Trade War: Historical Context, Theories, and Complications

Running head: TRADE WAR
Trade War
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TRADE WAR1
Abstract
The primary purpose of this report is to discuss about the historical context in relation to the
trade war. The report also elaborates on the political along with the economic theories that are
relevant to the trade war. The report talks about the complications that have emerged owing
to the trade war. The report also elucidates on how the automotive industry has been affected
on account of the trade war.

TRADE WAR2
Introduction
The trade war refers to the economic conflict in between two largest national
economies of the world- United States and China. The conflict was initiated by Donald
Trump who is the president of United States and it is characterized by the increase in the
tariffs along with the trade barriers that have been levied by both the countries. The primary
goal of the trade wars is to force China in making the changes to that of unfair trade policies
that have been made by China (Bbc.com., 2019). It has been found that since the year 1980,
Donald Trump has been involved in advocating the tariffs that can help in the reduction of the
trade deficit of United States. Donald Trump wants to promote the domestic manufacturing
and he has imposed the tariffs which was an important agenda of his presidential campaign.
This report discusses about the historical context in relation to the trade war of Donald
Trump. The report also elucidates on the political along with the economic theories that have
influenced the developing of the trade war. The report also elaborates on the complications
that have emerged in the present age pertaining to the trade war in between the United States
and China. The report also talks about the effect of the trade war on industry and the changes
that can be made to the business system that can help in shifting the situation to that of a
more positive outcome.
Historical context of Trade War
The Communist Party leader of China Mao Zedong was instrumental in establishing
People’s Republic of China within Beijing. It took place after the Communists had defeated
nationalist government of that of Chiang Kai-shek. Chiang along with thousands of other
troops moved to Taiwan. United States was involved in backing Nationalists against that of
the invading Japanese forces at the time of the Second World War. It supported the exiled
Republic of Chinese government within Taipei and it set the stage for the limited relationship
of US with that of mainland China. The US Secretary of State Hillary Clinton in the year
2011 outlined the fact that US was veering towards Asia (Theguardian.com., 2019). Clinton
made the call for increasing the investment within Asia-Pacific region that can help in
countering the growing influence of China. The US president Barrack Obama made the
declaration that United States along with eight other nations have reached agreement on that
of Trans-Pacific Partnership (see Appendix A). Barrack Obama announced the plans of
deploying 2500 marines within Australia that prompted the criticism from that of Beijing.