Rise of trade protectionism: the case of US-Sino trade war

Abstract

In recent decades, China experienced the fastest economic growth by opening its economy and focussing on trade and is now the second largest economy surpassing Japan. The widening of the US trade deficit with China raised tensions between the two largest economies of the world. Although China is gradually opening, it is still protecting some of its industries and engaging in unfair trade practices. Trump administration argues that trade deficit hurts US manufacturing and promised to cut them. Previous administration used the WTO process to challenge China for abusing intellectual property rights, import restrictions, and subsidising its industries. Protectionism hurts both countries. USA is the largest trade partner of China and US tariffs can slow its growth. China’s tariffs on US goods also are raising prices for consumers. Moreover, studies indicate that unilateral measures of imposing tariffs neither reduce deficits nor create jobs.