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  • Ethan Cui

The Impacts of the US/China Trade War

The People’s Republic of China and the United States of America, the two global economic giants that have disparate world views and national interests, clash on the world stage. There is a multitude of repercussions that stem from the decision of governments and international politics. The current bilateral trade war and other disputes have taken the world on a seemingly pernicious and volatile path in terms of economy and business. The tariff battle poses unwanted effects on various economies, businesses, employment, and consumers. These factors are all detrimental due to the impacts they have on the general livelihood of the people. Throughout the two countries, the economies have been negatively hit, with the people paying most of the price. The competition for power on the global stage and influence has culminated into a full out war with trade that has caused chaos in the global economy and holds the potential to implement more severe consequences for the people of the world and their lives. The rivalry between governments and superpowers does not only deteriorate international diplomacy and relations, but can pester and tamper with the lives of people and presents heightened risks for abysmal outcomes for the whole world.

Usually, trade wars begin when one country’s administration becomes increasingly protectionist by attempting to optimize and increase domestic jobs and businesses in return for fiscal gain. This is done by restricting foreign imports by enacting the taxation of goods going into the country, which is known as imposing “tariffs”. The real trade war begins when the nation that is subjected to the tariffs of one country retaliates by passing its own tariffs. In the history of tariffs, countries create tariffs in the effort to make the other country back down from trade. However, this is not the case, as the other side does not back down and the situation escalates. In economic retrospect, there were many cases of tariff wars started by governments that created abysmal outcomes. Major examples of how the discord and escalation of trade wars can result in serious repercussions can be proved by looking back into certain events in US history. The most significant of which is considered to be in 1930, where two Republican congress members, Reed Smoot and Willis Hawley announced tariffs on every trading partner of the United States. This would be later known as the Hawley-Smoot Tariff act. They sought to increase the amount of domestics jobs and opportunities for Americans. Then, practically the whole world retaliated by imposing their own trade sanctions on the US, turning the decisions of the two congressmen into a full out trade war. The trade conflict then fomented massive economic fluctuation and became one of the key driving factors in America’s steep recession, which contributed immensely to what was known as the worst economic disaster in history. It played a major role in bringing the world into the episode of the Great Depression. Ultimately, the Great Depression set the stage for the Second World war, creating years more chaos for the people of the world and jeopardizing peace. This would prove that the impulse of tariffs could end with devastating results. The act was an unmitigated disaster for the American economy and later, for the whole world.

With the case of today, US President Donald Trump sought to hamper the amount of trade deficit with the country’s main trading partners, especially China. He carried out this plan early into 2018, when his administration imposed unilateral tariffs on some of its major trading partners. Through this, China had faced the bulk of the US trade tariffs on some products that they export to the United States. Washington presented taxations on Chinese imports mostly in the sectors of machinery and technology, for example, Chinese made aircraft parts and cars. China then retaliated by presenting its own tariffs on American goods. They consisted mostly of American agricultural products and raw resources, such as soybeans, seafood, meat, and produce. Another reason as to why the American administration had imposed the tariffs is that they believe that theft, espionage and foreign interference allowed China to rapidly modernize it's military and corporations, becoming leaders and dominators of the world market. These accusations and sentiments have been amplified by US President Donald Trump and his administration. They regard China's rapid development as the pursuit of decades of predatory policies and practices of international trade. He aroused the suspicion that the Chinese government has been trying to get their hands on the intellectual property of American businesses. Trump claims that American corporations have been forced to unveil and transfer their technology to their Chinese partners and counterparts. The United States accused China of copying American made and designed products and stealing data of designs through hacking and intelligence theft. An example that the US has used to back up their claim is the F-35 project. The F-35 fighter jet came out to be the most expensive military weaponry system ever, that the US had put a large amount of investment in. US critics have noted that the Chinese Shenyang J-31 resembles the designs of the F-35 and looks exactly like it. This is used by many to prove the accusations of Chinese conducting hacking into the US military database and corporations that support it, thus allowing the Chinese to steal project data. To counter this accusation, the Chinese Communist party denied any theft on US intellectual property and in return to the accusation, stated that the US is trying to burden the global economy by starting the largest trade war yet. This side of the tensions culminated into a myriad of discourse and debates. This has only made way for more taxations, restrictions and condemnation between the two nations.

The bilateral trade war is accompanied by economic threats and impacts. This economic decline that stems from the tariffs between the two nations has an indirect effect on the people. The economies of countries around the world that trade with China or the US and their economic output can be hampered due to the effects on the two main superpowers from their bilateral trade war. Throughout the course of the tariff war, it was recorded that economic growth in not only the US or China has slowed but the output of many other national economies have been diminished. By 2021, it is estimated that the world economy would be indebted to 585 Billion USD. Other countries that play key roles in the Supply chains of these two countries are also seeing steep declines in their economies. The economic repercussions of the war of tariffs have spread to other nations in Europe and Asia, where significant declines have taken place. For example, countries in Asia such as Singapore, Malaysia and South Korea have experienced hard hits on their economies and will have rather difficult times adjusting to the economic impacts of the tariff war. The trade war fails to solve the underlying economic issues faced by the two global superpowers, and still hurts the global economy. This economic downfall has the potential to cut or hamper the amount of foreign aid wealthier countries are willing to provide other countries that are developing or underdeveloped. For the United States, it significantly hurts the economy without resolving the trade deficits it has with China. During the first year of the trade war between Beijing and Washington, the US has reported a loss of $8 billion worth of GDP, while China was not spared from suffering immense economic plummets as well. As the two largest economies in the world, the all-out trade war between them will result in plenty of fluctuation in the world economy and the economies around the world, making the results increasingly volatile.

