Assignment on International Relations 1

Running head: INTERNATIONAL RELATIONS
“What issues are most troubling Sino-American relations at the moment? How and Why?”
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1
INTERNATIONAL RELATIONS“What issues are most troubling Sino-American relations at the moment? How and
Why?”
The Sino-American relation is a much talked about economic and political phenomenon
of the world. The two most powerful economies of the world, China and the United States, have
engaged in a trade war since 2018 and that is affecting the global economy in a significant
manner. The war started in 2018 over the issues of rising tariffs and other measures to have a
technological and economic dominance over the global economy (Amadeo 2019). The basic
reason behind the trade war between the U.S. and China is interpreted as the growing supremacy
of populism, nationalism, protectionism and isolationism within the economies and the
competition to practice that dominance over the international market mechanisms (Liu and Woo
2018). The U.S. President Donald Trump announced in July 2018 to impose increased tariffs on
the Chinese products for the alleged unfair trade practices. U.S. had a trade deficit of almost
USD 419 billion with China and in order to decrease that gap, the increased import tariff seemed
to be the most suitable measure (Huang et al. 2018). However, the Chinese government retaliated
with similar measures for trade protection, which led to the trade war. Thus, trade war decreases
the level of international trade. The increase in tariffs on the Chinese imports is meant to protect
the domestic industries of the U.S. The tariffs increase the price of the imports and hence,
imports are reduced and domestic manufacturers get the scope for capturing the market. It helps
to improve their efficiency (Li, He and Lin 2018). In case of the U.S. – China trade war, over
1300 categories of Chinese products were listed for tariff imposition. As a protest to this
decision, Chinese government imposed increased tariffs on 128 products imported from the
USA. Thus, till date, the U.S. applied USD 250 billion worth of tariffs exclusively on the
Chinese imports, and China imposed tariffs worth of USD 110 billion exclusively on the

2
INTERNATIONAL RELATIONSAmerican imports (Wong and Koty 2019). From September 1, U.S. is going to impose another
10% tariffs on some more Chinese goods worth of USD 300 billion. However, the countries are
attempting to come into an agreement to improve their trade relations by taking constructive
measures, such as, increase in the mutual purchase.
The trade war between two powerful economies has significant impact not only on the
mutual relationship but also on the international economy. The purpose of this war was to reduce
the trade deficit of the USA with China, which amounted to $419 billion in 2018 (Huang et al.
2018). After the imposition of the increased tariff, the trade deficit with China reduced by USD
2.8 billion and amounted to USD 35.4 billion and it resulted in the decline of imports of
consumer goods, such as, mobile phones and cars, in the USA (Bermingham 2019). As observed,
China has always sold much larger volume goods to the U.S. than the amount it bought from the
USA. Due to the increased tariff on the Chinese goods the trade deficit narrowed but there is a
larger slump affecting the bilateral trade between the two economies, with lesser amount of
buying from and selling to China by the USA where fall in imports is much greater than fall in
exports. However, it has also been found that the trade deficit in reality widened by 7.1% in spite
of the imposition of increased import tariff by China. Volume of import and exports of the USA
reduced substantially. Hence, where China is moving towards surplus, USA is struggling with
increased deficit in comparison with current growth of China. As reported by Mai (2018), the
decision of trade war acted in favor of China in reality. Surplus of China with the U.S. grew by
10% and amounted to USD $31.08 billion in August 2018. Data from the General
Administration of Customs of China showed that the exports to the USA increased to 6.9% in
August and amounted to USD 44.38 billion, while the imports dropped by 0.9% to USD 13.3
billion, which led to the increase in trade surplus.