TARIFF IMPOSITION LEADING TO TRADE WAR

Running head: TARIFF IMPOSITION LEADING TO TRADE WAR
TARIFF IMPOSITION LEADING TO TRADE WAR
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TARIFF IMPOSITION LEADING TO TRADE WAR1
Executive Summary
This paper aims to evaluate the influence of the trade war between the US and China on the
economic and social aspects of both economies. The paper begins by presenting an overview
of the trade war. It provides the reason behind the implementation of tariff policy by the US
president in 2018. Furthermore, the analysis includes the impact of this war on the
production, business and consumers of both the economies. It also portrays the effect on the
international market. Additionally, the paper informs about the policy under consideration to
deduce the impact of the war. The author’s determination of future effects of the wars is also
mentioned in the analysis. Therefore, the paper solely aims at providing the present and
future consequences of the US-China tariff war.

TARIFF IMPOSITION LEADING TO TRADE WAR2
Table of Contents
Introduction................................................................................................................................3
Overview of the US-China trade war.........................................................................................3
Impact of the war on the society and economy of the US and China........................................4
Impact of war on the producers and domestic business.........................................................4
Impact on buyers budget and farmers income.......................................................................6
Impact on the domestic economy and international trade......................................................7
Policies of the government of the US and China to negate the crisis........................................8
The possible impact of the trade war on the health of the US and China..................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

TARIFF IMPOSITION LEADING TO TRADE WAR3
Introduction
Experiences from the past suggest that trade war tends to create severe turmoil in the
market, whether it is a domestic operation or global movements. There are both advocates
and criticizers of the effect of the tariff war. They tend to present contrasting views regarding
the effect of the trade war. Similarly, the trade war between the United States and China has
already created several problems in both the domestic and global economic functions. The
trade war was inaugurated in the year 2018, when President Donald Trump announced the
imposition of tariff on the imports from China. However, China is not the only country that is
targeted with the harsh tariffs; several other countries were targeted by the harsh tariff
structure of the country. This protectionist trade policy is designed to support and elevate the
productivity of the domestic manufacturing and agricultural sector of the United States (Di
Luft and Zhong 2019). As a result, the trade war began and affected the operation of both
economies. Advocates claim that the war provided several benefits to the agrarian sector and
certain domestic producers of the US economy. However, there are adverse effects of the
conflict that has affected the business operation and wealth account of the country
(Unctad.org 2019).
This study is designed to present an overview of the continuing trade war between the
United States and China. Relating to the trade war, the paper includes the possible impact of
the war on the economic operation and the society of both economies. Additionally, the paper
includes the social and economic policies adopted by the government of both countries to
overcome the effect of the crisis possessed by the war. Lastly, it tries to incorporate the
possible outcomes of the war on all the macroeconomic variables at both the domestic and
international levels.
Overview of the US-China trade war
The trade war originally began in March 2018 when President Donald Trump decided
to adopt a protectionist trade policy to support the deteriorating business structure of the US
economy. The tariff is imposed on several economies of the world such as Argentina, Turkey,
Mexico, and China (Irwin 2017). Except for China, all the other economies of the world were
later exempted from the harsh tariff barriers of Trump. Turkey and China continued to stay
under the tariff imposed by Trump. The tariff is designed to overcome the gap between rising
imports and falling exports of the US economy (Noland 2018). Moreover, the continuous use
of imported and relatively low-cost machinery neglected domestic production. This raised the