Trade War Between US and China - Article

Running Head: TRADE WAR BETWEEN US AND CHINA
TRADE WAR BETWEEN US AND CHINA
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1TRADE WAR BETWEEN US AND CHINA
Introduction:
A trade war starts when a nation formulates policies to impose quotas or tariffs, on
imports. Also trade war can be attributed to the retaliation of foreign countries with policies
fostering trade protectionism. According to economists, trade protectionism does not only curb
the opportunities of trade between two countries, it also abolishes the chances of growth for other
ancillary industries operating in the global market. The overall negative impact is trade war
narrows down the expansion path of international trade. Further, a trade war induced by trade
protectionism also curbs the chances of the expansion of job opportunities as well as economic
transactions at the global level. The purpose of this study is to delve deep into the trade war
between China and United States of America. In this context this study will also throw lights on
the impacts of the trade war on the economy of United States as well as China. Eventually in the
process of estimating the impact of trade war on the economy of United States as well as China,
this study will reveal the policies as well as factors fuelling the trade war between China and
United States of America. With reference to the economic models and concepts this study will
further elaborate the policies implemented by United States as well as China
Overview, Reasons and Impacts the trade War :
The current trade deficit of United States is $621 billion. After the analysis of the trade
deficits since the year 1975, economists like Liu & Woo, (2018), considered that, $621 billion is
the highest trade deficit that the economy of United States have exhibited till now. According to
the economists like Bown, (2019)., the majority of the United States’ trade deficit can be
considered as the result of American enthusiasm regarding imported consumer goods as well as

2TRADE WAR BETWEEN US AND CHINA
automobiles. In the year 2018, the country imported and spent $648 billion amount in the drugs,
clothing, as well as televisions along with household items. According to the economists like Li,
He & Lin, (2018), the export earning of United States was only $206 billion of the consumer
goods which was considered to add $442 billion alone to the trade deficit of the country. In the
same financial year the country imported automobiles as well as other parts of the vehicles and
also machineries of worth $372 billion, where as the export earnings from automobiles were
$159 billion. This was in turn responsible behind the addition of about $214 billion to country’s
trade deficit. Three major initiatives were implemented by Donald Trump to control trade deficit,
which in turn fuelled the trade war. According to the economists like Huang, Lin, Liu & Tang,
(2018), especially the policy that emphasized on the imposition of tariffs on Chinese imports, can
be considered one of the major factors responsible between the severe trade war between
America as well as China. Swanson, (2018), economists argued that that, there exists three main
factors that compelled the country of United States to initiate policies that instigated trade was
between United States and China. Firstly, the Chronically huge trade surplus of the country of
China, can be considered as one of those factors fuelling the trade war between China and United
States. According to Calì, (2018), the increasing rates of trade surplus is again, diminishing the
creation of job opportunities in the country. This is the reason why America has implemented
strict policies to impose tariff on good as well as services imported by China. Secondly, the
usage of unfair as well as illegal procedures by China can be considered as one of the major
reasons behind accelerating the trade war indirectly. According to Itakura, (2019), to China use
methods which are unfair as well as illegal to some extent for the purpose of adopting, imitating
and acquiring the technical advancement of United States at a large discounted price; which
enhances competition for United States and as Chinese products manufactured using the illegal

3TRADE WAR BETWEEN US AND CHINA
methods or imitative technology enter the US market through imports. Again, according to
Hosain, & Hossain, (2019), this also curb the export earning of United States, as through
imitative technology acquired using illegal methods, China has become capable of capturing the
markets in the developing or under developed countries and US is losing market share in the
developing countries. Again, according to Moeller, (2018), the third factor is the weakening of
national security of United States, by China. According to Lukin, (2019), China also curbing the
international standard of United States. According to Caprotti, (2015), The second conclusion is
that China’s trade imbalance reflects the economic conditions in both China and U.S., and that
the efficient and fair solution of the problem requires policy changes in both countries.
According to economists, trade protectionism does not only curb the opportunities of trade
between two countries, it also abolishes the chances of growth for other ancillary industries
operating in the global market. The overall negative impact is trade war narrows down the
expansion path of international trade. Further, a trade war induced by trade protectionism also
curbs the chances of the expansion of job opportunities as well as economic transactions at the
global level. The purpose of this study is to delve deep into the trade war between China and
United States of America. In this context this study will also throw lights on the impacts of the
trade war on the economy of United States as well as China. Eventually in the process of
estimating the impact of trade war on the economy of United States as well as China, this study
will reveal the policies as well as factors fuelling the trade war between China and United States
of America.