Paper Sample on Trade War Between the United States and China: Causes, Impact, and Implications

Introduction

Over the years, the power of China in the trading system has grown alongside that of the United States. As a result, it has brought rivalry in the trading world between the two nations. China became dominant in international trade, thereby making it the biggest exporter with a yearly export capacity of USD 2,264.32 million (Liu, 2018). In the year 2014, China's nationwide productive power had outclassed that of the United States because of its low-cost manufacturing center (Liu, 2018). Although China's productive power had escalated globally, the United States holds the foremost place in the financial markets. The perception of complete supremacy in the international market by the U.S. has come into a disagreement with the expanding disparity in bilateral marketing with China. It was brought by the United States allegations that China is exploiting the market by engaging in biased trade regulations through utilizing the advantages of trade liberalization while at the same time safeguarding its local trade system in odds with external competition (Meltzer & Shenai, 2019). Conversely, the trade war has no victors as the intercontinental economic chronicles manifest. Both China and the U.S. have incurred losses, but the United States has had a prolonged reputation of gaining from the talks on fixing the arising trade disagreement hence making other nations to pace back. This essay focuses on the history of the trade war connecting the United States and the Chinese government.

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Problem Statement

The trade war between the United States and China is significant because it provides advantages to the domestic business of both China and the United States and also protects national interests. Generally, the extent of the China-US trade could bring more bad news to the overall economy. Some businesses may tend to hold off from investing in new firms until the trade war is dealt with. As a result, there exists a pullback that leads to slow growth in employment rates, thereby affecting consumer spending, which happens to be the largest driver of both China and the United States. The trade war started back in the year 2018 because of the unfair trade practices, the growing trade deficiency, the stealing of intellectual possessions and the enforced conveyance of United States scientific technology to China. The trade war has affected the economies of both nations in a negative type of way. In the United States, it has to lead the way by increasing the prices for consumers and also financial difficulties among the farmers and the manufacturers. On the other hand, in China, it has led to a reduction in the manufacturing sector and overall economic growth.

Research Questions

Primarily, the trade war has brought about losses in the financial markets. Furthermore, the marketing conflict between the U.S. and China has negatively impacted the growth of other economies globally. Thus, the following research questions will guide the research proposal.

1. How has the trade war between the U.S. and China affected the trade markets and the financial market between the two nations?
2. What are the causes that have led to the existence of marketing warfare between the United States and China?
3. What are the similarities and differences connecting the U.S. and China regarding the trade war?

Rationale and Significance

The purpose of the study is to investigate the history of the trade war linking the Chinese and the U.S. government. This research proposal will make it easier to document the causes and outcomes as well as the differences and similarities of the trade war outcomes. Consequently, the findings will be important in examining how the trade war affects the economies of both countries.

Definition of Terms

The main keywords in this research proposal will be trade, trade war, and tariffs.

Trade: this term is used to define the primary economic concept that involves the buying and selling of goods and services, where a consumer pays a payment to a retailer.

Trade war: This term is used to define a situation in which different nations try to destroy each other's trade, mostly by the imposition of tariffs restrictions

Tariff: This term is used to describe a tax that must be paid on a specific group of imports or exports.

Literature Review

According to (Thiebaut, 2018), the United States government had two aims concerning the trade war. The first objective was to fix the trade deficit that the United States had with China in the year 2017, and the subsequent objective is to enforce the Chinese government to adjust its unbalanced industrial rules and regulations in the trade market. The main objective was to cease the uneven competitiveness that was caused by the commercial policies of China. Typically, some of the policies used by the Chinese government include subsidizing that favoured the Chinese industrial activities and also needing the different industries to make use of the technology conveyance as a trade-off for the China trade market. With such strategies, the intercontinental trading policies are threatened to a great expanse. President Donald Trump accused China's W.T.O. entry of negatively influencing the U.S. economy. For instance, China's W.T.O.'s has caused slow growth in the United States economy and also reduced the rate of employment among American citizens through the exportation of more competitive products to the U.S. open market.

