Comprehensive Report on the Trade War Between China and the US

This report provides a comprehensive analysis of the trade war between China and the United States. It begins by defining trade wars and their negative impacts, including reduced international trade and economic slowdown. The report details the origins of the US-China trade war, starting with ac...Read More

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“TRADE WAR BETWEEN CHINA AND THE UNITED STATES”
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“The current state of the trade war between China and the United States”
Trade war results when a nation imposes tariffs or other forms of trade protectionism and the
targeted nations retaliate by imposing the same trade protectionist measures. The trade war is not
the best practice as it causes a reduction in international trade. Trade war arises when a nation
protects its domestic industries against foreign competitors with the aim of reducing trade
deficits with the targeted nations and creating jobs among others (Abboushi 2010, p.384). In the
short run, trade war expands the domestic industries of the nation which imposes tariffs against
the others. This is because tariffs imposed increase the price for goods and services of the foreign
competitors and hence increase the market for the locally produced goods and services. This
makes the local businesses to grow significantly. In the long run, the targeted nations retaliate
and impose similar trade protectionism measures and this slows down the economic growth for
both nations (Evenett and Fritz 2015, p.18). The nations will also end up experiencing inflation
as the price for goods and services in both nations rise due to the imposed tariffs. In this report, a
discussion of the current state of the trade war between China and the United States has been
done. From what has been experienced from the trade war between these nations, it is clear that
trade war can cause economic growth slowdown not only for the nations involved in it but also
for the other nations worldwide.
The trade war between China and the United States began after the United States President
Donald Trump began accusing China of unfair trade practices even before he came into power
(Loridas 2011, p.403). The trade war took effect serious after President Donald Trump took the
presidency of the United States. It all began when the United States levied tariffs of 25 percent
on steel imports from all nations except Brazil, Argentina, South Korea and Australia and 10

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percent on imports of aluminum from all nations except Australia and Argentina on 23rd March
2018. On 2nd April 2018, China retaliated and imposed 15 to 25 percent tariffs on 128 United
States Goods worth $3 billion (Glick and Taylor 2018, p.102). The United States goods on which
tariffs were imposed by China included recycled aluminum, soybeans, pork, wine, fruits and
seamless steel pipes. The trade war between these two nations has since then worsened with each
nation retaliating against each other after tariff imposition. The two nations have met several
times in an attempt to solve their trade war but an agreement has so far not been made and talks
are currently ongoing to find the necessary solution.
The current amount of Chinese goods and services in which tariffs have been imposed by the
United States as a result of the trade war are worth $250 billion. On the other hand, the current
United States goods and services in which tariffs have been imposed by the Chinese government
are worth $110 billion (Noland 2018, p.262). Of the $250 billion Chinese goods and services in
which tariffs are imposed by the United States, $200 billion products tariffs have been increased
from 10 percent to 25 percent. These products are those which are listed in list 3. China in its
retaliation has also increased tariffs of its products listed in list 1 from 10 percent to 25 percent,
products in list 2 tariffs have been increased from 10 percent to 20 percent, products in list 3
tariffs have been increased from 5 percent to 10 percent whilst products in list 4 have tariffs of 5
percent (Guo 2018, p.101). The United States has also added the Huawei Company to its entity
list with an aim of banning the US companies from selling to it but this has not been
implemented as talks on how to solve the trade war proceed. China has also started investigating
FedEx, a United States shipping company on claims that it has diverted packages bound for
China from Japan.

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In a nutshell, the trade war between China and the United States has been worsening but talks are
underway to solve it. The current state of the trade war between the two nations shows that a
total of $250 billion Chinese products have been subjected to tariffs by the US while a total of
$110 billion US products have been subjected to tariffs by China. From the past experience of
the trade war between these two nations, trade war slows economic growth not only for nations
involved in it but also for the other nations in the long term. No one stands to gain from the trade
war and in case nations differ, then they should solve their differences amicably and avoid a
trade war.

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References
Abboushi, S., 2010. Trade protectionism: reasons and outcomes. Competitiveness Review: An
International Business Journal, 20(5), pp.384-394.
Evenett, S.J. and Fritz, J., 2015. The Tide Turns? Trade Protectionism, and Slowing Global
Growth. The 18th GTA Repor, 92(1), pp.18-27.
Glick, R. and Taylor, A.M., 2018. Collateral damage: Trade disruption and the economic impact
of war. The Review of Economics and Statistics, 92(1), pp.102-127.
Guo, M., Lu, L., Sheng, L. and Yu, M., 2018. The Day After Tomorrow: Evaluating the Burden
of Trump's Trade War. Asian Economic Papers, 17(1), pp.101-120.
Loridas, K., 2011. United States-China Trade War: Signs of Protectionism in a Globalized
Economy. Suffolk Transnat'l L. Rev., 34, p.403.
Noland, M., 2018. US trade policy in the Trump administration. Asian Economic Policy
Review, 13(2), pp.262-278.