CHINA/USA
ECONOMIC
WAR
BY: PEDRO GOMEZ
CONTENTS
01 - ACTORS
02 - RELATIONSHIP
BETWEEN THE ACTORS
03 - TRADE WAR
04 - CONSEQUENCES
05 - EXAMPLES OF SECTORS
AFFECTED
06 - CONCLUSIONS
ACTORS
The United States Of America People's Republic of China
The United States is the world's second-largest trading Since 2014, China has been not only the world's largest
nation, right behind China. with total trade in 2022 exporter but also the largest trading nation in terms of the
amounting to a total of 1.43 trillion U.S. dollars, making up sum of its exports and imports. In 2021, China exported over
8.1 percent of the world's total export trade. In regards to 3.2 trillion U.S. dollars of manufactured goods and imported
importation, the United States is heavily dependent on its 2.6 trillion dollars of US goods. Having, on the contrary, the
allies as it is the largest importer with a value that amounted United States a healthy trade balance.
to about 2.4 trillion U.S. dollars, or 13.5 percent of total
import trade worldwide.
ACTORS
RELATIONSHIP BETWEEN CHINA AND US
TRADE BEFORE THE TARIFFS
In 1979, the United States and China normalized relations,
generating a relationship that would last over the next four
decades from generating a few billion dollars worth to
hundreds of billions of dollars annually.
During this time, China loosened its control over its national
economy permitting the entrance of private companies to
boost trade and investment. In 2001, after negotiations with
the United States and other member states China
successfully joined the WTO.
The value of U.S. goods imports from China rose from about
There were already worries about
$100 billion in 2001 to more than $500 billion in 2022. This tariff cuts for imported goods,
increase in imports is due in part to China’s critical position in protections for intellectual
property, and transparency around
global supply chains and the United States' use of different its laws and regulations.
materials all around the world.
RELATIONSHIP BETWEEN CHINA AND US
TRADE BEFORE THE TARIFFS
According to a study made in 2019, it was found that China
boosted the annual purchasing power of the average U.S.
household by $1,500 between 2000 and 2007. Another
benefit that the US obtained is that American-owned
companies earn hundreds of billions of dollars annually,
which doesn’t reciprocate with China as American securities
limit this investment in the United States.
The main benefit that China has obtained is that China’s
economy has grown more than five-fold, adjusted for
inflation, and it is now the world’s second-largest, behind
only the United States.
ISSUES POSED BY THIS RELATIONSHIP
Manufacturing job losses
National Security
Subsidization and state-
owned enterprises
Currency manipulation
Labor and human rights
violations
THE TRADE WAR
In 2018, The Trump administration revised the foreign
economy policy under an analysis of the trade deficit of the
United States and the issues mentioned previously. It was
decided to switch their policy to a more protectionist one.
MISCONCEPTIONS ON TRADE DEFICITS
The US imposed tariffs on about $350 billion worth of
Chinese imports, and China retaliated by levying tariffs on an It is not good for the
additional $100 billion worth of imports. This has impacted
18% of their imports for the USA and 11% for Chinese economy
Importations.
Trade balances reflect
Both parties reached an agreement to not increase tariffs in
2020 but the ones established remain. trade policies
Trade deficits lead to job
PRODUCTS AND SECTORS AFFECTED
loss and slower growth
Agriculture, Apparel, Chemicals, Machinery, Materials, Metals,
Minerals, and Miscenalleous.
TRADE BALANCE OF GOODS BETWEEN THE US
AND CHINA
TRADE BALANCE OF GOODS OF THE US
TRADE BALANCE OF GOODS OF CHINA
EXAMPLES
Automobile Sector
TESLA
The 20% increase in tariff from China like many
other car manufacturers from the US, was
affected the most by the trade tensions. In this
case, Tesla had to increase its prices for the
Model X and Model S by 20,000 dollars. As this
was not viable from a consumer standpoint,
TESLA decided to absorb the cost, which ended
up in their favor as in 2020 the tariffs were
pushed back to the base 15%.
EXAMPLES
Technological Sector
Chip makers and electronics
The Americans first banned exports of chips,
manufacturers (NVIDIA, INTEL, semiconductor equipment, and software to
MICRON) Chinese companies. China retaliated by banning
the import of lower-grade U.S. chips. The U.S.
continued with further bans on chips to Chinese
cloud providers. China replied with a restriction
on the export of raw materials. With this, there
is an increased country risk where US foreign
investment will be reduced which as mentioned
earlier negatively affects the economy regarding
employment and also growth.
THANK YOU