US Trade War Research Articles

Indonesia Stock Exchange Resilience toward Crisis; Study Case of US and China Trade War

This paper investigates the resilience’s of Indonesia stock Exchange toward the US and China trade war. Emphasis is put on the influence of US and China trade war since 2016. We analyze data using five major sectoral indexes in IDX (Consumer Goods Industry Sector, Agriculture Sector, Infrastructure, Utility and Transportation Sector, Miscellaneous Industry Sector, and Mining Sector) using volatility modelling of Autoregressive Distributed Lag (ARDL) & Generalized Method of Moments (GMM) methods to find the correlation and co- integration between selected sector US and China trade war. We find inconclusiveness and no co-integration on correlated markets although the trade wars have impact for each sectoral index by using ARDL. GMM method showed a significance short-run relationship and long-run relationship. The market disequilibrium takes nearly about one and half week to clear any disequilibrium toward certain shocks or impacts.

Commentary

Commentary

English

English

The 2020 US Presidential Election: Trump’s Wars on COVID-19, Health Insurance, and Trade

A common narrative is that COVID-19 cost Trump re-election. But, we do not find supporting evidence. Rather, our results highlight the political salience of the trade war and health insurance coverage in the 2020 US Presidential election. US trade war tariffs boosted Trump’s support and foreign retaliation hurt Trump. In particular, the pro-Trump effects of US trade war tariffs were crucial for Trump getting inside the recount thresholds in Georgia and Wisconsin. Even more important politically, voters abandoned Trump in counties with large increases in health insurance coverage since the Affordable Care Act, presumably fearing the roll-back of such expansion. Absent this anti-Trump effect, Trump would have been on the precipice of re-election by winning Georgia, Arizona, Nevada, and only losing Wisconsin by a few thousand votes. These effects cross political and racial lines. Thus, our results suggest a mechanism based around the local economic impact of Trump administration policies rather than a mechanism of political polarization.

How COVID-19 Medical Supply Shortages Led to Extraordinary Trade and Industrial Policy

Early in the COVID-19 pandemic, a global shortage of hospital gowns, gloves, surgical masks, and respirators caused policymakers around the world to panic. This paper examines international trade in this personal protective equipment (PPE) during the crisis, with a focus on China, the European Union, and the United States. As the pandemic first hit, China increased imports and decreased exports of PPE, removing considerable quantities of supplies from global markets. For the European Union and United States, the decrease in their imports from China was not immediately replaced by increased trade from other foreign suppliers. Early shortages led to EU and US export controls on their own, domestically produced PPE and other extraordinary policy actions, including a US effort to reserve for itself supplies manufactured in China by a US-headquartered multinational. By April 2020 China’s exports had mostly resumed, and over the rest of the year its export volumes of some products surged, more than doubling compared to pre-pandemic levels. But China’s export prices also skyrocketed and remained elevated through 2020, reflecting severe and continued shortages. This paper documents these facts. It also explores these and other government actions, such as US trade war tariffs and the emergence of US industrial policy in the form of over $1 billion of subsidies to build out its domestic PPE supply chain, as well as potential lessons for future pandemic preparedness and international policy cooperation.

Two circuits: China defined with globalization

China has made achieving technological independence its top priority for years to come. China has turned a "crisis into an opportunity" in its response to the US trade war. China's industrial capabilities have been fully confirmed during the fight against the COVID-19 epidemic. The emergence and adoption in China of the concept of “two circuits” (dual-circulation”) means the predominant reliance on the internal circuit compared to the external. The old strategy focused on external markets and external resources helped China to become a "global factory". But times and China have changed: the domestic market of the country has huge potential, and tendencies towards de-globalization have spread abroad. The economic activity of the PRC turned towards the internal market and internal regions of the country. The state came out in defense of the market - against large international monopolists, no matter domestic or foreign. This posture opposes the sluggish economic dynamics in the industrial centers of the West caused by the monopolization of domestic markets by large and super-large transnationals, who overwhelmed governments, other branches of state power, many international and non-governmental organizations by narrowing and exploiting the market space. "Two circuits", as well as "self-reliance" in China, have a pronounced socialist orientation.The escalating US campaign for technological pressure on China is backfiring. The country is committed to further strengthening its growing technological prowess. China has thrown a strong challenge to Western domination, which has more than just an economic dimension. China has an increasing impact on the world and - less dependent on it.

