It has already been 1.5 years since US President Donald Trump signed a memorandum, introducing tariffs to about $50 billion’s worth of Chinese goods in the United States.

Ever since then, the trade war has been going back and forth, damaging the economies of both countries as well as third party jurisdictions who had pretty much nothing to do with the conflict at all.

Recent outcries from Australia confirmed that the trade war is getting out of hand and hurting the world economy, rather than just the two countries involved in it. But it doesn’t seem like a deal is anywhere close. Trump may continue saying that he’s been having great calls with Xi Jinping, but the fact that nothing’s changing claim otherwise.

It’s unlikely that either of the countries will go for a compromise as it would undermine their authority. And being a world superpower it’s simply unaffordable to sacrifice influence over monetary gain.

And who suffers the most at the end? The American, Chinese, European, Australian and pretty much any other country’s consumer. Goods get increased prices even if they’re necessities, and families have to adjust to it with their paychecks which are already lagging behind the inflation.

Currency depreciation cannot be a focus

One of the main reasons why tariffs are implemented in the first place is to help the government somehow gather funds from international trade. But in this case, it’s all about discouraging a local population to buy fewer Chinese products and opt for American-made ones.

But here’s the issue. Most of the products being produced in the USA use Chinese-imported parts, therefore increasing the prices not only on imported products but also locally produced ones.

This forces the population to spend more, thus increasing the rate at which people get near the poverty line.

In order to somehow compensate for this, the government tends to print more money to ensure that salaries can increase and most of the population can get their hands on daily necessities. But, in the process of printing this money, the currency suffers inflation, thus decreasing in value. Even though people may have their income increased to $70,000 a year, their purchasing power would still be the same as it was with $60,000 a year.

But for some reason, many economists believe that inflation is going to help the economies rather than damage it. Which, no matter how painful it may sound, is more or less correct.

But this is just the short term and individual level. We need to consider the big picture. This includes the economy in general. Having a “cheaper” currency ultimately translates into cheaper products for foreign nations to acquire from said country.

This helps increase the rate of exports, thus allowing funds to start funneling into the country, increasing the economy and sooner or later, strengthening the currency once again.

It’s extremely advantageous for the US to have a slightly weaker USD as that would help their new exporting plans.

Looking at it this way, the tariffs do indeed make some sense. It helps depreciate the dollar slightly while appreciating the CNY. And a strong Yuan is China’s biggest nightmare.

So, who will toss in the towel first?

It doesn’t seem that tariffs are a serious political discussion in the United States right now. Most of the population agree that reviving US manufacturing would introduce jobs and strengthen the economy. But in order to do so, a distancing from Chinese products needs to be somehow guaranteed.

As things stand right now, the USA is holding the upper hand and will not go lightly with the tariffs. The only way these tariffs can stop is if a newly elected president in 2020 will start the de-trumpization of the US and purge these policies along with many others.