The US And China Trade War

Running Head: Economics
0
International Business
US-China trade war
3/4/2020
Essay: The US and China Trade war

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Trade wars are good and easy to win” was stated by the U.S. President Donald Trump on Friday
and he has twitted this thing. He has given this statement after announcing the tariffs on the
imports of aluminum and steel (Hosain and Hossain, 2019). The rates which he has applied on
the steep tariffs on the imports are 10% on aluminum steel and 25% on imported steel. Due to
this trade tariffs, billions of the dollars was loosed by the USA while trading with the other
country.
For Example: If the US is trading with any country when they are billion are down such as $200
billion with another country and that country gets cute, and then nobody will trade with the
country. This was the idea Trump has that we win big if they don’t trade anymore.
Wall Street in Europe and Asia has feared the trade war and this was impacting the share price of
the steelmakers. The share price has shifted hard and US market manufacturers' supply will also
get hard (Itakura, 2020). This major impact of trading has been seen in the decline of the shares
and indexes extended their losses. The 400 points were falling with the Dow which leads to the
unintended consequences.
Trump thought that by raising the tariffs the American jobs will be safeguard but as per the other
economist many jobs will be destroyed such as in the field of the auto and oil industries as the
increasing price of the steel and aluminum is impacting the curb on imports but chain air
predicting this thing as the harm (Waugh, et al., 2019). China is thinking if the trade tariffs will
be imposed at the high rates then the countries will not only get the loss but many jobs will
decline. If the examples of the US are followed by the other countries of imposing the high trade
tariffs then the other countries also have to suffer the harm.
The two big countries of the nation are US and China are fighting with the trade wars and it was
started on the 19 June. Trade war has affected both the countries and consumer of both countries
has to paid higher prices (Sussangkarn, 2020). It is an economic conflict that was raised between
the two countries due to the increase in trade tariffs. The trade war not only affected the countries
in a bad manner but also affecting the consumers, companies, and economies.
The US has started the trade war by putting the high rate of tariffs on China. The country US has
claimed China that they have theft the US Intellectual property. Trump thought that by imposing

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the high rates of tariffs on steel and aluminum, the country will become much stronger and their
nation will be in a top manner.
China and the US are very much linked with each other in terms of trading partners as there were
many goods and services which were traded by the two largest countries. In China US companies
are getting cheap labor, the cost of the production is lower so it was negatively impacting the
export market of the US. China owes a lot to the US as its foreign debt is very high.
The US not only imposing the high tariff rates but it is also putting high barriers of the trade on
China. To remove the US trade deficit, Trump always advocates the high tariffs and save the
country from ripped off. But later on, the country's the US only facing major issues by imposing
the tariffs such as issues related to the struggling of the manufacturers and farmers (Evans,
2019). The prices for the consumers for buying the goods and services have increased. The
burden on the domestic manufacturers has increased as due to the unfair trade practices the local
manufacturer has to suffer more. Even the stock market of China and the US get unstable due to
the trade deficit.
The tariffs are announced on the washing machines and solar panels. From China, 8% of the
solar panels are imported and residential washing machines are about $1.1 billion in 2015. From
China, the US imported steel about 3% and Trump has imposed the tariffs all over the country on
steel and aluminum (Liao and Kannan, 2014). The US has imposed tariffs on the various goods
and services of china such as medical devices, aircraft parts, satellites, flat-panel decisions, and
the other different weapons.
The investment restricts were imposed by the US on China and 25% tariffs are imposed on the
$50 billion of the Chinese goods which are significant to the technology. The trade talks are
discontinued if the trade sanctions are imposed more on china and they will not do the trade with
Washington. Later on, Trump also clarified that 25% tariffs on the exports of the Chinese worth
$50 billion (Sussangkarn, 2020).
Now China has accused this war and they were also started responding to similar tariffs for the
US imports. The commerce ministry of China is responding to the US trade war but within the
few days, the US had declared other tariffs of 10% on the Chinese imports worth $200 billion if
china raised any issue against these US tariffs (Bhala and Stumo, 2018).

