The third part of the project incorporates any revisions to the second part of the project, and gives the student the opportunity to act as an intermediary b

5

Economic Conflict and Global Repercussions of the U.S.-China Trade War

Name

Instructor

Course

Date

Economic Conflict and Global Repercussions of the U.S.-China Trade War

The trade war between the United States and China has been among the substantial international economic issues since 2018, significantly affecting the patterns of international trade, economic policy, and geopolitical relations. This conflict, in particular, is brought about by the following: trade imbalances, rights to intellectual property, and tariffs imposed by both nations. In fact, as country after country moved to adopt policies safeguarding their respective industries and securing positions of preeminence in the global economy, the trade war cut across all lines globally, with particular effects on technology, manufacturing, and agriculture. This paper looks at the background of the conflict, the parties involved, and the broader implications of the trade war in shaping the contours of the world economic landscape.

Background of the U.S.-China Trade Conflict

Decades of economic competition between the two biggest economies of the world have laid the bedrock on which the U.S.-China trade war rests. The trade relations with China became strained when the U.S. government, under President Donald Trump, started to take a hard stance against the country's trade practices, accusing it of following unfair trade policies, manipulating currency, and stealing intellectual property. As a response, the U.S. imposed tariffs on several billions of dollars in goods originating from China. As Mahedi et al. (2024) note, Chinese import tariffs increased from 2.6% to 17.5% in 2018, and China, in retaliation, responded by placing tariffs on goods that were coming from the United States and increasing its import tax to 16.4% from 6.2%. In this case, such an escalation in the trade fight had repercussions in both countries' economies and the patterns of global trade.

Nature of the Conflict

Therein lies the five core issues at the heart of the U.S.-China trade war. The U.S. wished to address its trade deficit with China, a big point of controversy. According to Mahedi et al. (2024), this trade deficit hugely favored China; hence, the U.S. perceived it to be a sign of unfair trade practices on the part of China and asked for reciprocal tariffs and better market access for goods emanating from America. The U.S. also raised concerns with China's intellectual property laws. It stated that the country was not offering enough protection, hence facilitating the theft of American technologies through compelled technology shifts (Winkler, 2023). Another set of accusations that fueled further escalation was when the U.S. placed restrictions on Chinese technology companies like Huawei for the risks they posed to national security.

In return, China branded the U.S. as protectionist and initiated its policy of retaliation with the imposition of tariffs on American farm products, machinery, and automobiles, thereby marking the beginning of a series of escalations in tariffs. The nature of this conflict was extended beyond economic concerns into geopolitical power struggles where both countries try to outcompete each other in critical industries like technology and manufacturing. This caused a disruption in the global supply chain, especially in East Asia, where countries like Japan, South Korea, and Vietnam, there was a reconfigured trade flow to their advantage, with increased U.S. imports (Mahedi et al., 2024).

Impact of the Conflict

The trade war between the U.S. and China has left a profound impact on both economies and world trade. The tariffs were believed to increase costs for U.S. consumers and businesses, especially those reliant on Chinese imports. A report by the Federal Reserve estimated that U.S. investment fell by 1% to 2% owing to the uncertainty created by the trade policy (Caldara et al., 2019). This conflict also caused a decrease in the exportation to China, with significant losses to American farmers, especially in agricultural sectors such as soybean production. Similarly, China dealt with a reduction in exports to the U.S., particularly in machinery and electrical equipment, with the tariffs making such goods uncompetitive for the American market (Mahedi et al., 2024). The Phase One Agreement, signed in January 2020, temporarily relieved some of the tensions by modestly lowering the tariffs and promising China to buy more goods from the United States, mainly in agriculture and energy. However, it only slightly relieved the global economy, having averted just a 0.1% decline in global GDP (Mahedi et al., 2024). Still, general trade policy uncertainty remained unaddressed, therefore discouraging investment with a long-term focus and making supply chain management difficult.

