Trade Restrictions on Australian Economy

Trade restriction refers to artificial restriction on trade of goods and services between two countries. This essay throws light on the effect of the trade war between USA and China on the Australian economy.

Running head: TRADE RESTRICTIONS ON AUSTRALIAN ECONOMY
Trade Restrictions on Australian Economy
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1TRADE RESTRICTIONS ON AUSTRALIAN ECONOMY
Trade restriction refers to artificial restriction on trade of the goods and the services in
between two countries. The trade restrictions take place as a by-product of the aspect of
protectionism. Trade war is indicative of economic conflict that arises on account of
protectionism. In the trade war, the state creates tariff so that it can restrict the growth of
another country (Smh.com.au 2019). Trade wars can lead to a full conflict taking place in
between the states. The nations output the composition so that they can move towards the
autarky position. This essay throws light on the effect of the trade war in between USA and
the China on the Australian economy.
The USA has imposed tariffs amounting to billions of dollars of the Chinese products.
This imposition of tariff has been retaliated by Beijing. The USA has been instrumental in
imposing three rounds of the tariffs on the Chinese goods that has amounted to more than that
of $ 250 bn. It has been found that the duties range from 10 % to 25 % that helps in covering
wide range of the industrial along with the consumer items (Bbc.com 2019). USA has also
imposed tariffs on the import of the goods like the steel and the washing machines that has an
effect on the products coming from China. China on the other hand targets the products that
includes the chemicals, coal along with the medical equipments. The range of the tariff varies
from 5 % to 25 %. It has targeted the products that are made within the Republican districts.
Donald Trump has imposed the aluminium along with the steel tariffs that can help in
offering protection to the industries of America. 25 % tariff has been imposed on $ 60 billion
of the Chinese exports to US that includes aerospace information along with the
communication technology (Smh.com.au 2019). China on the other hand has placed fees on
various kinds of the US products that includes scrap aluminium along with the apples.
Donald Trump has promised that he would impose tariffs on around 1300 Chinese products.
Tariffs aims of pushing back against the demands of China pertaining to the technology
transfer from that of the US companies.

2TRADE RESTRICTIONS ON AUSTRALIAN ECONOMY
The trade war taking place in between USA and China would badly hit the economy
of Australia. Australia would lose around $ 36 billion in the event of a trade war taking place
in between USA and the China. It would also detrimental for the economy of Australia as it
would lose thousands of the local jobs. The tensions taking place in between the USA and the
China will hit the exporters along with the consumers of Australia. The economic shock on
account of the trade war would hamper the global demand and badly hit the farmers. The
exports of Australia that includes resources along with the education sectors would be
exposed owing to the trade war. The falling Chinese currency would weaken the buying
power of the Australians. It would discourage the Chinese parents from sending the children
to the universities of Australia. The slowing economy would reduce the demand for the iron
ore along with the coal.
It has been projected that the tariff would not be escalated beyond current threats from
White House. It is being stated that the GDP of Australia would become 0.3 percent lower by
the end of the year 2022. This shows $ 36 billion drop pertaining to the economic growth
over the five years (Bbc.com 2019). The modelling is dependent on the trade war in between
US and China that would prove to be devastating for the economy of Australia. It would lead
to a loss of the national income of around half a trillion dollar over a course of 10 years. The
trade war would make Australia lose 40 percent of the household disposable income of
Australia.
The job loss within Australia would be crucial and it would push the real wage down
by around $ 16 per week for that of the average worker (Theguardian.com 2019). China can
be said to be biggest export market of Australia therefore it can be said that the effect on local
economy could be catastrophic. The slowdown taking place in China would bring down the
demand of the industrial commodities of Australia. It would hurt the export of the food along
with the services to the middle class of Australia. It has been stated that USA along with the

3TRADE RESTRICTIONS ON AUSTRALIAN ECONOMY
China are instrumental in providing 30 % of that of the current stock pertaining to the direct
investment of Australia. Superpowers in the event of pulling back from the global agreements
would adversely affect the open economy of Australia. Escalation pertaining to US-China
trade war would cost the economy of Australia around $ 36 bn in the next decade. It would
deprive national economy of around 0.3 % growth. Australia would be more affected as
compared to European Union or the Japan. It would make the consumers of Australia pay
more on account of the tariffs. The trade war taking place in between USA and the China
would have a bad effect on the Australian economy.
Trade restriction is indicative of the restriction pertaining to trade of goods between
the various countries. Protectionism paves the path for the trade restrictions in between the
countries. USA has been instrumental in imposing tariffs of around billions of dollars
pertaining to Chinese products. Beijing on the other hand has retaliated imposing the tariff.
The trade war has affected in a negative manner the economy of Australia. It would make
Australia lose $ 36 billion that would cost adversely the economy of the place. It would be
harmful for the economy as it would lead to a loss of jobs in Australia. Tension taking place
would be adverse for the exporters living in Australia. It would be instrumental in pushing
real wage by around $ 16 in relation to the average worker. China can be said to be the
biggest export market pertaining to Australia that would have negative effect on local
economy.

4TRADE RESTRICTIONS ON AUSTRALIAN ECONOMY
References
Bbc.com (2019). US-China trade war in 300 words. [online] BBC News. Available at:
https://www.bbc.com/news/business-45899310 [Accessed 10 Apr. 2019].
Smh.com.au (2019). Donald Trump's trade war will cost Australia's economy at least $36
billion. [online] The Sydney Morning Herald. Available at:
https://www.smh.com.au/politics/federal/donald-trump-s-trade-war-will-cost-australia-s-
economy-at-least-36-billion-20180907-p502dr.html [Accessed 10 Apr. 2019].
Theguardian.com (2019). Australia's economic growth at risk as US-China trade war
escalates. [online] the Guardian. Available at:
https://www.theguardian.com/business/2018/sep/19/australias-economic-growth-at-risk-as-
us-china-trade-war-escalates [Accessed 10 Apr. 2019].