USA–China Trade War

Causes, Effects and Ethical Aspects

Abstract

At the beginning of 2018, the USA imposed a variety of tariffs and import duties. Since China was most affected by these taxes, the trade war began. The total value of US customs tariffs imposed on Chinese goods is worth US$ 550bn, while the total value of Chinese customs tariffs imposed on US goods amounts to US$ 185bn. Late in 2019, the end was looming — China committed to importing US$ 200bn worth of US goods over the next two years, while the US agreed to “halve” the tariffs on Chinese goods. One of the reasons behind the war is the fact that China exports much more to the US than it imports, while the reverse is true for the US. The US claims that China’s inadequate position in the WTO and manipulations of the RMB/USD exchange rate are to blame for its vast trade deficit. Another reason is the realization that through acquisitions and takeovers, China is acquiring advanced technology for which it has not been paying a fair corresponding price. However, higher import prices helped some USA corporations which compete with foreign exports, but at the same time increased domestic production costs and reduced the purchasing power of American households, thus negatively affecting consumption, investment and employment. This in turn amplified economic uncertainty and reduced potential economic growth in the long run. The ethics of the US decision to protect certain domestic companies from international competition, while at the same time inflicting greater costs on other economic entities (notably consumers) in the USA and around the globe are difficult to defend.