2018 China United States trade war

Document Type:Thesis

Subject Area:Economics

Document 1

This paper will give an analysis of the war, its consequences on the involved parties and how it could be resolved. Donald Trump, the president of the United States of America, has voiced his frustrations with China’s trade practices even before he took office. He described China’s trade activities as an act of ‘rape’ to the US economy (BBC para 2). After taking office, he has keenly targeted China with aggression, the trade war with China being a huge part of his agenda. China has been on the receiving end of trade policiesinvestigations and tariffs imposed on a steady rate. China maintains that the claim made by the US is backed by inadequate evidence and thereby filed a counter-request for consultation against it.

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Additionally, Beijing has accused the US of initiating the largest trade war in history. According to China, the US does not have any legal authority to act in accordance with the rules set up by the World Trade Organization. To strike back, Beijing has imposed tariffs on American goods totaling to $110bn. The US products affected by the tariffs include medical equipment, coal, and chemicals. China has invoked criticism against the US restriction on the export of their high technology products. Beijing feels that they have been treated unfairly by the US in terms of market economy status. Moreover, they claim that the trade sanctions made against them are unreasonable. According to China, they do not want a trade war with any country but they do not fear to engage in one with the US and that they are adequately prepared to manage the conflict (Telegraph Foreign Staff para 1).

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China considers the US to be a strategic partner that has been mutually helpful. Specifically, the Guangdong University of Foreign Studies' Research Center for International Trade has conducted a simulation that depicts the effects of the conflict on not only the two parties but also other actors in the world. The potential implications of a war between China and the US were produced using a general equilibrium model that considers a multi-country situation. The effects of the China-US trade war were then produced by the simulation in numerical values. According to the simulation, China will be more harmed by the tariffs in all indicators. China is likely to face troubles in its trade, manufacturing employment, gross domestic product, and welfare. The trade between China and the US will cause havoc throughout the world.

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It is of utmost importance that a solution is materialized as quickly as possible. At the moment, both countries are engaged in a tit for tat battle that whereby no one really benefits. It should be noted that war is a tool that brings countries together for consultations and the creation of a long-term solution that favors the political and economic growth of the involved parties. However, war is counterproductive especially when taking place for a long time and should be avoided or minimized as much as possible (Kajimoto para 1-5). 25 Oct. 2018, https://www. bbc. com/news/business-45899310 Kajimoto, Tetsushi. “Japan Calls for Early Solution to U. ‘US-China relations crumble as disputes extend beyond trade war. ’ Telegraph Media Group Limited, 26 Sept.

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