Trade Protectionism Institutional Affiliation

Running Head: ECONOMICS 1
Trade Protectionism
Institutional Affiliation
Name
Date

ECONOMICS 2
Introduction
In the year 2018, the president of United States Donald Trump imposed tariffs on the
chosen imports of steel and aluminum arising from various nations under the act of 1962.
President Donald Trump put tariffs on various commodities that are imported from China to US
in order to alter the rational property rights(Xiong∧Beghin , 2017). The president further warned
to put enforcement tariffs about the United States imports arising from China in case the country
does not respond towards the changes of its practices, programs and intellectual property rights.
Impacts of the rising tariffs
In this context, there is no real winner in the US-China trade war. This is because the
countries that face new tariffs get reductions in their real exports and the growth domestic
product (Mehling et at , 2018) . It is evident that other nations are faced directly in relation to the
demands that are weaker about their own exports whether from supply chain or towards the
economic growth around the globe. In addition, such effects go beyond the possible gains from
trade diversion in order to prevent tariffs( Xiong∧Beghin , 2017).. Also, by considering the
scenario of protectionism, the global growth domestic product that is reduced to 0.1% in 2019.
Furthermore, the world trade faces the environment that is more protectionist, the
countries shift inwards as the companies on multinational level change production to markets in
order to be competitive. In this case, the real exports of goods and services are likely to be 2.4%
down the level of baseline by 2020( Behravesh , 2019). Most significant is that, the basic declines
about real exports experience in China and some North American countries. Besides, the greatest
reduction in imports of goods and services was experienced by United States (fall by 4.5% in
2020 down the baseline).

ECONOMICS 3
In addition, the fixed investments can be restrained in the scenario of trade war that
reflects the losses about exports, decline in foreign investment, financial stress and reduction of
equity prices especially in markets that are targeted by the import tariffs of United States
(Behravesh , 2019). However, the losses that are substantial experienced in China since foreign
local investors are likely to take approach that is cautious in China about capital spending.
Major Retaliatory Measures
China announced the retaliation about the $60 billion for imports emanating from United
States in relation to the mild response. The retaliatory measures are:
Direct Economic Effect: In this context, it is observed that the negotiations between US
and China may attribute to the win-win result. The China’s reformers identify their state owned
enterprises are observed as inefficient and costly subsidies the surging of the country’s
endowment that must be protected( Neumayer , 2017). Therefore, such reforms lie in the direction
where several American businesses and the administrators would like to see happening.
Systematic Effect: in case when the escalations are allowed, the disputes of trade between
US and China is likely to alter the likelihood about the surge of global protectionists which
therefore collapse the system of international trading which is based on the World Trade
Organization ( Neumayer , 2017). The World Trade Organization benefited in the retaliation
measures of the United States. On the other hand, there is severe damage that are done by the
refusal of United States in order to replace members of appellate organization. This was done in
order to put tariffs about steel and aluminium for the allies.
Justifications for Trade Protectionism