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What are the views on the US - China trade war? Show more Show less
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Donald Trump's protectionist economic policies led to the introduction of tariffs on $550 billion worth of imports from China. President Xi Jinping responded with tariffs of his own, affecting some $185 billion worth of US-made products. As the two global economic behemoths enter a trade war, what are the implications for both economies and the rest of the world?

The trade war is bad for China Show more Show less

China increasing tariffs on U.S. imports such as food will produce a rise in price for Chinese consumers. Large tariffs of Chinese exports will reduce exports and manufacturing and cause damage to China’s economy. Together, these mean that the trade war will place China at a significant disadvantage.
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Increasing tariffs on Chinese goods harm key exports

Since China is reliant on U.S. exports, large tariffs cause huge damage to the Chinese economy. China will lose the trade war because the U.S. will be able to sustain the damage for longer than China.
America China Trade War

Context

What these tariffs aim to do is cripple the Chinese economy and force China to change its economic relations with the United States. The main mechanism to that goal is attacking crucial Chinese exports, without which the Chinese GDP may flounder.

The Argument

In 2017 (before the trade war), exports made up 18.5% of China’s GDP.[1] Of those exports, more goods go to the United States than to any other country; however, the trade war caused a more than 12% decrease in China’s exports to the U.S. in 2019.[2] That is a substantial blow to China’s economy. A large proportion of Chinese businesses have found that their goods are more expensive, uncompetitive, and languishing on U.S. shelves. This decrease in sales for businesses translates into a slowdown for the Chinese economy which has a tangible impact on Chinese workers and business owners. In 2019, China's industrial output growth fell to its lowest in 17 years.[2] This is particularly damaging given the significant role export goods play in reducing poverty levels. Another source of prolonged damage to China is the possibility that this trade war results in further decoupling (reducing the United States’ reliance on China for manufacturing).[3] Some manufacturing has already been moved, but more extensive decoupling would cause damage to China’s economy for years to come. With total tariffs placed on Chinese goods reaching $550 billion, it is safe to say that President Trump's tariffs have made a big impact on the Chinese economy.[4] What's more, because of China's economic reliance on export-led growth, they are less able to sustain the prolonged damage of U.S. sanctions and will lose the trade war.

Counter arguments

The impact of the tariffs on China's economy may be being overestimated. It still has large markets all across the world and has diversified enough of its manufacturing to allow it to weather the brunt of the war. While China may be badly hit, the same is true for the United States, which relies on its cheap consumer and industrial goods. Rather than China being the first to break under the pressure of sanctions it may be the United States economical system, under the pressure of rising prices that impact Trump's key constituents. China has the very real potential of outlasting the U.S. in this trade war.

Proponents

Premises

[P1] China is reliant on U.S. exports to maintain its level of growth. [P2] Targeting those exports through large tariffs will cause huge damage to the Chinese economy. [P3] The U.S. will be able to sustain the damage for longer than China, which means a loss of the trade war for China and a capitulation to U.S. demands.

Rejecting the premises

[Rejecting P2] China is capable of exporting to other places. [Rejecting P3] If China manages to hold on longer than the United States, it could be better off than the United States.

References

  1. https://www.statista.com/topics/1456/export-in-china/#:~:text=In%202017%2C%20China's%20trade%20surplus,constituted%2018.5%20percent%20of%20GDP.
  2. https://www.npr.org/2019/10/10/768569711/has-the-trade-war-taken-a-bite-out-of-china-s-economy-yes-but-its-complicated
  3. https://www.cnbc.com/2019/09/06/tariffs-are-no-longer-chinas-biggest-problem-in-the-trade-war.html
  4. https://www.china-briefing.com/news/the-us-china-trade-war-a-timeline/
This page was last edited on Thursday, 29 Oct 2020 at 10:14 UTC

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