BEGINNING OF THE TARIFF CONFLICT

Running head: BEGINNING OF THE TARIFF CONFLICT
BEGINNING OF THE TARIFF CONFLICT
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BEGINNING OF THE TARIFF CONFLICT1
Executive Summary
This report is prepared to focus on the impact of the ongoing conflict between the United
States and China regarding the imposition of tariffs. The study provides a brief about the
various reasons mentioned by the US president behind the imposition of protectionist tariff
policy. It also indicates the reason behind targeting China with tariffs. Afterward, the paper
provides an analysis of the impact of the war on the social and macroeconomic aspects of
both countries. Thereafter, it incorporates all the policies that the government of both nations
has adopted to stabilize the macroeconomic condition of their respective economies. This
paper again includes the possible outcomes that this conflict can lead to in the future.

BEGINNING OF THE TARIFF CONFLICT2
Table of Contents
Introduction................................................................................................................................3
Outlining the tariff conflict amid the United States and China..................................................3
Effect of the tariff war on the social and economic aspects of the countries.............................4
Effect on domestic industries and agriculture of both the economies...................................5
Transferring the effect on consumers.....................................................................................6
Effect on the economic variables of the economies...............................................................6
Policies undertaken by the US and the Chinese government.....................................................7
Future predictions of the trade war on the macroeconomic factors of the countries.................8
Conclusion..................................................................................................................................8
References................................................................................................................................10

BEGINNING OF THE TARIFF CONFLICT3
Introduction
Theories and evidence suggest that tariff barriers lead to trade war and cause hurdles
in the swift flow of international trade operations. This tends to create turmoil in the global
trading market. Thus, when was or conflict emerges between two large countries, it tends to
create a problem for other economies that are in close association with the two conflicting
nations. Similarly, the ongoing tariff conflict between the United States and China has raised
global issues both inside their domestic territory and in other economies of the world. This
conflict originated soon after the announcement of the protectionist trade policy of US
President Donald Trump. Several economies were targeted with the harsh tariffs of the
president. However, China was the main target of the president. As mentioned by the US
president, the tariff was set to support the declining domestic manufacturing industries and
the export sector of the United States. In addition to this, the profitability of the US farmers
was also claimed to take care of by the implementation of this tariff. The trade conflict
generated both positive effects and negative outcomes for both the economies1.
The following report is prepared to evaluate the causes and outcomes of the trade war.
It begins by presenting how the trade war originated between the two countries. Additionally,
the paper includes the impact of this conflict on both the domestic as well as global
operations. The study incorporates the insights of the administration of both the economies
against the negative impact of the conflict. The paper tries to evaluate the future aspects of
the conflict as well.
Outlining the tariff conflict amid the United States and China
The war between the two economies began soon after President Donald Trump
implemented the protectionist tariff policy. This imposition of trade barriers took place at the
end of the first quarter of 2018. The United States has been witnessing a deficit in its trade
account for decades. In 2018, this gap widened to 621 billion dollars2. As a result, the
president took the initiative to control this deficit and restricted increasing imports through
the imposition of tariffs. Initially, the president imposed tariffs on several economies that
includes Argentina, Turkey, Mexico, China and European car manufacturers. The USA
imports a huge amount of merchandise goods and raw material from these countries.
1 Irwin, Douglas A. "The false promise of protectionism: why Trump's trade policy could backfire." Foreign
Aff. 96 (2017): 45.
2 "2018 Trade Gap Is $621.0 Billion | U.S. Bureau Of Economic Analysis (BEA)". 2019. Bea.Gov. Accessed
December 18, 2019. https://www.bea.gov/news/blog/2019-03-06/2018-trade-gap-6210-billion.