The historical conflict between China and Taiwan has taken uglier turns in recent times. Tensions have massively heightened because US House Speaker Nancy Pelosi visited Taipei. During her one-day visit, Pelosi met Taiwanese President Tsai Ing-wen along with other top officials of the island nation. She also reaffirmed America’s commitment to Taiwan. 

China is Taiwan’s largest trading partner and has reacted sharply to this visit. With bilateral trade worth $273 billion last year which accounted for 33 per cent of the island’s total trade, globally, the current situation can be alarming. Warning that Washington will “pay a heavy price” for its “mistakes”, Pelosi’s visit has also stirred a rift between China and the United States because China claims Taiwan as a part of its territory. 

History has it, that Beijing often targets Taiwan’s agricultural industry as punishment for political issues. This time, China has also decided to hold almost a week of military exercises, including live-fire drills in six zones surrounding Taiwan. These drills are accompanied by trade curbs. Beijing halted some trade with Taiwan in retaliation and more disruptions are likely as political tensions intensify between both nations. 

Citing excessive pesticide residue as the reason, China suspended some fish and fruit imports from Taiwan. Exports of natural sand which is used in construction have also been banned. Though from an economic perspective Taiwan might be able to sustain these bans, the military exercises have posed to be a bigger threat particularly because of their adverse impact on shipments. In addition to this, China’s Taiwan Affairs Office has declared that it would suspend imports of grapefruit, oranges, lemons and citrus fruits. 

Taiwan media has reported that China banned food imports from more than 100 of its suppliers. In fact, the Chinese customs data show that Beijing has blocked the imports of nearly 2000 food items from Taiwan. However, it is still unclear when these imports were suspended. 

Further, tensions are ablaze over the impact of this trade war on Taiwan’s semiconductor industry. Due to its significant global contribution, traders and analysts are worried about an escalation in these tensions and its impact on the inflation levels and the global supply chain. 

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