Significance of the U.S.-China Trade War

The U.S.-China trade war is essential not just because of its economic consequences but also because of geopolitical stakes. This conflict reflects a shift in the balance of global power, and both nations are fighting for dominance in sectors that are considered crucial, such as technology, telecommunications, and even artificial intelligence. These tariffs and trade restrictions have been tools for each country to advance its economic interests while attempting at the same time to reshape the global rules of trade in its favor (Fajgelbaum & Khandelwal, 2021). For instance, the U.S. tried to reduce dependence on manufacturing in China by incentivizing the reshoring of industries. At the same time, China pursued strengthening its indigenous industries through the Made in China 2025 initiative (Mahedi et al., 2024). The broad ramifications of this trade war are the fragmentation of international trade networks; alternative partners, perhaps, emerge. While Chinese goods became more expensive in the U.S., countries like Vietnam and Mexico thereby gained a foothold in sectors hitherto dominated by the country. The trade war thereby gave way to the reorganization of global value chains, in which some countries benefited from increased trade with the U.S., while others-particularly East Asian economies, from disrupted value chains (Mahedi et al., 2024).

Conclusion

The U.S.-China trade war has reshaped global economic relations, sent supply chains into dislocation, increased uncertainty in international trade, and changed the balance of power in critical industries. Though the Phase One Agreement had some relieving moments, the conflict is yet to be resolved, with further tensions presumably going on to shape global trade for the next several years. The story of this trade war is more about the geo-economic impact on both countries than the economic fallout; it presages a change in geopolitical dynamics and an example of how interlinked global supply chains have become. Sorting out these complexities, tussling with deep-seated issues that fired up the conflict between both countries in the way ahead part of this process.

References

Caldara, D., Iacoviello, M., Molligo, P., Prestipino, A., & Raffo, A. (2019). The Economic Effects of Trade Policy Uncertainty. International Finance Discussion Paper, 2019(1256), 1–49. https://doi.org/10.17016/ifdp.2019.1256.

Cheng, N. F. L., Hasanov, A. S., Poon, W. C., & Bouri, E. (2023). The US-China trade war and the volatility linkages between energy and agricultural commodities. Energy Economics, 120, 106605. https://doi.org/10.1016/j.eneco.2023.106605.

Fajgelbaum, P., & Khandelwal, A. (2021). The Economic Impacts of the US-China Trade War *. National Bureau of Economic Research, 14(29315). https://doi.org/10.1146/annurev-economics-051420-110410.

Mahedi, H., Wang, J., Mizanur, R. M., Hasan, R., Srikanto, M., & Al, F. U. (2024). A Comparative Analysis of the Trade Policies of China and the United States of America. Open Journal of Business and Management, 12(04), 2174–2207. https://doi.org/10.4236/ojbm.2024.124112.

Stephanie Christine Winkler. (2023). Strategic Competition and U.S.–China Relations: A Conceptual Analysis. The Chinese Journal of International Politics, 16(3). https://doi.org/10.1093/cjip/poad008.

,

6

Unsuccessful Attempts at Resolution of the U.S.-China Trade War

Name

Instructor

Course

Date

Unsuccessful Attempts at Resolution of the U.S.-China Trade War

The trade war between the U.S. and China has been ongoing for a couple of years, with mutual tariffs slapped on each nation and with accusations of unfair trade practices. Both countries have tried to negotiate their way through this crisis, but most strategies seemed to fail due in large part to the conflicting interests in trade policies, national security concerns, and geopolitical rivalry. This section shall look at how attempts by both the United States and China have sought to resolve the trade conflict but failed and for what reasons.

The Phase One Agreement: A Short-Lived Success

One of the most high-profile attempts to end the U.S.-China trade war was the "Phase One Agreement signed in January 2020. It commits China to buying an additional $200 billion worth of U.S. goods and services over the next two years," beyond what it bought in 2017 (Bown, 2022, par. 9). The U.S. committed to easing some tariffs on Chinese products in return. It did nothing to solve the root causes of the trade war, although it temporarily relieved tensions. The Phase One Agreement focused on tariff reduction and increasing purchases. Major areas of interest, such as intellectual property theft, forced technology transfers, and the state subsidies China gave to its key industries, were not affected (Ciccantell et al., 2023). As Siripurapu and Berman (2023) explain, the deal did not involve the resolution of structural gaps between the economies of the two nations, entangled deeply with China's state-controlled model of development versus the U.S.'s call for equal market competition. The narrow limits of this agreement left many contentious issues still to be negotiated for a continued trade war.

