International Business Report on US-China Trade Disagreements Analysis

This report examines the trade disagreements between the US and China, focusing on the developments and scenarios arising from the trade war. It references a KPMG report that identifies the implementation of protectionist tariffs as a key factor, detailing the US's tariffs on steel, aluminum, and Chinese merchandise, and China's retaliatory tariffs. The report discusses three potential scenarios: limited escalation with no contagion, full escalation with no contagion, and full escalation with full contagion, highlighting the potential job losses and GDP impacts on both countries. It emphasizes the importance of resolving the trade war to minimize economic losses and promote resource utilization, concluding that failure to do so will hinder business development. Desklib offers similar reports and solved assignments for students.

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Table of Contents
Introduction................................................................................................................................3
Summary of the report...............................................................................................................3
Subsequent developments in the US China trade disagreements...............................................4
Discussion of the developments of three scenario contexts.......................................................5
Rationale....................................................................................................................................6
Conclusion..................................................................................................................................6
Reference list..............................................................................................................................7

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Introduction
The introduction of the business relationship among two emerging developed nations
United Nations and the China will identify the developments of the trade disagreements that
will basically identify the development of the contexts or the scenarios that has led to the
development of such situations. The main aim of this study is to identify the innovations in
the trade policy that has enabled the development of trade war among these two countries.
The report “Trade Wars: There are no winners, on economic modelling of the expected
impact of the recent US-China trade disagreements” that has been published by KPMG will
be looking to find the solutions of this trade war.
Summary of the report
The report is going to identify the factors in the form of implementing protectionists
tariffs on the range of goods. The US economy already implemented tax on the imports of
steel and aluminium from the EU countries, Canada and Mexico. The US economy and the
government sectors is using the voted for the implementation of tariffs on the imports of the
automobiles from the European countries. On the other hand, the US economy has
implemented 10% of tariff on US$200 billion of Chinese merchandise. In the month of early
July, the US government has implemented a tariff of 25% on the US$34 billion of Chinese
imports. Through this implementation of tariff on the Chinese goods will allow the
development of the trade war. On the other hand, through the development of better
implementation of 25% of tariff on US$500 billion of goods that are to be imported from the
Chinese economy (Anon, 2019). Responding to the development of this tariff that has been
set by the US economy, the Chinese economy has also implemented a tariff of about 5-25%
of the goods and raw materials that are to be imported from the US economy. The main
insight of this trade war is making a severe impacts on the development of other countries.

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However from the report it can be highlighted that three situations has raised mainly due to
this trade war. The first situation that can be seen that Limited escalation, no contagion, the
second situation is Full escalation, no contagion and the third situation is Full escalation, full
contagion.
Subsequent developments in the US China trade disagreements
Due to this trade war among US and China is resulting to about 1 million jobs are
about to loss due to this war. Currently, the US$250 billion of goods that are to be imported
by the US economy is under the tariff rate of 10-25% and the tariff rate is going to increase
after 2nd March if the trade negotiation among these two countries are not reaching any point
(US-China trade war ‘could cost 1 million American jobs, 2019). The US economy has
implemented the tariff in order to revive their manufacturing units but the development of
this trade war will definitely highlight the incorporation of better development of retaliatory
tariffs that has been implemented on the US economy by the economies like China, European
unions are actually weakening the US economy (Anon, 2019). This in turn is going to weak
the production of the US economy. This is because in the modern world of globalisation no
country will be able to produce the goods and this will definitely have an impact on the
development of production of the economy like US. Through this policy, the US economy
will also have to pay high for the components or the raw materials from the other countries
that will help in the manufacturing of the goods within the US economy (US-China trade war
‘could cost 1 million American jobs, 2019). Through the improvement in the development of
the tariff or the trade war will invite the development of the job loss and the increase the cost
of standard of living. On the other hand, this current situation will bring a trim to the total
production ability that will have an impact on the development of the economy.