The trade clash between the PROC and the US has also posed destabilizing effects for many business sectors and corporations. The corporations of the mainstream businesses of both nations have experienced investment freezes, decreasing employment rates, loss of revenue, and bankruptcy. Trump’s actions amounted to one of the largest tax increases for businesses in years. For example, the US tech giant Apple Inc. has blamed the trade war for it’s declining revenue due to the PROC’s revisions of it's US tariff list. A loss of revenue makes companies lay off employees and increase product prices. Because of taxations on Chinese shipments, American companies that buy or rely on Chinese parts or assets have to pay extra money to US customs for every shipment of Chinese goods to make up for Trump’s tariffs. Over the long term, protectionism takes away from corporate competition, which allows the dominant corporations to raise their product prices intrepidly for clients and buyers. There are also less green light incentives for corporations to innovate or introduce reform, strictly limiting the corporate owners and their workers. Additionally, American farmers are at high stakes, if not the highest risk in the country. According to statistics, the vast majority of what was once a $24 billion market in the US was confiscated from the American farming industry as a result of Chinese retaliatory tariffs on the United States. China is the biggest importer of American produce and tariffs imposed on them can result in far more difficult times for farmers when selling their produce. Across America, many farmers and agricultural producers have gone bankrupt due to the trade war. Major American agricultural products that have been hit with Chinese imposed tariffs such as soybeans have great support for the Republican government. Therefore, the American government will feel the effects of the trade war as well. This can subsequently hamper the morale of the government, thus affecting the people of their country through less governing potential. In the capitalistic economic structure of the two nations, they are driven by market capitalists and their businesses. People are also reliant on corporations and businesses for their continued prosperity. If certain sectors of business were to fall, there will be major declines in the other nations that have economic reliance on the US and China. The consequences are the same for the mainstream businesses of the People’s Republic of China. All this will make sellers of products increase their prices, subsequently making clients who buy the products pay more out of their wallets and experience the unwanted effects of the trade war. Tariffs are detrimental towards businesses and capitalists for both nations. Business owners and corporations are also what the people rely on for products, services and employment.

The war on tariffs that Trump has launched backfires by harming American corporate owners and companies.

The competition between the two biggest global superpowers with a dichotomy of views, does not only place a weight on diplomacy and world politics, but introduces significant impacts on the people of the world and burdens the relationships between countries. The current PROC/US trade war only causes more distress by exacerbating the relations between the two nations. It damages the global economy and fails to make significant progress. When the tariffs are active, consumers and businesses are put at risk and the countries that rely on assets provided by the two countries are at stake of economic decline. All this topples the livelihoods of the people. The biggest fear among critics is that trade wars can tear apart allies or diplomatic partners and history can repeat itself through stimulating war and conflict. Therefore, boycotting will be more prevalent. The rivalry could also mean the two nations engaging in heavy competition for the leadership in sectors such as technologies, diverting the attention and investment of the government from the benefit of their own people. As seen in the current war on trade, the people are put at stake through job losses, limited business opportunities and advancement, price increases on basic necessities and other things they purchase. Ultimately, it is the people who have to pay the large portion of the tariff war’s price. The war on trade that rages on between the People’s Republic of China and the United States of America plays a key role in impacting the lives of the people.

This current international issue is often ignored and neglected by most people and ruminates merely in the minds of people that have a strong association with politics and economics. However, issues that pertain to politics should be of concern for all people, including young people. The youth of today have every right and reason to be acquainted with contemporary politics and the issues that occur within it. Most people have rudimentary understandings of the world’s political environment and their effects on society, seeing as they are oblivious of how governments and their policies impact their lives. In order to carry out societal change for the better, all individuals should be educated on the matters of politics. The intent, however, is not for youth to advocate for any particular political faction but to rather construct a strong understanding of world issues so that they can take on the role of remedying it in the future through formal politics. As our current generation of youth tends to be diffident and shy regarding political topics, it is crucial that they are aware of how world leaders and their politics are able to manipulate the lives of their people. The rivalry between governments and countries has the potential to create extreme detriment towards their people and components within nations internally. As the generation that will be the leaders and decision-makers of tomorrow, educating ourselves on politics should never be neglected, nor should the encouragement for youth to formulate opinions and express their viewpoints on the grounds of politics. As the current leaders in politics ages, it is vital to ensure that the forthcoming change-makers and leaders are in favour of and are familiar with the steps to conducting responsible politics and improving the world’s political climate. Being acquainted and assimilating issues of politics and world issues at hand is of great societal importance. A wide scope of knowledge about our world is the power and potential for today’s youth and the backbone for the prosperous and stable future that everyone desires and pursues.


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