demanded China to purchase more goods from the US to balance the trade deficit (Palumbo, & Nicolaci da Costa, 2019). The trade deficit is pronounced through the fact that the US purchases more goods from China than China purchases from the US. The trade deficit is a factor that can bring detrimental outcomes to a country’s economy. For example, it diminishes the number of workplaces in the country, which lowers the income brackets for people (Reinbold, & Wen, 2018). Lower income brackets, in turn, significantly decrease the country’s national savings.
The main areas of business that the regulations would influence are telecommunication equipment, computer parts, and furniture. The implications for the prices are that with the rising costs of the equipment, consumer prices will rise as well. The key pieces of information that a company in the before mentioned categories need to know vary greatly. First, it needs to know the percentage of the equipment imported from China. Second, it needs to find out if or how the responding trade tariffs will affect its market. Third, the company should consider which competitors in their sphere do not use imports from China and how they can stand against these now-privileged competitors.
Palumbo & Nicolaci da Costa (2019). Trade war: US-China trade battle in charts. BBC News.
Reinbold, B., & Wen, Y. (2018). Understanding the roots of the US trade deficit. The Regional Economist, 26(3).