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About 0.37% of the US GDP will be facing loss over three years and the average cost
of living a family of four will be around US$767 per year and about 934,700 loss of jobs will
happen (US-China trade war ‘could cost 1 million American jobs, 2019). Through the
utilisation of this scenario, the US surplus from the trade will be narrowed and will
decreased. They will be losing huge number of jobs that will be mainly highlighted the
development of the indulgence of the economic loss that will be highlighted as the
development of unemployment in the economy that will no doubt will decrease the level of
investment to be occurred within the economy. Through the development of huge level of
unemployment it is important for both monetary policymakers of US regarding the
development of trade disagreements.
Discussion of the developments of three scenario contexts
In the given report of KPMG, the three scenario that has been created in the study is
that the first scenario is that Scenario 1: Limited escalation, no contagion. In this scenario,
current trade war among US and China has claimed that US$200 billion of goods by both the
countries (Anon, 2019). In this scenario, the GDP of both the country will be having little
effects in the sense that through the resource utilisation, GDP of China will be smaller by
0.61% in the last four year and on the other hand, the US economy will be having GDP
growth rate of 0.58% in the last four years (Anon, 2019). The second scenario is that Full
escalation, no contagion. Under this situation, the development of the GDP of China will be
1% lower in 2021 and on the other hand, the US economy will be having lower GDP of about
0.58% in the last 4 years (Anon, 2019). However, in all the scenario, the US GDP will be
having the most effects and will be more viable for the development of the more impression
on the development of the job loss and loss of GDP that will be having long run impacts. The
third scenario that has been identified as the Full escalation, full contagion. Under this

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circumstances, all the countries will be able to implement a tariff of 15% in the imports
(Anon, 2019). This is important in the sense that if the war would not have happened the
world would have faced a GDP growth of 5% and after the development of this trade, the US
economy will be facing GDP growth by 2% and the China will be having growth rate of 6%
all-round.
Rationale
The rationale of this study is to highlight the importance of the trade war that is
happening among US and China. Through the development of this trade war, both the
countries will be willing to identify the pros and cons that will be highlighting the importance
of the study. Through the development of this policy, the development of the trade war will
be fascinating the development of the GDP.
Conclusion
After studying the published report the study has claimed that in order to increase the
development of the resource utilisation, both the countries need to settle the trade war as soon
as possible in order to increase the growth of the country and to minimise the loss of the
employment this is important in the sense that it will develop the incident of better utilisation.
If the countries does not stop the war then it will be problematic for the development of the
business.

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Reference list
Anon (2019). Assets.kpmg. Retrieved 30 March 2019, from
https://assets.kpmg/content/dam/kpmg/au/pdf/2018/trade-wars-no-winners.pdf
Chong, T. T. L., & Li, X. (2019). Understanding China-US Trade War: Causes, Economic
Impact, and the Worst-Case Scenario.
Draper, T. (2017). American business and public policy: The politics of foreign trade.
Routledge.
Irwin, D. A. (2016). The truth about trade: What critics get wrong about the global
economy. Foreign Aff., 95, 84.
Jensen, J. B., Quinn, D. P., & Weymouth, S. (2015). The influence of firm global supply
chains and foreign currency undervaluations on US trade
disputes. International Organization, 69(4), 913-947.
Luttwak, E. N. (2017). The Virtual American Empire: On War, Faith and Power. Routledge.
Milanovic, B. (2016). Global inequality: A new approach for the age of globalization.
Harvard University Press.
Pierce, J. R., & Schott, P. K. (2016). Trade liberalization and mortality: Evidence from US
counties (No. w22849). National Bureau of Economic Research.
Tønnesson, S. (2015). Deterrence, interdependence and Sino–US peace. International Area
Studies Review, 18(3), 297-311.
US-China trade war ‘could cost 1 million American jobs’. (2019). South China Morning Post.
Retrieved 30 March 2019, from https://www.scmp.com/economy/china-
economy/article/2185446/us-china-trade-war-slash-almost-one-million-jobs-
us-economy

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