Ultimately, the United States trade representatives imposed an ad valorem tariff of 26% on the Chinese products that were imported into the United States market (Thiebaut, 2018). The U.S.T.R. also introduced another tariff increase with a proportion of about US$ 17 billion yearly trade value (Murthy & Kalsie, 2019). China retaliated by imposing a supplemental ad valorem duty of 26% on roughly US$50 billion yearly trade worth of all products that were marketed to the Chinese market (Thiebaut, 2018). On the 1st of January 2019, the United States trade representatives imposed a further supplemental ad valorem of 10% with an approximation of about US$200 billion yearly trade worth (Yu, 2018). As expected, the Chinese government also introduced an ad valorem duty of about 5% with an approximation of about US$ 60 billion annual market value on American products (Li et al., 2018). The United States later set the tax back to 11% on imported products from China, prompting the Chinese government to expand their imports (Li et al., 2018).

According to the Chinese government's view, the series of tariff expansions and the false allegation made by the United States, the Chinese government provided a detail concerning the primary standards for global communications like joint respect and same dialogue. Typically, the Chinese government argued that their trade markets and that of the United States were highly interdependent on the grounds of the comparatives dominance of the two nations. Distinctively, goods from the U.S. are at the centre and the high-point of the international profit chain end and that the U.S. primarily imports capital and intermediate goods to China. On the other hand, goods from the Chinese market are at the low and middle phase of the international value, and the Chinese government only imports summer goods and final products from the United States (Zhang et al., 2017).

Typically, the China-US trade is advantageous to both countries in a big way for a long time. For instance, the imports and exports from China to the United States are ranked as the top in value amount. Furthermore, the trade between the two countries has increased economic development and also raised the standards of living of Chinese country. Because of the economic globalization framework, the Chinese government has contributed largely to China's global production, thereby benefitting the economic growth of China. Additionally, the U.S. firms that have invested in China have contributed largely to the development of other Chinese firms in terms of technological remodelling and effective planning of the trade market. On the flip side, the firms of the United States benefit from huge opportunities provided by China, thereby enhancing the economic stability of the United States. The market cooperation linking China and the united states also offers significant employment opportunities to U.S. citizens (Wang et al., 2020).

The trade conflict affects not only the economic growth of the U.S and China but also that of other countries. Ideally, the trade war has immediate impacts on some markets like the financial market where there is the poor performance of the stock and bonds returns. For instance, the shanghai stock composite stock market has experienced a decline of about 20% because of the trade war (Lester & Zhu, 2019). Moreover, the trade war could also exert a persistent influence on the fiscal markets. This is because each time two governments make negotiations regarding bilateral trade issues, the shareholders immediately make necessary steps to avoid losses in the stock market. According to (Kwan, 2019), a 10% rise in the ratio of U.S. sales will bring about a reduction of about 0.9% of China's cumulative stock market returns. As a result, other firms that are associated with China indirectly through trade will also be affected through the connections of the intercontinental profit chain engagement.

Technically, the tensions connecting the U.S. and China relations pressurize the whole international economy and not just the two nations. (Ferguson & Xu, 2018) maintains that because of the trade conflict, the international economy can expect to reduce by 0.6% in the coming years. Moreover, a response from China regarding the trade conflict could harm the United States more. This is because American firms will fall short of their customers in China because of the patriotic appeal to steer clear of goods from United States firms. For instance, firms like Apple and K.F.C. could lose their customers from China hence leading to a decline in profit. Moreover, China's insistence on goods not allowed by the United States government has increased gradually. As a result, firms like Huawei and Z.T.E. are placed in challenging positions since most of the products for telecommunication equipment manufacturing are shipped out from the United States, and China cannot restore that amount.

Nonetheless, the impact on customers is entirely dependent on the individual's taste and preferences. An example is when the Americans who enjoy the tech products that mostly come from China, are more likely to have the notion of being ripped off than those depending on locally manufactured products since the imported products are made to be more exorbitant by the elevated tariffs (Moosa, 2011). The trade war might have severe outcomes for both nations. The U.S. government market bond will deteriorate; the inflation rate in the local market will escalate gradually. Additionally, the likelihood of unilateral productive consent inflicted will force other nations to look for different vendors and markets. China will, in turn, seek to push the U.S. out of the annual percentage rate. Trade war leads to a change in the export-import flows, the rise of territorial free-market regions, and economic associations.

Materials and Methods

Design and setting

This is a research proposal that utilizes the ground theory to argue the findings. The above-evaluated literature and others will be used to provide relevant data collected previously during other studies across the world.