6/6/2023

International Trade Wars and

Turkey's Position in the Current
Scenario

Course : ITF 112

Name : Bahar İrem SABIR

ID number : 20210608051

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How did the trade wars start?

 After the 2008 crisis, countries shifted towards protectionism instead of promoting open trade.
 The conflict initially focused on currencies but escalated into trade wars.
 The trade dispute between the United States and China emerged from their trade imbalance, with
China causing a significant deficit for the US.
 President Trump officially started trade wars in 2018, primarily targeting China.
 These trade wars affected the global economy as trade is crucial for its functioning.
 The implementation of protectionist measures caused economic contraction, impacting China, the
EU, and the US.
 Concerns arise about a potential escalation into a global trade conflict and its lasting
consequences.
 Major powers adopted protectionism to safeguard their economies, despite risks.
 Global economic growth and trade have slowed down in the past two years due to these trade
wars.
 The continuation of these conflicts could further deteriorate the global economy and increase
risks.
 The dispute reflects changing global trade dynamics and poses challenges to the future of the
global economy.

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 Navigating Trade Wars: Impacts and
Strategies for Countries
 Trade and currency wars have
been found to have a long-term
negative impact on economies,
as highlighted by Şanlı's 2020
study covering the period from
1970 to 2019.
 Protectionist measures, such as
increased import costs and
higher consumer prices,
discussed by Dupuis and
Genereux (2017), contribute to
reduced economic efficiency
and the risk of trade wars and
retaliation.

 Engaging in trade wars is generally considered detrimental to the economy and global welfare.
Instead, policymakers should resist pressure to raise tariffs and explore new markets.
 Maintaining neutrality and avoiding trade wars is the best approach.

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Potential Future Consequences of
Trade Wars
 The potential effects of new protectionist policies on the global economy include a contraction
in global trade, the initiation of trade wars, and a reduction in economic growth.
 Trade wars can lead to a reduction in trade flows, an increase in trade barriers, and higher tariffs,
causing disruptions in the global trade system.
 Trade wars also create uncertainties in the global trade system, undermining economic growth
and stability.
 Trade wars can strain diplomatic relations and increase tensions between countries, potentially
leading to broader political conflicts.
 The long-term effects of trade wars include the possibility of retaliatory measures by other
countries, leading to a decline in global trade and reduced international cooperation.
 It is important for countries to resolve trade disputes through cooperation and dialogue while
keeping protectionist measures limited in order to maintain the global trade order and promote
stable global economic growth.

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An overview of America's trade policies

 The United States, under President Donald Trump, implemented

protectionist policies to protect domestic industries and increase
competitiveness.
 Tariffs were imposed on steel, aluminum, and durable consumer goods
imports, leading to trade tensions and retaliatory measures from other
countries.
 China's steel and aluminum exports witnessed significant growth,
contributing to the trade disputes.
 The trade war between the U.S. and China was driven by China's economic
rise and its impact on American interests.
 The analysis of trade figures suggests that the targeted sectors did not have
a major influence on overall U.S. trade volume, indicating non-economic
motives behind the trade war.

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 Addressing Unfairness and Undermining
China's Advantage in US Trade Wars

US Trade with China: 1995-2018 (Billion $)

Source: Census, 2019.

The US engaged in trade wars due to the following steps:

• Pre-2008 crisis: US companies shifted production to China, impacting trade balance negatively.
• Post-crisis: US implemented policies to reduce trade deficit and bring back production from Asia.
• China benefited from free trade but saw a deteriorating current account balance.
• US experienced a widening current account deficit while China's share decreased.
• US trade deficit with China reached $811 billion in 2017, triggering trade wars.
• Undervalued yuan contributed to the persistent US trade deficit.
• US expansionary monetary policy depreciated the dollar, prompting interest rate adjustments
globally.

In summary, the trade wars aimed to correct the US balance, reduce the deficit, and diminish China's 6/17
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advantages.
Trade Dynamics: Exports and Imports of Goods and Services
as % of GDP for Selected Countries (2000-2021)

 Before the 2008 Global Financial

Crisis, the world export ratio to GDP
steadily increased, surpassing 30%.
 The crisis affected the EU and US,
taking them 2-3 years to recover,
while Turkey recovered faster due to
its robust banking system.
 China's graph shows a different
trend, with its state-controlled
Exports of Goods and Services (2000-2021)
regime focusing on growing GDP
and internal consumption, distancing
itself from global engagement.
 China's imports of goods and
services started declining after 2010,
reflecting its systematic policy to
reduce economic interdependence
and dis-integration.
 Despite the trade war and the impact
of Covid-19, the United States
remains China's largest trade partner.

