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Contemporary World

The United States and China imposed tariffs on each other's imports starting in 2018, launching a trade war. They reached a phase one trade deal in 2020 where China agreed to buy more American goods. While some industries in both countries were hurt, other countries like the Philippines were less impacted due to lower trade exposure. The long-term effects of supply chain shifts on global trade remain uncertain.

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SIMPAO, Ma. Kristine Mae C.
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43 views3 pages

Contemporary World

The United States and China imposed tariffs on each other's imports starting in 2018, launching a trade war. They reached a phase one trade deal in 2020 where China agreed to buy more American goods. While some industries in both countries were hurt, other countries like the Philippines were less impacted due to lower trade exposure. The long-term effects of supply chain shifts on global trade remain uncertain.

Uploaded by

SIMPAO, Ma. Kristine Mae C.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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The United States and China are said to be the two largest economies in the

world. The United States led by Donald Trump and China with its President Xi Jinping

started the trade war in July 2018. The trade war between US and China started when

the US has accused China of unfair trading practices, including intellectual property

theft, forced technology transfer, lack of market access for American companies in

China, and creating an unlevel playing field through state subsidies of Chinese

companies. As promised by US President Donald Trump during his campaign in 2916,

he claimed to reduce the large trade deficit with China. US imposed a 25% tariff on

US$34 billion of Chinese imports during 2018 and 2019. Additional tariffs on items

imported from the other country were imposed by the US and China, implying that

purchases in the opposing country would have to pay higher import taxes to bring their

purchases into the country.

With the US and China slapping various import taxes on each other’s products

until mid-December 2019 when a preliminary agreement on a phase one trade deal was

achieved. The phase one trade agreement was formally signed on January 15, 2020,

and its contents took effect on February 15, 2020. As part of the deal, China agreed to

buy an additional US$200 billion of American goods and services over the following two

years. According to Trump, China has agreed to drop tariffs on a lengthy range of US

products, including beef, pork, poultry, fish, dairy, rice, infant formula, animal feed, and

biotechnology. The deal also resulted in the US suspending a new 15% tariff planned

for December 15 on around US$162 billion of Chinese goods, with an existing 15% duty

on imports worth around US$110 billion halved to 7.5%. China also postponed

retaliatory tariffs that were set to go into effect on that day.


Each of the two countries, as well as other countries, has had implications and

challenges. China and the United States import a huge number of goods from each

other, including aircraft, automobiles, machinery, equipment, and other items. With the

rising tariffs, the price of each commodity rises since some manufacturing enterprises in

each country will require more materials and a budget to produce those things. As a

result of the trade war, certain American companies are struggling in China, and vice

versa. Some countries have been impacted by trade wars as a result of a rapid drop in

bilateral commerce, which resulted from higher consumer prices and trade diversion

effects, which increased imports from countries not directly involved in the trade war.

Singapore has seen slower growth in the second half of 2018. This is largely on the

back of slower global demand for semiconductors and tech gadgets which has pulled

down growth in the key manufacturing sector. Because of China's export losses to the

US market, the US has gained a percentage of other imports from nations with smaller

economies, resulting in a large gain for the importer countries.

The US-China trade war has had a low impact on the economy of the

Philippines. The said war can be a possible benefit to the domestic economy in the long

run. Our country's exports have been completely stable amidst the trade war that is

happening, this is due to the Philippines' modest exposure to products that are directly

targeted by US tariff moves against China and that the exposure is low. The Philippines'

minimal engagement in global commerce and global value chains in comparison to

peers appears to explain why the US-China trade war has had little impact on our

country. The US-China trade war has caused a re-evaluation of existing global supply

across countries, with corporations possibly moving away from reliance on any
particular country. The Philippines can benefit from trade redirection and industrial site

migration as a result of the present wave of global supply chain remodeling. The trade

war between the United States and China is still ongoing. Even under the new Biden

administration, the trade war continues to wreak havoc on the US economy.

References:

https://www.scmp.com/economy/china-economy/article/3078745/what-us-china-trade-

war-how-it-started-and-what-inside-phase

https://www.brookings.edu/blog/order-from-chaos/2020/08/07/more-pain-than-gain-how-

the-us-china-trade-war-hurt-america/

https://www.ft.com/brandsuite/cme-group/trade-war-costs-consumers-companies-

nations/index.html

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