Essay Sample on Issues Affecting International Trade

International trade involves the exchange of commodities, capital and services across global borders. It may be in the form of export or import. Export international trade involves selling goods and services out of the country to another while import international trade entails a country purchasing goods and services from another country. The cheap price cost and high quality of a product lead to importation. A country can also buy goods from another when the products produced domestically are not enough. There exists an international trade between the United States and China. The two countries are the main partners in global international trade because they are very strong economically. The main commodities exported from China to the United States include electrical machinery, beddings and furniture, sports equipment and plastics among others. On the other hand, the United States sells to China aircraft, optical and medical instruments, vehicles and agricultural products. Despite the connection between the United States and China, there exist several issues that affect the trade between them. Among the issues that will be discussed in this paper is the trade war between the United States and America. A trade war is an economic conflict resulting from the tendency to protect the economy of a country. It involves creating or raising the existing standards or other trade barriers against each other in response to the trade barriers created by the other party (Amadeo, 2019). The rising tariffs are the main trade barrier between China and the United States.

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President Trump of the United States is the one who initiated the trade war between the US and China by imposing very high tariffs on goods imported from China. A tariff is a term that is used to refer to a specific tax that is levied on an imported good at the border. It leads to a rise in the cost of goods and services bought originating from another country thus the domestic customers fail to purchase. This is because the United States is very powerful economically thus it is eligible for making decisions that can influence trade with other countries. Trump has ordered an increase of tariffs between 10 to 20 percent on imported Chinese commodities that are worth billions of dollars (O'Brien, 2019). In retaliation, China also imposed tariffs on imported goods from the US worth billions of dollars. Though the creation and rising of the tariffs are reciprocal between the two countries, the United State's tariffs on Chinese goods seem to be higher. The introduction of tariffs serves to secure market opportunities for domestic producers. This is because domestic products are cheaper thus will attract more customers concerning the expensive imports after tariffs.

The desire by President Trump of the United States to raise the tariffs on imported goods from China is initiated by the need to reduce the 621 billion dollars existing trade deficit (Amadeo, 2020). The trade deficit had resulted from the United States exporting fewer goods than it imported. This trade deficit results from the high consumption of imported commodities. For example, in 2017, the United States exported to China goods worth 130 billion dollars that included aircraft, soybeans, and automobiles (Amadeo, 2020). In exchange, the United States purchased goods that were worth 506 billion dollars from China which entailed electronics, clothing, and machinery (Amadeo, 2020). This resulted in a trade deficit in the United States. Reducing trade deficit is a framework for creating more job opportunities in China. In addition to the issue concerning the trade deficit, Trump aims at stopping the transfer of technology to China because He wants America to stand out as the only country which has developed technologically. China imports and is in dire need to get technological ideas from the United States because she wants to improve her Artificial Intelligence level.

The trade war between the United States and China has a lot of effects. They are threats to international trade globally. Farmers in the agricultural sector are among the groups of people that are highly affected by the high tariffs. For example, in the farms that are situated in Indiana, lack of money has increased to a very high level. In 2017, food production was half the required quantity and again farmers profit decreased by 11 billion dollars (Davies, 2019). This is due to the high cost of the agricultural inputs inclusive of the farming machines. Countries involved in global trade are excluding the United States from forming trade agreements due to these high tariffs. The trade war between the US and China affects other countries such as Malaysia because the tariff policy applies to Malaysia's major export to the United States. The trade war is a very significant threat to China bearing in mind that China's economy solely depends on Sales.

As a consultant in international trade corporations, there are solution strategies that I can recommend on the issue concerning the tariffs trade war between the United States and China. This is because the trade war has a lot of disadvantages which extend the negative effects on other countries that export their products to the two countries, more so to the United States. The first solution to the rising tariffs is following and implementing the tariff exclusion process (Vineyard, 2018). This policy was formulated by the Office of the United States Trade Representative. Business people from the United States can present a letter requesting for removal of high taxes on goods imported from China. In such a case, the goods will turn out cost-friendly to the domestic consumers thus they can purchase them without any constraints. The letter to be submitted to the government for tax exclusion should contain the physical characteristics of the specific community to mark the difference of the good from other goods from the same category. This is because according to the rules of the exclusion policy, only one product from a certain category is eligible for exemption from taxation at the border. Information that should be included in the quantity of the product that is ought to be excluded from taxation. The quantity presented should be for the past three years.

