Critical Analysis Of Donald Trump’s Trade Policy With China

Introduction

Since its inception in 1949, US-China relation has faced rise and declined. The tension between their relations has sometimes intensified and led at the alarming point. In 1949, the Chinese President, Mao, Cared out its Communist Republic in China aftermath of peasant revolution. US supported the Nationalist Party during WW-II, in order to defeat Japanese forces. Moreover, during this era, US-China relations had declined in the mainland of China.

In 1950, when the Korean War broke-out, China backed North Korea while the US supported South Korea. China blames that US provided logistic and military support to South Korea and during that US and South Korean troops reach at the border of China. This, however, has further worsened the US-China relations. In 1964, when China conducted its first nuclear test US-China relations enter into another of tension. In 2012 trade tension has increased between the two powers.

After the historical visit of US former, Secretary of State, Rex Tillerson in March 2017 declared that there are non-confrontational and non-conflictual relationships with Beijing. It is particularly based on mutual respects and win-win policy. In 2018, the Sino-US relations have entered into a new era. Trump strives to fulfill its campaign promises. The problem is that China with its increasing diplomatic, economic, and military might is a strategic competitor like no other the United States has faced since it emerged as a world power after the end of World War II. The Soviet Union represented a formidable military challenge but without a strong, competitive economic foundation or an effective, adaptive political system. China, by contrast, potentially has all three.

Trump administration imposed heavy tariffs on Chinese commodities. More then 50 billion dollars tariffs imposed on Chinese imports like steel and aluminum imports. It is obvious that Trump tries to protect its domestic markets. In retaliation, China has also imposed tariffs on US goods. China took retaliatory measures in April 2018 and inflicted tariffs on a range of US products. This, however, broke a trade war between two largest economies. This hard line approach of US President towards China has ruined their bilateral relations. Trump’s approach not only deteriorates but also widen trade war between two countries at large level.

However, trump administration also imposed additional fresh tariffs on Chinese products i. e. 43 billion dollars in the transports and industrial sector, and other goods such as medical devices and television. Moreover, China came up with its own tariffs which are around four billion dollars its targeted products are beef and seafood. The Chinese government has criticized Trump administration and called it trade bullying that would trigger conflict in the global market. Under Trump administration, the issue becomes more complicated.

Statement of Problem

The current research aims to critical analysis of Trump’s trade policy to China and its effect on US China relations. This trade policies not only worsens their ties but also demolish global trade system. Before Trump era it was believed that US is champion of liberal free trade. All global trade partners for given equal treatment and international economic system but Trump administration has greatly influence its liberal economic policies. In order to know about the Trump’s trade policy to China this research study will analysis the effect of trade policy on their respective bilateral relations.

Research Objectives

1. To highlight Trump’s trade policy To China.
2. To explore the consequences of his trade policy on US China relations.
3. To explore trade war between US and China and its effects on global trade system.

Literature Review

Several studies have been conducted on US-China bilateral relations with other countries. These studies have been critical and vital particularly focusing the realities that the US is a strong economy in the world and any bilateral or multilateral economic ties with he strives to send ripples in the economic system. In this part, the researcher will review some of these studies in order to evaluate some areas that relevant to this research study. It will be noted that merely these researchers are most important to this study has been reviewed. S. Vastdeva-Shetty organized a study in 1976 on China trade relationship with the US in Asian countries during the era of 1960-1973.

This research is evaluating the role of global trade in promoting economic ties and its limitation on the modern world. It, however, uses a classical theory of international global trade for that purpose namely Mercantilism theory, (Thomas Mun, Antonio de-montchret model). The absolute advantage, (Adam Smith Model). And comparative advantage (David Ricardo Model).

This research deals the Trump’s trade policy to China and also goings economic trade war in Capitalists and Socialists countries. It also highlights the trade system of these two countries and the effects of a trade war in their bilateral relations. This study will establish a strong case on a bilateral trade war with a perception apposite to the general belief that liberal trade was the best approach that policy is hard to clearly apply in the existing economic world of this time. The research had also noted that Asia, European Union, and Africa entered into trade war of US-China. This research is rightly some up that China has gate more that she has lost in bilateral trade with European countries.

