IBS221 Group Essay: Analysis of the US-China Trade War

This essay provides a detailed analysis of the US-China trade war, a significant global economic issue. It explores the causes, including tariff disputes and unfair trade practices, and examines the impact on both the US and Chinese economies. The essay discusses the imposition of tariffs, their effects on GDP, employment, wages, and the stock market. It also highlights the reactions of both countries, including retaliatory tariffs and the impact on various industries. The essay concludes by assessing the overall impact of the trade war, including its effects on consumer prices, economic growth, and international trade. The essay also includes tables and data representing the impact of the Trump administration's tariffs and threatened tariffs on the GDP, wages, and jobs of the country. The paper concludes by stating that though few domestic sectors get benefited from this, the global economy is highly affected due to the trade war.

Running Head: Economics
0
Globalization and international trade theory
US China trade
9/13/2019

Economics
1
Contents
Introduction.................................................................................................................................................2
Discussion...................................................................................................................................................2
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9
Appendix: Statement of Contribution........................................................................................................11

Economics
2
Introduction
The global economy can be defined as where the trade has been done for the goods and services
across the national borders. Due to the globalization, the trade in the world has emerged at the
extent level. The global economy of the country has been developed effectively due to the
trading in the other countries which was creating many issues to the global economies. There are
many issues in the global economy such as global inequality, poverty, lack of resources, global
warming, unequal development, etc. The essay is made on one of the major global economic
issues which are US-China trade war (Swanson, 2018). The war creates violence which not only
distracts the economy but also causes much loss of the property. The war has started in the US
and China due to the tariffs as China retaliates imposed the tariffs on the US goods $50 billion
which were of similar value. In this essay the detail description of the global issue of US China
trade war will be elaborated. The long-run GDP has declined and many other wages and jobs
have been lost by the person which will also be stated.
Discussion
The United States and China are considered as world’s largest economies as they have the high
rate of the GDP. The United States is the largest importer in the world and China is the largest
exporter. They both are the essential pillars of the global economy. Due to the high tariffs rate,
trade relationship between these two countries was getting hampered (Noland, et al., 2016). It is
the biggest global issues and the economic conflict which was creating the trade war between
these two countries. The conflicts were raised by president Donald Trump as he said that China
was doing unfair trade practices so he has forced china to make some changes in the trade. There
are many trade practices such as theft of intellectual property, increasing trade deficit, etc. The
global economy gets affected as Trump promotes domestic manufacturing products more so that
they can rip off by the trading partners (Stojek and Tir, 2015). Due to these lots of the pressure
was created on the manufacturers and the farmers. The instability in the stock market is raised in
the company. Many economic damages have to face due to this. They are imposing the very
higher amount of the tariffs on each other goods.

Economics
3
Trump has made the policy of the tariff whose main aim is to encourage the consumers to buy
the goods and services through America instead of the importing goods which are more
expensive. The main focus of the trade policies launched by him was that he wants to reduce the
gap between import and export. The tariffs were increased by the countries from 5 to 10%. The
double tariffs were imposed by president Donald Trump on $200bn of the Chinese goods
(Noland, et al., 2016). So China negotiates with the US. In the last year the war between these
two countries has increased due to the unfair trading practices.
Source: barrons.com
The trade has played the major global role for these countries as trade by US tariffs on China was
$250bn in the year 2018 (Hufbauer, 2016). But tariffs threated by the Trump are much higher
which $325bn was. In the year 2018, many goods have been imported by China to the US as the
number is $5390bn. There are many products which are getting affected due to the trade wars
such as the many types of machinery, motorcycles, etc. Not only this product is get affected but
also the clothing, footwear, fish, handbags, etc. these products are majorly targeted by the
countries and rate of tariffs have been increased from 10 to 25% which was creating the major
issue in the economy.