In the exclusion letter, those presenting a request should give comprehensive reasons as to why they want the product to be free from taxation (Chen, 2018). This is done to give more emphasis and convincing power to the United States government to heed to their interest. Since, the exclusion policy readily favors goods exported from China, an explanation of whether China is the only available is required. The commodity should thus be purchased from China to meet the exclusion standards. Those requesting should also give out an analysis of whether the commodity is affecting their economic scale negatively. If the good does not affect the business people, the domestic consumers, and the United States economically in any negative way, it, therefore, fails to meet the exclusion standards. As an international organization consultant, I can strongly attest that this exclusion policy can only work on large companies that have a high economic growth scale margin. For example, large companies like Apple that deal with mobile phones and other electronics are capable of employing attorneys to help them fight through the tariff exclusion process and get them a win at the end. Companies that are of small size cannot get enough cash to hire and pay a representative on the process.

Another solution that can be applied to solve the extreme rise in the tariffs on imported commodities from china is to consider importing from other countries whose goods are not levied much at the border (Vineyard, 2018). These goods will automatically be cheap and affordable to domestic customers in the United State. If you are a business person and you are sourcing your goods from China, if at all you are not getting any profits from the sales after taxation, one should stop. The only disadvantage of this solution is one can get goods, similar to those that could have been imported from China that is of low quality. Some countries may also be unwilling to export their products. It will result in the production of more counterfeit commodities because of the high demand.

The issue of imposing high tariffs on Chinese commodities in the United States is formulated and implemented by President Trump. If the tariffs have to be abolished, the political issues should be separated from the economic issues (Huang, 2019). The trade industry should be headed by a representative who understands well the extreme effects of having such policies. Or rather, a debate can be conducted in the implementation of tariffs because the possible result would be opposing the tariffs by the majority. In such a case, trading terms governing international trade between the United States and China will be friendly.

To end the trade war between the United States and China, the two countries are supposed to engage in a talk (Cyrill, 2019). The main theme of the should be on how to collaborate and work together as trading partners without subjecting torture on each other. This is because if the trade war continues, the United States retailers and domestic consumers will continue to be affected if the taxes on Chinese goods will remain high. On the other hand, a decrease in job opportunities, inadequate finances and poor growth in the manufacturing industry and domestic consumption sectors will render China with no other option but to engage themselves in friendly talk with the United States. This will result in effective partnership terms between the two.

In conclusion, the trade war between the United States and China stand out among the issues affecting global trade. The trade war involves the high imposition of tariffs on both imported goods from each of the two countries. The war was initiated by the United State's current president Trump to improve the state of the domestic producers. Trump also wants to prevent China from growing in technology and artificial intelligence. The trade war thus creates an opportunity for the United States to improve domestic production and reduce trade deficits. Despite the opportunity created by the war, it has effects such as decreasing China's economy. Among the solutions that can be applied to solve the trade war includes initiating friendly talks between the two countries, separating economic issues from politics, following the tariff exclusion policy in the United States and importing goods from other countries apart from China.

References

Amadeo, K. (2020). US Trade Deficit with China and Why It is So High. Retrieved from https://www.thebalance.com/u-s-china-trade-deficit-causes-effects-and-solution-3306277

Amadeo, K. (2019). Trade Wars and their Effects on the Economy. Retrieved from https://www.thebalance.com/trade-wars-definition-the-effects/

Chen, C. (2018). Section 301 Tariff Exclusion Process for Chinese Products. Retrieved from https://www.universalcargo.com/sectuin-301-tariff-exclusion-process-for-chinese-products/

Cyrill, M. (2019). How Will the US-China War End?. Retrieved from https://www.china-briefing.com/news/how-will-us-china-trade-war-end/

Davie, W. (2019). How is the Us-China Trade War Affecting the Global Economy?. Retrieved from https://www.ftadvisor.com/investments/2019/10/15/how-is-the-us-china-trade-war-affecting-the-global-economy/

Huang, Y. (2019). Can the US-China Trade War Be Resolved? Retrieved from https://thediplomat.com/2019/07/can-the-us-china-trade-war-be-resolved/