This is after deeply analyzing the export and import fronts. On the export, the researcher has selected a few goods that are exported from China to European countries with the purposes of switching trading. These goods are selected on the basis their importance of China’s exports and their manufacturing relationship other trade partner countries. These study further also examines that the implication of trade war is on their respective relationships. The outcome of this trade war seems negative on either side. It resulted in a US-China balance of trade between 1972 onwards. This study based on data from trade showed that China balance of trade was Rs. 55. 7 million in 1972 and grow further as their relation established.

The president Trump has placed tariffs on billions of dollars' worth of goods from around the world, in particular China. He's imposed a 10% levy on $200bn worth of Chinese products so far. In May, he announced plans to impose a 25% tariff on $325bn of other Chinese goods. Mr Trump said the $100bn gained from the tariffs will be used to buy US agricultural products, which will then be sent to poor and starving countries for 'humanitarian assistance'. He also wants to cut the trade deficit with China a country he has accused of unfair trade practices since before he became president. Mr Trump made a big point on the campaign trail about cutting the country's trade deficits. He's convinced it hurts US manufacturing, and has said time and time again on the stump and on Twitter that the US must do more to tackle them.

Economists and think tanks have calculated that, if all of Trump’s current and proposed policies actually happen.

• U. S. gross domestic product (GDP) in 2019 will be $365. 1 billion lower than it otherwise would.
• The lost production will be $2, 357 per household or $915 per person.
• Some 2. 75 million jobs will be lost.
• Remaining workers will see lower wage growth.

Research Questions

1. What will be the consequences of Trump’s trade policy to China ?
2. Why is Trump doing this?
3. How does trade war between China and US effects global trade system?

Theoretical Framework

This research dissertation seeks the guideline provided by Mercantilism theory. This is economic theory deals with trade export and import if this theory is observed it will show that it deals the imbalance of trade in the global economic system. It explains that how state protects their domestic market and decrease their import and increase exports. This research article is also based on realistic theory. This theory based on realistic assumptions and realistic critic as well as impacts of the variable in the trade war this choice is viewed from realistic prospective trade competition at domestic level and international level and international anarchy system. Thus, on the basis of economic built up and balance of trade remains ever reality in the global trade system. The current trade war strikes many as strange at best and counter-productive at worst. There is a method to the madness, however. Donald Trump's trade policies call back to mercantilism.

Research Methodology

This study is qualitative where different type of questions will be answered. The aim of researcher is to answer the question on the basis Trump’s trade policy to China under Mercantilist and Realists interpretation.

Conclusion

China is unhappy with the degree of accommodation provided by the United States and the united states is uncomfortable with the strategic requirements made by China. Chinese assert that Washington has a concealed plan of confining China's development, while the Americans grumble that China is acting extremely persuasively. On the off chance that China keeps up its inner political steadiness and high monetary development rate, this tense period would proceed for something like a couple more decades. Pressures would be additionally irritated if the Chinese Government accepts, as some Chinese assessors guarantee, that the more China 'rises', the harder Washington will stand up to while America holds all the high cards in trade with China, and nearly none of Beijing's alleged purposes of weight are genuine threats.

The vast majority of the risks, for instance, would hurt China's delicate unquestionably more than the durable US economy. The main component Washington needed in past was political will to utilize its staggering force. Up until now, Trump has exhibited such will, even despite shriveling analysis, particularly at home.

Both the US and China would lose from an exchange war. Tariffs would push up import costs and automatically affecting the development. The two sides would do best to keep away from an episode of threats. The US-China is suffering of course but t what is neglected during this time is the effect it has on global economy as the currencies of many countries has been affected by these strain relations of two economies. The countries are coming gradually on hard stance where it could lead both to the disastrous results thus once again putting the whole world under shadow of severe threats.