Unilateral Tariff Strategies

While tariffs have been the first option in trying to resolve the trade conflict between the two countries, the U.S. and China have continued to rely on them a great deal in what has mostly been an ineffective tool for them. The U.S. imposed retaliatory tariffs across billions of dollars in Chinese goods for what initially was a move to compel China into changing its trade practices. China eventually responded with retaliatory tariffs targeting farm products and other key U.S. industries. This approach has yielded very little result so far, as required to resolve the dispute. One of the main reasons tariffs have yet to yield the desired result is that tariffs are basically an act of hurting both economies without necessarily solving the ground problems. As Ciccantell et al. (2023) observed, the tariffs against Chinese goods have hurt American consumers and businesses through increased costs, while the tariffs laid by China against U.S. exports devastated American farmers. These have disrupted supply chains worldwide, especially in industries such as electronics and manufacturing, and make it hard for either country to maintain economic stability. The mutual damage of the tariffs did work to grow domestic opposition in both nations, but neither has been willing to jettison the strategy entirely.

Intellectual Property and Technology Transfer Disputes

Another significant failure in resolving the trade war lies in the ongoing disputes over intellectual property rights and forced technology transfers. The U.S. has long accused China of engaging in practices that force American companies to share their technologies in exchange for market access. This issue remains a central point of contention and has been a major obstacle in trade negotiations. The failure to resolve these disputes stems from the differing economic systems of the two nations. China’s state-led development model, which includes heavy subsidies for industries such as technology and manufacturing, is fundamentally at odds with the U.S. demand for a market-driven approach. As Shi (2022) points out, China’s protection of its domestic industries and its strategic focus on becoming a global leader in technology are key reasons why the U.S. has been unable to reach a comprehensive agreement on intellectual property and technology transfer issues. Without addressing these structural differences, any attempts at resolution are likely to be temporary or incomplete.

The Geopolitical Dimension

One of the most important factors is the role of geopolitics in perpetuating the failure of negotiations between the U.S. and China; both countries consider the trade war to be not just an economic dispute but also a tectonic struggle over global supremacy. As Siripurapu and Berman (2023) note, the trade war is about much more than tariffs and trade balances- it is a reflection of the broader strategic competition between the world's two largest economies. This is all the more geopolitical, making it rather difficult to resolve, for neither country would want to give in to a situation that could weaken them on the global stage. The U.S., through the Trump and Biden presidencies, has pursued a tough approach toward China, viewing the trade war as part of the overall policy of containing China in areas like technology, military power, and international trade. China, for its part, has resisted American demands, which are viewed as tantamount to obstructing Chinese sovereignty and development processes. This geopolitical standoff makes it very problematic for negotiators to find a lasting agreement that would square long-term strategic interests with short-term economic gains.

Conclusion

The U.S.-China trade war is still in the morass of an unresolved conflict despite several attempts at negotiation and resolution. The Phase One Agreement was a momentary success but could not resolve the major issues of intellectual property rights and China's state subsidies. Plainly, the unilateral tariff ways would not work; both economies were bearing negative influences, and thus, they could not settle the root causes of the conflict. This is also elaborated by the geopolitical factor in the trade war, which has further complicated efforts at finding common ground. The trade war, in all its enormous consequences on the world's economy, will thus not be stopped unless these most basic issues can be compromised on by the two nations.

References

Bown, C. (2022, October 20). Four years into the trade war, are the US and China decoupling? Peterson Institute for International Economics. https://www.piie.com/blogs/realtime-economics/four-years-trade-war-are-us-and-china-decoupling.

Ciccantell, P. S., Smith, D. A., & Sowers, E. (2023). Trade Wars and Disrupted Global Commodity Chains. Journal of World-Systems Research, 29(2), 457–479. https://doi.org/10.5195/jwsr.2023.1164.

Shi, Y. (2022). A Review of Non-Tariff Measures with Particular Focus on the U.S. and China Practices. Theoretical Economics Letters, 12(03), 601–628. https://doi.org/10.4236/tel.2022.123034.

Siripurapu, A., & Berman, N. (2023, September 26). The Contentious US-China Trade Relationship. Council on Foreign Relations. https://www.cfr.org/backgrounder/contentious-us-china-trade-relationship.

Collepals.com Plagiarism Free Papers

Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.

Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS

Why Hire Collepals.com writers to do your paper?

Quality- We are experienced and have access to ample research materials.

We write plagiarism Free Content

Confidential- We never share or sell your personal information to third parties.

Support-Chat with us today! We are always waiting to answer all your questions.