The Effect of the U.S.-China Trade War on Global Trade

Abstract

If one country attacks another country's trade with taxes and quotas, it is defined as a trade war. It is aimed to protect the domestic market from competition. The U.S.-China trade war begun on March 1, 2018, and was centered on the customs duty of 25% for the imported steel and 10% for the imported aluminum. The protectionist measures against each other in both countries have increased day by day. However, the impact of these protectionist measures on global trade is not yet known. In this chapter, the effect of the U.S.-China trade war on global trade is analyzed. For this reason, the export data of the U.S. to China and the global export data yearly is compared. According to the results of the linear regression analysis, if the value of the goods export of the U.S. to China increase 1 unit, the value of global export of the goods increases to 58 units. While the trade wars decreased the goods export from the U.S. to China, it has decreased global goods exports too. In 2018, developments in global commodity exports and the U.S. goods exports to China were observed in the same direction.