The impact of the China–USA trade war on USA Chapter 12 farm bankruptcies

PurposeThe purpose of this paper is to determine the effects of the 2018–2020 China–US trade war on US farm bankruptcies as filed under Chapter 12. The key task is to identify the economic factors affecting farm bankruptcies generally, and to then control for the trade war impacts including the Market Facilitation Program (MFP), floods, agricultural conditions and the health of agricultural finance leading into the trade war.Design/methodology/approachResults were obtained using ordinary least square regression and panel fixed effect model using bankruptcy rates and number as the dependent variable. Independent variables included market effects, credit conditions, yield variation, trade impacts, 2019 flooding, macroeconomic conditions and regional fixed effects. The authors use cubic splines to interpolate annual and quarterly data to a monthly base.FindingsBased on a fixed effect model, the authors find that all other things being equal the China–USA trade war would have had a significant impact on Chapter 12 farm bankruptcies, increasing the bankruptcy rate by 25.7%. The flooding in 2009 had minor effects of increasing the rate by only 0.05%. The overall impact will, however be substantially lower than the 25.7% because of the MFP. The MFP variables (binary) had mixed effects and its true impact is unknowable at this time; however, the authors also find that a 1% increase in the producer price index decreases bankruptcy rates by 2.62% and farm bankruptcy numbers by 3.70%. Likewise a 1% increase in GDP reduces bankruptcies by 3.25%. These suggest that the MFP program will have likely reduced farm bankruptcies considerably than what would have occurred in their absence. The authors also find that states heavily dependent on trade faced lower market uncertainty. Broader economic factors (net charge-offs of farm loans held by insured commercial banks, US real GDP, the average effective interest rate on nonreal estate farm loans) affect farm bankruptcy.Research limitations/implicationsThe authors use monthly bankruptcy statistics, however not all data were available in monthly measures requiring interpolation using cubic spline functions to approximate monthly changes in some variables. Although the MFP had mixed effects in the model, the mid- to longer-term effects may be more impactful. These longer-term effects (and even shorter-term effects through 2020) are complicated by the coronavirus disease 2019 (COVID-19) pandemic, which will require a different identification strategy than that employed in this paper.Originality/valueThe analysis and results of this paper are, to the authors' knowledge, the first to investigate the impact of the China–US trade war on Chapter 12 farm bankruptcy filings. The use of cubic splines in the interpolation of agricultural data is also a technical innovation.

Guest Editorial: China–US Trade War

Guest Editorial: China–US Trade War

Is the enemy's enemy my friend? American public support for Taiwan under the context of the Sino–US trade war

PurposeIn this paper, the authors investigate the factors that explain US public support for military operation for the enemy's enemy, and argue that US public support for military defense could be attributed to three factors – whether such support aligns with US national interests, whether the public perceives the US enemy to be a threat and whether interventions and military assistance to the enemy's enemy garner moral grounds.Design/methodology/approachTo find evidence of our claims, the authors conducted two survey experiments in 2018 and 2019 on Amazon.com's Mechanical Turk (MTurk) to see whether the ongoing trade war between the US and China (enemy) would alter the public's willingness to provide military assistance to Taiwan (enemy's enemy).FindingsThe authors first find that US national interests only matter when the public considers China's military to be not a threat when the US–China rivalry intensifies. In both waves, respondents were most likely to support for Taiwan's defense if they perceived China's military to be a major threat, followed by a minor threat and not a threat, respectively. Contrary to our theoretical expectation, the study does not find empirical support for moral factors.Originality/valueOur research applies the survey experiments among the US public to gauge public support for the enemy's enemy (Taiwan), which generates unique and vital findings to foreign policymakers and international observers.

Position of Russia in economic globalization

Subject. The article considers the position of Russia in economic globalization. Objectives. I focus on determining the position of Russia in economic globalization. Methods. The study rests on the systems approach, using the methods of statistical, cluster, and neural network analysis. Results. A slowdown in globalization has caused changes in the existing world economic relations. Russia has taken an active position among developed countries, amid a decline in the role of Chinese exports in the world. I revealed that in the context of the US trade war with China and the strengthening of protectionism, developing countries assumed the risks of loss of capital and recession. The position of Russia in economic globalization is connected with the place of BRICS in the new world order. The new conditions of globalization made it necessary for Russia to initiate the creation of new geopolitical communities, in addition to BRICS, which should include Denmark, Singapore and Slovenia. The findings form new competencies of State authorities for making managerial decisions to maintain a stable position and image of Russia in the process of economic globalization. Conclusions. To maintain a stable position and image of Russia in the context of economic globalization, the modern objective reality requires both Russia’s participation in and initiation of various geopolitical communities. The said participation will ensure that Russia’s certain position and image is maintained in the economic globalization.

