US-China Trade War is Upsetting the Demand and Supply Forces

Last updated on September 5th, 2018

US- China trade is now breaking the barriers of unrealistic fight and has seriously started affecting the producers and consumers at large scale. Ralph Hamers, CEO of the Dutch bank ING, says some customers have shown the early signs that their sales will soon tumble to a new low.

A top banking CEO from Europe cautioned that his clients have started to feel the outcome of global trade tariffs, with production lines being changed and profits warnings being issued.

“We see clients looking to reorganize their value chains. We are making sure that either they are not caught by higher tariffs or moving their production or basically rerouting value chains through which they make their products,” Ralph Hamers, told Annette Weisbach on the sidelines of the Handelsblatt banking conference in Frankfurt. Adding that the indications of sales dropping to a new low must be taken seriously, the costs will thus increase and therefore the product might lose its competitive nature.

Understanding the basics of how any economy functions, it is clear that the demand and supply must go hand in hand. Besides, with trade war the equilibrium of the two forces is pretty uneven. The war also means that the producer confidence to invest and for consumer confidence to consumer is showing some really negative signs.

Last week, the US and China imposed tariffs

on $16 billion worth of goods on each other. Even earlier, both the countries putting their aggressions ahead of sensitivity, rlevied tariffs worth $34 billion on goods in July. Also, as the pattern suggest the marketers are now eyeing fresh round of US tariffs on $200 billion worth of Chinese good, expected to arrive later this year.

Apart from the trade war, destabilization is also caused by factors surrounding Brexit- that is the UK’s vote to exit European Union. The investors have been cautious because of the uncertainty factor looming large in the economy. The top bank CEO, however assured that at this moment there doesn’t seem to be any detrimental effects from Brexit.

The UK economy is growing at steady rate, despite its decision to leave the European Union. The current situation is not alarming, however as we approach 29 march 2019, a lot of factors including the war trade can affect this continuing turmoil.

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