Sino-US Trade War: Conservative Trade Policy in the Grand Economic Strategy of the United States

Qin Sheng

doi:10.18639/merj.2019.954639

Abstract

The Sino–United States (US) trade war since 2017 has triggered Sino–US confrontations in the economic field and also intensified geopolitical competition. From a historical perspective, the current Sino–US trade war is a continuation of the conservative US trade policy, rather than a dramatic development. From a global perspective, the trade dispute between China and the United States is only part of President Donald Trump's grand global economic strategy that aims to stabilize the economic hegemony of the United States. Trump's economic diplomacy targets both China and its Western allies, with the goal of achieving a comprehensive and complete solution. The developmental status of the United States shows that its economic strength is increasingly insufficient to support the status of global hegemony, as well as being increasingly incapable of meeting the global requirements for providing public goods. Therefore, trade wars are essentially trade policy adjustments made by the United States to consolidate its hegemonic foundations and fight against potential opponents, e.g., the trade wars against Germany in the 1960s and Japan in the 1980s. Based on the timeline of the current trade war, Trump was obviously well prepared. Trump's behavior now clearly violates the basic rules of WTO and his policy does not focus on technology and innovation, which is key to future economic growth. Whether Trump's well-planned and aggressive economic strategy will work, it will fundamentally change China's US policy from cooperative to more independent.

Highlights

Trade disputes have characterized the interactions between China and the US in their economic and trade relationships over 30 years
The Chinese government proposed the slogan of Widespread Entrepreneurship and Innovation and formulated the Made in China 2025 strategy to encourage more talent to engage in the high-tech industries and prospective technologies, whereas Trump launched trade disputes in order to protect the sunset industries and win industrial workers who have been abandoned over time
The results showed that Trump’s trade war had not brought him the expected mid-term election victory

Summary

INTRODUCTION

Trade disputes have characterized the interactions between China and the US in their economic and trade relationships over 30 years. In the early morning on March 23, after eight months of 301 investigations against China, Trump signed a memorandum based on the report of the US Trade Office regarding $60 billion of high-tech and high-end manufacturing goods imported from China, which were subjected to a 25% tariff increase. In the most recent round, after a sudden reversal during negotiations, the US increased the 10% tariff on $200 billion of imports from China to 25% on May 10, 2019. The most recent Sino–US trade dispute was in 2010 when the US launched a 301 investigation of China’s clean energy policy. Issues and potential contradictions related to economics and trade can be discussed before serious problems emerge, and these mechanisms have played important roles in preventing trade wars. For the US, the trade war has become a key component of its new comprehensive global strategy

SHORT- AND LONG-TERM GOALS OF TRUMP’S TRADE WAR

TRADE WAR AS A CONTINUATION OF THE CONSERVATIVE TRADE POLICY AND COMPLEX PLAN

WHO IS WINNING AND WHAT IS NEXT?

Findings

CONCLUSION