Economics
4
The prices of the imported goods have been raised due to the high tariff which was affecting the
economy at a large level. The consumers have to pay the high prices to domestic consumers as
there is no high competition in the market. The economic growth has been reduced and cost of
the materials and the parts have been raised due to the increasing tariffs. The employees and the
owners of the capital have the lower-income as the outputs of the private sector have been
reduced and price of the goods which are used in the inputs have been raised (Milanovic, 2016).
The tariffs were imposed by the United States as the statement was made by the Trump that to
protect the domestic industries and to reduce the foreign competition of China the tariffs have to
be imposed. They raise the revenue, to protect the domestic producers and inefficient domestic
industries from the foreign competition also tariffs were imposed by the United States (Liu and
Woo, 2018). By imposing the tariffs the revenues have been generated through the federal
government and also cat as the protective barriers for the domestic countries which have newly
started. Trump has imposed new tariffs which have threated many other countries also and
billions of dollars were imposed on the China imports. In the year 2018 august, the chain
declared the tariffs on 25% on the goods of the US worth $ 16 billion which includes crude oil
and vehicles (Athukorala, 2017). China has done tit for tat as United States has increased the
tariffs so the Chain also did on the goods. It is type of the protectionist trade barriers which was
creating many issues for the global economy.

Economics
5
Although many issues have been faced by these two countries and in fact the economic growth
of both the countries has declined due to the increasing tariffs but still few domestic sectors get
benefited from this. The prices affected of the goods due to the increase in the tariffs and it
highly affects the economy (Handley and Limão, 2017). The global economy is highly getting
affected due to the trade war as it was putting many restrictions on another country. It does not
damage the nation but it was also impacting the consumer and the business of the United States
and China.
The inflation in the country get reduces due to the increasing cost of the goods. The choices in
the market get reduced by the consumers which were causing the shortage in the marketplace. As
tariffs have imposed at the high rates so China was not making many imports to the United
States and this results in declining the choices of the products by the consumers. The trade was
discouraged and it was causing slowdown in economic growth.
The GDP of the United States has been reduced by 25% due to the tariff imposed (Bergsten, et
al., 2014). As per the tax foundation model it was also founded that the Trump administration
has also brought many consequences as much full-time equivalent jobs have been reduced. The
wages of the employees has also declined and it was bringing the lack of capital in the market.
There are certain goods on which Trump has imposed high tariffs such as washing machines,
solar panels, aluminum, steel, and many other products. Due to the tariffs imposed by the United
States the amount of the total tax has increased by $86.13 billion. Earlier only 20% tariffs were
imposed on the imported goods of the washing machines and the solar panels but later on 50%
tariffs have been imposed on the tariffs goods. Due to this tax has been increased amounted $015
billion. The tariffs imposed by President Trump on the steel were 10% and the aluminum was
25% (Schweller 2018). The tax calculated on the imported steel was $7.3 billion and for the
aluminum it was roughly $1.7 billion. Later in 2018, August, the tariffs were imposed by the
doubled rate on the steel and aluminum from Turkey. It was levied on 20 and 50%. It was
creating economic harm to the country as lifting the tariffs on steel and aluminum was reducing
the revenue for the country.
The trade war between China and the United States was creating many fluctuations to the
economic policies also as they were doing the tit for tat for each other. So President Trump has

Economics
6
decided to settle down this war and imposed 25% tariffs on the Chinese’s products whose worth
is $50 billion. Due to the increases in the tariffs amount of Chinese products resulted in the
increases in the taxes. In September 2018, 10% tariffs have been imposed on the additional
China goods of the $200 billion (Allison, 2017). Later on in the year 2019, August Trump was
threatened to impose the tariffs of the 10% on the additional Chinese goods of the $300 billion.
But there are some products which have been required by the country as they are for healthy
security and health reasons so they should be exempted. The tariffs revenues for china are $86.13
billion for the tariffs accounts of the $79.3 billion.
Image: Table showing the Impact of the Trump Administration imposed Tariffs.
The picture stated above was stating the impact of the Trump administration imposed tariffs on
the GDP, wages and the jobs of the country. All the outcomes are showing the negative results
and it was impacting the economy at the adverse level. The long-run GDP has declined by -
0.25%. The wages and the FTE jobs of the person have also declined by the -0.16% and the -
193649 which was showing the adverse effect.
Tariffs also threated the United States as the tariffs have been imported on the automobiles and
parts which were increasing the tax amount roughly of $109.63 billion (Katz, 2013). 25% tariffs
have been imposed on the automobiles such as trucks, cars, and vehicles. The administration has
announced that the on the Chinese’s products also 25% tariffs will be levied on the $250 billion

