Essay Sample on Current US Trade War

The current US trade war is headed for a dangerous path. Since Trump fired the first grenade of tariffs that triggered off a trade war with China more than a year ago, there has been a lot of discussion across many circles about what this portends to the US consumers and businesses. While the tariffs imposed on American imports sounds good music to the Republicans, the Democrats of Texas feel that the trade war is going to hurt Americans consumer in a significant way. If we are to hope protect Texans, Democrats must exert an enormous pressure possible to force the current administration to rethink this strategy for the better future of all Americans.

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The trade war is a disaster for all Americans because it would continue hurting American farmers. Texas is one of the foremost arteries of the United States regarding agricultural production. Despite the existence tariffs imposed against China, the Asian giant remains a leading destination for American goods and services. According to the US-China Business Council (2019), Texas emerged as the top trading partner of China among all American states in 2018 with the state recording $16.3billon in exports, representing a 1.9% increase from 2017 and 88.2% increase since 2007. Although these exports include a range of products, agricultural products occupy top positions of these exports. If the trade war continues, it will become more expensive for American farmers to access the Chinese market. With a population four times that of the US, denying US farmers a market with such big opportunity would undermine agriculture not only for the Texas farmers but also for America as a whole.

The trade war is not suitable for Americans as it would reduce foreign direct investment (FDI) from China could, in turn, impact employment and the country's GDP negatively. According to Rhodium Group (2018), the rate of FDI from China since Trump began his abrasive trade policies fall significantly with data suggesting that in 2018, Chinese FDI dropped to $ 4.8 billion. This is a massive decline from $29 billion and $46 billion for 2017 and 2016 respectively. This implies that fewer businesses are created as compared to previous years. A drop in FDI would reduce the output of the United States. For instance, Holland and Sam (2019) suggest that if the trade war continues for the next two years, the GDP of the US and China will shrink by 0.2 percent and 0.5 percent, respectively. In a scenario where Republicans remain in office and extend this war for a decade, around $ one trillion could be entirely wiped from the economy (Birmingham, 2019). Consequently, more people would become jobless and less revenue in taxes. This is a massive threat to the country's employment and economic expansion. If Americans lose jobs and business incomes, their prosperity would be under threat. Even with this grim reality, not everybody seems to agree.

Those who disagree like the Republicans and their sympathizers argue that China would be hurt more than the US. According to experts, China relies more on the US market for its overreliance on tech imports from the United States, and this could make the country suffer more than the US. However, the real pain of the tariffs is split between the businesses and consumers of the country imposing tariffs and the country being targeted (Lee, 2019). According to a recent study, the little cost would fall on Chinese manufacturers, and more Americans would be hurt compared to the Chinese (Cavallo, Neiman, Gopinath, & Tang, 2019). So American consumers would suffer, and businesses exporting to China would lose profits. American companies like Apple will find it tough to operate in China. Therefore, this argument does not hold any water.

If the issue of American trade is to be addressed, a trade war can never be the solution. This is because this strategy would hurt both American businesses and consumers. No sound American leader wants American to suffer. Thus, Democrats must rise and stand with the American people

References

Birmingham, F. (2019). US$1 trillion war: the potential cost of the US-China trade dispute. Retrieved from https://www.scmp.com/economy/china-economy/article/3002376/us-china-trade-war-could-slash-us1-trillion-us-economy-decade

Cavallo, A., Neiman, B., Gopinath, G., & Tang, J. (2019). Tariff Passthrough at the border and at the store: evidence from US trade policy. Harvard University. Retrieved from https://scholar.harvard.edu/files/CGNT_0.pdf

Holland, B., & Sam, C. (2019). A $600 billion bill: Counting the global cost of the U.S.-China trade war. Retrieved from https://www.bloomberg.com/graphics/2019-us-china-trade-war-economic-fallout/

Lee, Y. N. (2019, June 3). Is China really paying for Trump's tariffs? It isn't so straightforward. Retrieved from https://www.cnbc.com/2019/06/03/us-china-trade-war-who-pays-for-donald-trumps-tariffs.html

Rhodium Group. (2019). Net negative: Chinese investment in the US in 2018. Retrieved from https://rhg.com/research/chinese-investment-in-the-us-2018-recap/

The US-China Business Council. (2019). 2019 state export report: Goods and services exports by US states to China over the past decade. Retrieved from https://www.uschina.org/sites/default/files/2019_state_export_report_0.pdf