Trade War Between USA and China Topic

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TOPIC: TRADE WAR BETWEEN USA AND CHINA

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Contents
Introduction................................................................................................................................3
China’s response to the trade war..............................................................................................3
Impacts of the trade war on Australia’s economy......................................................................5
Conclusion..................................................................................................................................5
Reference....................................................................................................................................7

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Introduction
International trade is one of the tools of globalisation that connects one economy to the other.
Tariff is defined as the cost to import a good from another economy. Now, since the end of
the year 2018, two of the largest economies of the world USA and China have been involved
in a trade battle wherein both the countries have increased tariff leading to a reduction in the
import and export between the countries. It started with an action from the trump government
that undertook protectionist policy to save the manufacturing companies of the USA. This
paper highlights the responses of the Chinese economy along with its impacts on the
economy of Australia.
China’s response to the trade war
Figure 1: The major trade partners of the USA
(Source: Amiti, Redding and Weinstein, 2019)
China, since the end of the world war, has been one of the major trade partners of the USA.
As per the figure of the year 2016, china was 18% of the overall trade volume of the USA.
This is more than all the other major trade partners of the country. Therefore, the trade war
that has been incited by the USA has deeply influenced the economy of China. Apart from
that it is also known that china is a manufacturing hub of the world and most of the products