The 19 19 Trade War between US and China Name of the University Author

Running head: TRADE WAR BETWEEN US AND CHINA
Trade War between US and China
Name of the Student
Name of the University
Author note

TRADE WAR BETWEEN US AND CHINA1
EXECUTIVE SUMMARY
This paper intends to analyse the effects of the trade war on the global economic structure in
short as well as long term. Moreover, the unfair trade practices by the China forced the US to put
trade restriction on the China. This paper also examines the influence of escalation of trade
conflict on two major economies of the world as well. It emphasizes on the impacts of the
increases in the tariffs on the overall trade of the countries. This paper assesses the plunge caused
by the trade uncertainty on the global GDP growth and how the initiatives taken by the central
banks of the countries may contribute to negate the aftermath of the trade war on the global
growth. There are several forces that intensified the trade uncertainty and turmoil of the global
economy, other than trade restrictions. This paper also taken into consideration those forces to
understand the impacts of the trade conflict.

TRADE WAR BETWEEN US AND CHINA2
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Trade war between US and China...............................................................................................4
The effects of the trade war on global economic structure..........................................................9
Conclusion.....................................................................................................................................14
References......................................................................................................................................16

TRADE WAR BETWEEN US AND CHINA3
Introduction
An economic conflict in response to trade restrictions imposed by other party results in
extreme protectionism in terms of creating or raising tariffs and other trade restrictions against
one another is known as trade war (Yong, 2019). The output combinations of the participating
nations in trade war reaches autarky position, where both countries minimize the influence of the
international trade or external assistance. Hence, the trade war impacts participating countries in
trade war along with other countries of the world. One of the major ongoing trade war is between
two biggest economies of the world the Unite States (US) and China. The US is the largest
economy in terms of nominal gross domestic product (GDP) (Usa.gov, 2020).
Moreover, the highly developed country US is the second largest economy in terms of
purchasing power parity. On the other hand, the China is the largest economy in terms of
purchasing power parity. It is also second largest economy in terms of nominal GDP (Gov.cn,
2020). As per the value, US is the largest and second largest importer and exporter of the world
respectively. On the contrary, the China is the largest and second largest exporter and importer
of the world respectively as per value of trade. Therefore, international trade plays a vital role in
the prospect and growth of the US and China. Likewise, the economic conflict between the US
and China impacts the international trade among two countries. The trade war started by the US
government led by the president Donald Trump in protests of unfair trade practices by the
government of China in 2008. To control the unfair trade practices of the China, the government
of US applied tariffs and other trade barriers on the China. Moreover, the unfair trade practices
mentioned by the US government include the theft of intellectual property, the increasing trade
deficit and the illegal transfer of technology from the US to China.