Economics
7
which has increased to 30% later on. The tariffs threatened against China were $36.5 billion of
the total $109.63 billion. Due to higher level threatened tariffs the United States has to face the
many issues in the global economy. It has also resulted in declining the many GDPs, lower
wages and jobs.
Image: Table showing the Impact of the Trump Administration of threatened Tariffs.
The picture stated above was stating the impact of the Trump Administration of threatened
Tariffs on the GDP, wages and the jobs of the country. All the outcomes are showing the
negative results and it was impacting the economy at the adverse level. The long-run GDP has
declined by -0.32% (Ray, et al., 2015). The wages and the FTE jobs of the person have also
declined by the -0.20% and the -247114 which was showing the adverse effect.
China was doing the tot for tat game as when te Trump was imposing the tarried on the certain
goods China was also doing the same. China has also declared that 15% tariffs on the American
products worth $3 billion on 120 products such as nuts, wine, and steel pipes. China also
declares that he will impose 25% of tariffs on certain products such as recycled pork and
aluminum. China responded as Trump administration policy and raises the tariffs on the US
products by $12.5 billion (Morrison, 2014). The tariff revenue of China has increased by $15
billion when the rate of the tariffs has been increased by 25% on the additional $60 billion US
goods.

Economics
8
Trump has threatened the Chinese’s goods by imposing the 10% tariffs on $300 billion goods.
China also imposed then 5 to 10% of the tariffs on the US goods which worth is $75 billion.
China also announced that on the US automobiles they will impose the 25 % of the tariffs and on
the auto parts. China has recently accounted for the $33.73 billion and has threatened the US
economy and the other nations with the $35.68 billion on tariffs (Duffy, 2014).
The exporting industries also suffer due to the increase in the tariffs as trading partners retaliate
with their own tariffs (Young, 2014). The domestic demand for china has decreased and it was
negatively impacting the economy of the world. The global economic growth has been slow
down as trade deficit with China was $419.2 billion in the year 2018. The economic conflicts of
the countries have also resulted in the extreme protectionism which was increasing the prices of
the products and reducing the volume and the size of the products. The tariffs which were highly
imposed on the goods include the manufacturing products, handbags, vegetable juices, etc.
Trump administration has complained that China was taking billions of dollars through unfair
trade practices from the American economy. There was also the theft of the US intellectual
property and it was estimated that it was amount for the $240 billion annually.
Conclusion
It was evaluated from this essay that the war between the United States and China for the
increasing Tariffs was creating many issues in the economy. The global economy of the country
was impacting in a negative way due to the increasing tariffs by Trump. As a result, China was
also doing the same. He was also increasing the tariffs of certain goods on the US and the
American countries. As a result many taxes have been increased by these countries and the GDP
rate of the country was declining. The inflation in the country get reduces due to the increasing
cost of the goods. The choices in the market get reduced by the consumers which were causing
the shortage in the marketplace. As tariffs have imposed at the high rates so China was not
making many imports to the United States and this results in declining the choices of the
products by the consumers. The trade was discouraged and it was causing slowdown in
economic growth.
The economic growth has been reduced and the cost of the materials and the parts have been
raised due to the increasing tariffs. The employees and the owners of the capital have the lower-