Winners and losers of the Sino–US trade war from economic and environmental perspectives

The ongoing trade war between the United States and China is having profound impacts on the global economy. As recent studies have found substantial amounts of carbon dioxide and air pollution embedded in the global supply chains, the Sino–US trade war may also affect emissions and health burdens worldwide, which remains poorly understood. Here, we estimate the potential changes in gross domestic product (GDP), anthropogenic emissions and particulate matter (PM2.5) related premature deaths worldwide under two Sino–US trade war scenarios. We find that for the US and China, the trade war would reduce their GDP and, less significantly, emissions and mortality, suggesting that the trade war is not an effective means of environmental protection. The trade war would increase both GDP and mortality in many developing regions, because of their increased production of goods targeted in the Sino–US trade war. Surprisingly, Western Europe and Latin America and Caribbean would have higher GDP but lower emissions and mortality, an economic and environmental win-win outcome as a net result of the complex changes in the global supply chains. Neighbour regions of the US and China such as Canada, Japan and Korea would also have higher GDP but lower mortality, because of reduced atmospheric transboundary transport from the US and China overcompensating for increased local emissions of these neighbours. The complex consequences of the Sino–US trade war highlight the strong inter-regional and economic-environmental linkage in support of a global collaborative strategy to foster economic growth and environmental protection.

The effects of the China–US trade war during 2018–2019 on the Chinese economy: an initial assessment

The China–US trade war during 2018–2019 has attracted attentions from academics, policy makers, businesses and investors around the world. Unlike previous researches which are mainly based on hypothetical scenarios, this study looks at the real effects of the China–US trade war on the Chinese economy. Based on either weekly or monthly data during January 2018–December 2019 including creatively using the Google Trends data to measure the severity of the trade war, this study examines the effects of the China–US trade war on Chinese Renminbi, China–US bilateral trade and stock markets.

Into the Post-Pandemic

The pandemic-triggered economic crisis has served to merge, amplify and accelerate changes driven by the anti-globalization movement, the US trade and technology war on China, the digital transformation, and the Anthropocene. Existing business models that might have been able to withstand individual shocks are now collapsing from the merged shocks. As the world moves to recovery, the “solution space” to which the economy is being pushed will look different from the one disrupted by the pandemic. What we produce and how will change, and by extension so will how this production is shared internationally and exchanged through the trading system, and indeed how the system is governed. Moreover, the major economies have been asymmetrically impacted by these various shocks and face important political transitions in 2021, with the Biden Administration taking office and resetting US policies, and the European Union splintering with Brexit. It has been argued that the world needs another Bretton Woods moment to reset the international institutional framework to make it fit for purpose for the age of change that is upon us. However, this note argues that, to get to a second Bretton Woods moment, we first need a second Yalta moment, in this case with the United States and China agreeing on the terms of a detente to buy time for the groundwork for a viable framework for the post-pandemic economy to be set out.

Transcultural political communication from the perspective of proximization theory: A comparative analysis on the corpuses of the Sino–US trade war

Previous studies have shown the operational potential in political discourse analysis from the proximization perspective. This study adopts a cross-disciplinary approach to analyze political communication across transcultural contexts, especially in the cyber discourse space. Based on the spatial–temporal–axiological (STA) model, we compare the journalistic discourses on two social media platforms by China Xinhua News Agency (CXNA), an official speaker for China worldwide. The corpuses are constructed with microblogs on Weibo in Chinese and Twitter in English containing key words of Sino–US trade war. It is found that the speaker has shaped different realities of discourse in accordance with the cultural contexts and proximized from corresponding dimensions to increase political legitimacy.

Industrial Policy and Technology Innovation under the US Trade War against China

Industrial policy (IP) toward technology innovation (TI) is a focus of the US trade war against China. The US is forcing China to stop IP uses in promoting TI that directly threaten the US technology leaders, like its reaction to China’s plan of “Made in China 2025”. Does China have too many IP? Does the US use IP? What TI patterns affect IP? This paper develops the following points as conclusions: (a) Due to market failures, all countries implement IP in their economic development; (b) original innovation (OI) involves a lot of risks and uncertainties such that entrepreneurship rather than government plays a key role, while imitation innovation (II) is much less risky and uncertain so that more rooms are left for IP; (c) technology-leading countries like the US has to conduct OI to maintain their advantages, and catching-up countries like China do more II, thus more IP are adopted in China than the US; and (d) the US engaged substantially IP in the history and is deploying various IP to meet challenges from China; and (e) economic and political institutions matter.

