DE VERA, LOUISA KATHERINE B.

FEBRUARY 8, 2023
BSBA FM 3-1
REACTION PAPER
Winners and losers in the US-China trade war
The article "Winners and Losers in the US-China Trade War" investigates the trade war's
consequences. Tariff barriers on goods traded between the two countries have been raised because of the
trade war, raising consumer prices and reducing profits for businesses that rely on imports. The article claims
that the conflict has had varying effects on various industries, with some benefiting from tariffs while others
suffer. Furthermore, the trade war has heightened tensions between the two countries and disrupted the
global supply chain.

A trade war is an economic conflict in which states impose or raise tariffs on each other to protect
their trade. A trade deficit occurs when the cost of imports exceeds the value of exports. A trade war begins
due to a state's trade deficit.

Issues found in the trade war.

1. Rising tensions between countries involved in a trade war can lead to increased tensions
and potential trade disputes, exacerbating the negative effects of tariff barriers and
potentially leading to a drop in global economic activity.
2. Trade and investment can be reduced by making imported goods more expensive, resulting
in lower demand for those goods and potentially limiting businesses' ability to expand and
invest.
3. Increased consumer costs can raise the price of imported goods, resulting in higher prices
for customers who buy them.
4. Reduced product quality can lead to market inefficiency by forcing businesses to seek
alternative commodities or pay higher prices for imported goods. This could have a negative
impact on market competitiveness and efficiency.
5. Global Supply Chain Disruption can cause disruptions in the global supply chain because
companies may need to seek alternative sources of goods or face increased expenses for
imported products.
 In 2018, the US trade deficit was $2.5 trillion in exports and $3.1 trillion in imports. China was
responsible for 4.8% of total exports ($120 billion) and 17.3% of total imports ($540 billion). China has the
largest trade deficit with the United States, totaling $419 billion. As a result of this trade imbalance, the U.S.
After President Donald Trump imposed tariffs on $50 billion in Chinese imports, China retaliated with a 25%
tariff. Trump wants to limit American technology transfers to Chinese companies while also reducing the trade
deficit. To sell goods in China, foreign companies must reveal their trade secrets. China may be able to use
these trade secrets because of its expertise in manufacturing and product imitation.

To resolve this issue, the United States and China must reach an agreement that benefits both
countries. A fair agreement should no longer exist, and the United States and China should respect one
another. Regardless of how heavily the United States relies on Chinese imports, the trade agreement must
be fair to all parties. Trump had reason to declare war on China. Whether everyone agreed with it or not, it
happened.

The importance of trade wars in this subject course International Business and Trade is that
we understand how trade liberalization benefits the global economy in a progressive way. Returning
to the earlier discussed topics, nations that choose to refuse.