Economics
9
income as the outputs of the private sector have been reduced and price of the goods which are
used in the inputs have been raised. Due to these lots of the pressure was created on the
manufacturers and the farmers. The instability in the stock market is raised in the company.
Many economic damages have to face due to this and it results in declining the global economy
of the world and creating many issues.
References
Allison, G., 2017. Destined for war: can America and China escape Thucydides's trap?.
Houghton Mifflin Harcourt.
Athukorala, P.C., 2017. China’s evolving role in global production networks: Implications for
Trump’s trade war. China’s New Sources of Economic Growth: Human Capital, Innovation and
Technological Change, 2, pp.363-388.
Bergsten, C.F., Hufbauer, G.C. and Miner, S., 2014. Bridging the Pacific: Toward Free Trade
and Investment between China and the United States. Peterson Institute for International
Economics.
Duffy, R., 2014. Waging a war to save biodiversity: the rise of militarized
conservation. International Affairs, 90(4), pp.819-834.
Handley, K. and Limão, N., 2017. 13 Trade under TRUMP policies. Economics and Policy in the
Age of Trump, p.141.
Handley, K. and Limão, N., 2017. Policy uncertainty, trade, and welfare: Theory and evidence
for china and the united states. American Economic Review, 107(9), pp.2731-83.
Hufbauer, G.C., 2016. Could a President Trump shackle imports?. Assessing Trade Agendas in
the US Presidential Campaign, pp.5-16.
Katz, R., 2013. Mutual assured production: why trade will limit conflict between China and
Japan. Foreign Affairs, 92(4), pp.18-24.
Liu, T. and Woo, W.T., 2018. Understanding the US-China trade war. China Economic
Journal, 11(3), pp.319-340.

Economics
10
Milanovic, B., 2016. Global inequality: A new approach for the age of globalization. Harvard
University Press.
Morrison, W.M., 2014. China’s economic rise: History, trends, challenges, and implications for
the United States.
Noland, M., Robinson, S. and Moran, T., 2016. Impact of Clinton’s and Trump’s trade
proposals. 16-6 Assessing Trade Agendas in the US Presidential Campaign, p.17.
Ray, R., Gallagher, K. and Sarmiento, R., 2015. China-Latin America economic bulletin 2015
edition. Global Economic Governance Initiative, Boston University: Boston.
Schweller, R., 2018. Three Cheers for Trump's Foreign Policy: What the Establishment
Misses. Foreign Aff., 97, p.133.
Stojek, S.M. and Tir, J., 2015. The supply side of United Nations peacekeeping operations:
Trade ties and United Nations-led deployments to civil war states. European Journal of
International Relations, 21(2), pp.352-376.
Swanson, A., 2018. Trump to Impose Sweeping Steel and Aluminum Tariffs. New York
Times, 1.
Swanson, A., 2018. US and China Expand Trade War as Beijing Matches Trumpʼs Tariffs.
Young, E., 2014. Alien nation: Chinese migration in the Americas from the coolie era through
World War II. UNC Press Books.

Economics
11
Appendix: Statement of Contribution
Contributio
n
Introductio
n
Body Conclusion Overall
Contributio
n
Signatur
e
Comment
s (if any)
ABC The global
economy
can be
defined as
where the
trade has
been done
for the
goods and
services
across the
national
borders. Due
to the
globalization
, the trade in
the world
has emerged
at the extent
level.
The United
States and
China are
considered as
world’s
largest
economies as
they have the
high rate of
the GDP. The
United States
is the largest
importer in
the world and
China is the
largest
exporter.
They both are
the essential
pillars of the
global
economy.
Due to the
high tariffs
rate, trade
relationship
It was
evaluated
from this
essay that
the war
between the
United
States and
China for
the
increasing
Tariffs was
creating
many issues
in the
economy.
The global
economy of
the country
was
impacting
in a
negative
way due to
the
increasing
3 ABC