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The war of trade has begun and it was not only affecting these two countries but also impacting
the markets of the number of nations. By imposing the tariffs on the imports and the exports of
the goods and services, the supply chain is getting disrupted and also rippling around the globe.
China has started retaliatory tariffs on the goods of the US at a similar value (Bown, 2019). The
war has taken place and it was continuing as the tariffs were accounted at the rate of 0.1% of the
GDP. In 2018, 10 July, the additional 10%tariffs are imposed on the $200 billion goods of the
china. After the two days, China has also done the same as they retaliate the additional tariffs
worth $60 billion American goods.
The effect of this trade on the US economy is that due to the uncertain trade war the stock market
of the US has caused turbulence. The conflict has raised and investors have rattled the stock
market. In the year 2018, the 600 points have been declined in the share market so Dow Jones
argues to the trade war. Due to the increasing tensions between the US and China trade war
presidential election will also be affected (Heginbotham, et al., 2015).
The major impact of the trade war has been seen in the foreign direct investment as it is slowed
down the market. The European economy has hurtled badly with the trade war and the relation
between Germany and china also gets affected. The economy of Canada also gets affected badly
by the trade war. The manufacturing performance gets weal in countries like Britain, Japan,
Germany, South Korea, etc. The result of the trade war has also seen in the declining demand for
the semiconductor devices and it is seen that it has declined with 12%.
Although the negative effects of the trade war were much more the positive impacts were also
there of the trade war in that some countries have benefited economically. There was a gap
between the two economies which were filled by the increasing exports to China and the United
States. The national interest of the countries is getting protected through the trade war and the
major advantage has been seen to the domestic business (Svetlicinii, 2019). Due to the trade war,
the international countries don’t export much so domestic business expands their productivity.
The biggest industry which gets affected due to the tensions of the trade war is the U.S.
automotive industry as by increasing the tariffs on the US by China, the automobiles industry
gets benefited as they have entered the much retaliation to U.S. tariffs.

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Due to the trade tensions, the major benefits which get are Vietnam and the other exporters
which are of low cost. The global supply chain is distorted with trade conflicts. From the
escalating US-China trade war, countries like Vietnam get benefited as the distributors over there
adjust to buy and sell the goods (Jackson and Shepotylo, 2018). Some companies are distributing
from China to Vietnam so the investment in Vietnam is growing. In comparison to 2018 to 2019,
the US has imported more to Vietnam with the more 40%. The economy of Vietnam has 7%
upgraded from the last year due to the account for a whopping 26% of the GDP.
There are some of the economies which are feeling the pain of the trade war such as the
European Union. The major long term consequences have been seen in the EU economy as the
fresh stimulus was coming soon over there (Wallin and Åström, 2018). The future economic
growth of the EU has declined as the economy of the EU is highly reliable on the trade and due
to conflict trade war; the slowdown in the trade has been seen. The major trading partners of the
US are the EU and the Draghi which has major adverse effects as they were the largest trading
partners.
Due to the trade war between the countries, there were some reactions also which were seen such
as trump policies have affected the consumers of the American. The trade war is reporting some
domestic issues which are censored in China (Huang, et al., 2019). The US also has some
domestic reactions as every political and every region in the country should support the actions
of the Democrats, Republicans American. The global recession has caused due to the US-China
trade war so it was impacting badly in the economy.
The inflation in the US economy has caused due to the import tariffs. The corporate profits of the
companies have declined which resulted in the declining market share and due to the lower profit
margins the trade disputed has increased. China has offset some of the impact of the tariffs to
lower down its own profit margins (Heginbotham, et al., 2015).
One country is imposing protectionist to another one so this war has an adverse impact. The
American economy has slow down and the growth of the job in the country is also declining.
When the opportunities for the job in the country will be lower people will migrate from one
place to another and it will also result in the increasing poverty in the country. The living

