The US-China Trade War

Running head: ECONOMICS
Economics
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ECONOMICS2
Table of Contents
Introduction................................................................................................................................3
Trade relations between US China.............................................................................................3
Major US imports and exports in China..................................................................................4
Reasons for imposition of tariff.................................................................................................4
Analysis of the trade war............................................................................................................6
Impact of imposed tariffs on market and companies.................................................................7
Impact on the currencies of both the nation...............................................................................8
Impact on China.........................................................................................................................9
Industries that are mostly affected due to trade war................................................................10
Present situation of both the nations........................................................................................11
Conclusion................................................................................................................................11
Reference list............................................................................................................................13

ECONOMICS3
The US-China trade war
Introduction
A trade war is known to take place when countries are known to attack each other’s
trade with quotas and tariffs for protecting their industries. According to the International
Monetary Fund, the two largest economies of the world are People’s Republic of China and
the United States of America. The United States is the largest trading partner of China
whereas China is the second largest trading partner of USA (Ross, 2016). International trade
have helped several parts of the globe while establishing economic relations.
The trade between United States and China have increased rapidly after both the
countries re established the diplomatic relation in the year 1979. The first move in the trade
war had been taken place by the American President where he initiated an investigation on
China. Based on the investigation trump have known to imposed tariff on billions of worth of
goods (Friedman & McCormick, 2015). The US department have also stated that the Chinese
company have violated the US sanctions. However after some time both China and the
United States had put the trade war on hold. The economic relationship between US and
China kwon to have come under increasing strain since 2017, when the President began to
take steps to impose significant amount of tariffs on the Chinese imports. Despite the efforts
taken from International Organization for halting protectionism, the economic nationalism
known to have become a global tendency which is accentuated by the Trump administration.
International trade have helped for connecting several parts of the globe which will establish
interdependent economic relations.

ECONOMICS4
Trade relations between US China
The Chinese US relations refers to the international relations between US and China.
The relationship between both the countries is strong as well as complex in nature. Both the
countries have an extensive economic partnership with each other. The US China trade
relationship is known to support more than 2 million jobs in the United States. However, in
the year 2005, the united states were known to run into a trade deficit with China of about
$200 billion. The rapid integration of China into the global economy known to have posed
problems for the higher income countries like USA (Herrero, Xu & Gary, 2018). China has a
rapidly growing aggregate bilateral trade surplus with the United States. It have been found
out that China will be significantly hurt by the tariff trade war which includes all the
indicators like the welfare, gross domestic product, manufacturing employment and trade.
Major US imports and exports in China
The United States exported around $115.6 billion merchandise to China. China had
been the third largest merchandise export market after Canada. The top merchandise US
exports to China are the aerospace products, motor vehicles, waste and scrap, pol seeds and
grains. About one fifth of US exports to China comprises of agricultural products like
soybeans which had been the US largest single export to China. Most of the United States
largest exports to China comprises of crops or raw materials (Hughes & Meckling, 2017).
The goods that are exported to China are soybeans, civilian aircraft, corn, coal, passenger
vehicles, aluminium materials and copper materials. The economic growth have improved the
purchasing power of the citizens of China, especially for people residing in the urban areas.
The large population and huge amount of foreign reserves makes China a potential market for
the exports. According to a work prepared by the Oxford Economics for US China Business
council, it have been found out that in the year 2015, the United States known to have