Russia in Economic Globalization

The article analyzes the current state of the Russian economy in the context of globalization. The research reveals the dominant role of capitalist countries in the process of globalization. The role of developing countries is related to ensuring a balanced world economy. Globalization causes changes in world economic relations. Russia has taken an active position not only among developing but also developed countries. The article reveals that in the context of the US trade war with China and increased protectionism, developing countries have assumed the risks of losing capital and falling into a deeper and longer recession. Russia’s position in economic globalization is linked to the place of BRICS in modern world order. Modern world order requires Russia to initiate the creation of new geopolitical communities, in addition to BRICS. To maintain Russia’s stable position in the world economy, modern objective reality requires not only its participation in various geopolitical communities,but also their initiation.

China’s Policy Response to the China US Trade War: An Initial Assessment

The China US trade war had been looming since January 2018, effectively started on 6 July 2018, calmed down since December 2018 until April 2019, has now entered a second stage after the US decided to increase previous tariffs of 10% levied in US $200 billion worth of Chinese goods to 25% on 10 May 2019. This study reviews the policy response from the Chinese authorities during January 2018–April 2019 by looking at the fiscal stimulus, monetary stimulus and other institutional reforms. Finally, this study concludes that the Chinese government has changed its policy focus from the traditional demand-side economics such as the 2008–09, 2012 and 2015–16 stimulus to supply-side economics such as the 2018–19 stimulus.

Towards Economic Decoupling? Mapping Chinese Discourse on the China–US Trade War

Abstract Tremendous changes have occurred in China–US relations since Donald J. Trump took office in the White House, but the most significant event is the outbreak of the China–US trade war, whose unprecedented scale and impact has drawn wide attention in China and sparked considerable debate. This article aims to review the four main stages of this great debate on the China–US trade war among China’s influential intellectuals and prominent thinkers. It covers the three-year period since beginning of the Trump administration. The initial argument among Chinese academics was whether or not there could ever be a trade war, which led to a dividing line between optimists and pessimists. Soon after, when China-US relations took a sharp downturn and a trade war seemed inevitable, Chinese scholars shifted their focus to reasons why the United States should wage a trade war against China. This culminated in three different perspectives embodied respectively in the structural conflict theory, institutional conflict theory, and the theory on exporting domestic problems. After China and the United States began slapping additional tariffs on one another’s exported goods, and with the flare-up of the Zhongxing Telecommunication Equipment Corporation (ZTE) and Huawei incidents, the debate on how to respond to a trade war cleaved between the ‘whole nation system school’ and the ‘market reform school’. As to coping with the technology war, Chinese intellectuals were divided between the paths of ‘independent innovation’ and ‘open innovation’. More recently, in view of the many signs that the China–US trade war could continue indefinitely, and an economic decoupling of the two nations is no longer unimaginable, a fierce debate has arisen between those that advocate full preparations for such economic decoupling and those who insist on further links with the US economy. Although the main themes of the four stages of the debate differ somewhat, they share a certain degree of consistency as regards the conceptual pedigree of the debating parties. Their divergence derives, in essence, from different perspectives on such issues as state power versus market force, independence versus interdependence, and zero-sum competition of power versus win-win economic cooperation. This also exemplifies the competing views in Chinese academia on classical political economy.

Китайская баталия Д. Трампа: возможна ли победа?

The US economic and trade war against China largely escalated in 2018–2019. The conflict is unlikely to be resolved in the near future, while this would be economically beneficial for both parties. Beijing has been carefully avoiding the escalation of emerging US-China bipolarity into confrontation, relying on cooperation with large American business enterprises and using numerous foreign policy failures of the Trump administration. Nevertheless, in the spring and summer of 2019, the United States continued to increase pressure on China. The fundamental confrontation between the two powers affects not only the business interests of both countries, but also a wide range of issues that go far beyond bilateral relations.

The Influence of D. Trump’s Policy on International Trade

The increasing level of tension in the trade relations between the United States and other countries, especially China; the potential escalation of trade wars, when countries take more and more explicit retaliatory protectionist measures, becomes a sustainability risk to development of international trade. The US actions taken in 2018–2019 to protect the internal market turned into into a full-fledged trade war, directed primarily against China - the country the United States has the largest trade deficit with. The introduction of the US tariff restrictions on imports from China and several other countries has caused retaliatory measures, as a result the uncertainty of the prospects for international trade increases. Non-tariff measures, such as phytosanitary requirements and technical barriers to trade, have also seen an increase in restrictions.An important source of controversy is the different positions of countries regarding the permissible degree of state support for enterprises. Developed countries, especially the United States, Japan, and the countries of the European Union, have fairly rigidly regulated rules regarding free competition. A cause for great concern is not only the US trade war with China and its consequences for other countries, but also the problems of international trade regulation.