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standards of the people have also declined due to the trade way as their source of income gets
reduced.
The demand for American products has declined so due to the trade way, the manufacturing
industry is majorly struggling. The decline in the job growth has been seen and the expectations
were slowing down in the non-farm payroll. The recession has come in the country and due to
the trade war, shrugging has been seen in consumer spending and retail sales. Due to this trade
war, the countries are not economically affected but also there political relations get lower down.
The GDP growth of the US and the China economy has slowed down and the term recession has
taken place in the country. The major manufacturers which have struggled through the trade war
are steel. The uncertainty of the market is there as the share market has declined (Wallin and
Åström, 2018). So there were no smaller companies which are investing in the other business as
the uncertainty level is high. The growth of productivity is also slowed down as there was the
weaker in the CAPEX. The real investment and the non-farm productivity are also declining
which is affecting the economy.
The major verse of the collapse of the economy is rapidly increasing in exports. The major suffer
due to trade war has to be done on the industrial and the smaller business. the exports set to be
plunge as the trade war was hampering the confidence of the business and the exports which
result in the intensifications.
The high rate of quotas and tariffs are imposed on the imports and form trade protectionism
which reduces international trade. By imposing the tariffs, the domestic producers get a
competitive advantage (Kwan, 2020). The tariffs have increased the price of the goods and
services which has dresses the economic growth of the countries and also triggers inflation.
The export market if the US is also impacting badly as in china there are cheap labors and the
production cost is also lower. The united states also get benefited from oil prices as they were
decreased so the country was enjoying the import. The largest import partner of the US is China
which was valued at the $505.5 billion (Kwan, 2020). Among that percent, the total number of
the import of the US is 21.6%. In the US treasury securities also china holds the largest part and
they are the largest creditor of the US. As per the figures of 2018, the debt was over 21% of the
US overseas.

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The GDP rate of china is continuously declining and has negative impacts on the market. The
short-run has been seen in the balance of the trade as it was increasing the unemployment rates
which have affected negatively the domestic demand of China. The company has to cut the cots
at the time of the recession so they choose the option to eliminate the employees which creates
unemployment in the economy (Jackson and Shepotylo, 2018). To remain the profit at the higher
rate the company has to layoff which is the only option left with them.
The US economy has positive effects on the slowdown of the Chinese economy as the prices of
the oil have to get decreased and china is the biggest oil importer (Marchant and Wang, 2018).
The US was the second-largest oil importer so the imports of the oil get decreased and create the
silver lining. The bottom line of the other economy also gets affected by the decrease in the
domestic demand for China.
The financial market has badly get impacted the US-China trade war as there were the
ramifications for the consumers in the debts, savings, and spending power. The industrial
materials and the supplies get affected with the potentially higher prices so raising the price
affects the products of the American (Vlados, 2020). The burdens of the consumer can be solved
by reaching the deal of china and the United States. The stock market turn moil has declined and
the interest rate has got slower. The Federal Reserve has lowered the interest rate so that people
could take the loan and enhances their business in the declining market. Loans and mortgages
have become more affordable.
The currency war has also been raised and it becomes very complicated and complex to
understand the sentiments of the investors. In the global world, imports and exports have
declined and loss has a great impact on the economy (Liu and Woo, 2018). The venture capital
investment between the two nations is $13 billion to the five years which lowers the amid the
trade war. So it can be said the major financial impact has been seen in the domestic companies
as due to the decrease in the competition they have increased their prices and earning a huge
profit.
So, it was evaluated from the essay that the US and China trade war is the second largest trade
war of the nation which has impacted badly not to these two economies but to another country
too. This major impact of trading has been seen in the decline of the shares and indexes extended

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their losses (Heginbotham, et al., 2015). The 400 points were falling with the Dow which led to
the unintended consequences. The US has imposed tariffs on the various goods and services of
china such as medical devices, aircraft parts, satellites, flat-panel decisions, and the other
different weapons.
Some companies are distributing from China to Vietnam so the investment in Vietnam is
growing. In comparison to 2018 to 2019, the US has imported more to Vietnam with the more
40%. The economy of Vietnam has 7% upgraded from the last year due to the account for a
whopping 26% of the GDP. In China US companies are getting cheap labor, the cost of the
production is lower so it was negatively impacting the export market of the US. China owes a lot
to the US as its foreign debt is very high.
The largest import partner of the US is China which was valued at the $505.5 billion. Among
that percent, the total number of the import of the US is 21.6%. In the US treasury securities also
china holds the largest part and they are the largest creditor of the US. As per the figures of 2018,
the debt was over 21% of the US overseas. The GDP rate of china is continuously declining and
has negative impacts on the market. The future economic growth of the EU has declined as the
economy of the EU is highly reliable on the trade and due to conflict trade war; the slowdown in
the trade has been seen. The major trading partners of the US are the EU and the Draghi which
has major adverse effects as they were the largest trading partners.

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