Imports of Goods and Services (2000-2021) 7/17

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Turkey's Import and Export Statistics:
Insights into April 2021 Trade Activity

 In April 2021, Germany maintained its position as Turkey's primary export partner, with exports
amounting to $1.654 billion. On the other hand, China emerged as the top country for imports,
with Turkey importing goods worth $2.412 billion from China during the same period. This
indicates the substantial trade connections that Turkey has established with both Germany and
China in terms of both exports and imports.
 Moreover, throughout the January-April 2021 period, Germany remained Turkey's major export
partner, with exports totaling $6.276 billion. Similarly, China retained its position as the leading
country for imports, with Turkey importing goods worth $9.665 billion from China during the
same timeframe.
 These statistics emphasize the significant trade ties between Turkey and these nations,
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underscoring the importance of their economic relationships in driving Turkey's trade activities. 8
Turkey and China relations in trade
 Turkey-China trade relations have entered a new phase, driven by trade diplomacy activities and
the priorities set during their respective G-20 presidencies.
 Amid tensions with the United States and global trade wars, the diplomatic and trade capacities
between Turkey and China have gained critical importance.
 To facilitate trade, bureaucratic mechanisms need simplification, while efforts to strengthen
bilateral economic relations and address the widening trade gap are necessary.
 Turkey's proximity to European markets and competitive labor costs position it as an emerging
production base, further enhancing its trade ties with China.
 As Asia becomes the center of global economic growth, Turkey's international trade with China
and its partners is expected to continue expanding.

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China-Turkey Economic Ties Strengthen as Trade
Grows, Trade Deficit Spurs Export Diversification

 China's rise as a global economic powerhouse and its growing consumption capacity have
boosted bilateral trade with Turkey. However, Turkey's trade deficit underlines the need to
diversify its export mix. The COVID-19 pandemic has emphasized the importance of stable
supply chains and economic alliances.
 Turkey's strategic location and cost advantages make it an attractive production base. China's
Belt and Road Initiative offers investment opportunities and closer ties. Both countries are
committed to promoting trade growth and strengthening their relationship. 10/17
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Turkey's Trade and Current Account Deficits Surge
in the 2000s, Fueled by Growing Energy Imports

• Turkey's trade deficit and current account deficit have experienced notable growth in the 2000s,
with the current account deficit reaching $74.4 billion in 2011.
• The ratio of the current account deficit to GDP has also significantly increased.
• Energy imports hold a significant share in Turkey's import structure, with a rapid rise observed
after the 2000s.
• However, despite the increase in energy imports, their share in total imports did not rise
substantially. This can be attributed to overall increases in total imports and declining oil prices.
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 Trade Graphs Highlight Impact of Foreign Trade
on US and China Economies, Warns of Adverse
Effects from Trade Wars

ABD China

• According to Mahfi Eğilmez's statement on November 01, 2019, the graphs presented below depict the
relationship between the growth of foreign trade volume (represented by the red line) and economic
growth (represented by the blue line) in the United States and China from 1998 to 2018. Interestingly, the
correlation coefficient between these two variables is 0.91 in the United States and 0.45 in China.
 This indicates that foreign trade has played a much larger role in the growth of the United States compared
to its impact on China's growth. It is evident that a trade war could have adverse effects on the economic
growth of both countries.
 By analyzing the graphs and correlation coefficients, it becomes evident that the US economy would be
more negatively affected by imposing protectionist measures and restricting foreign trade, as opposed to
China. 12/17
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 Turkey's Economic Growth Linked to Foreign Trade
Expansion: Graph Highlights Positive Relationship

 Let's now look at the situation of the

Turkish economy in relation to this
relationship. The graph below
represents the period from 1998 to
2018 and shows the correlation
between Turkey's economic growth
(blue) and the growth in foreign
trade volume (red).
 The correlation coefficient between
these two variables is found to be
0.79. The high value of both the
graph and the correlation coefficient,
0.79, highlights the positive impact
of trade growth on Turkey's
economic growth.

 Although Turkey is not as positively affected as the United States by the increase in foreign trade volume, it
appears to be more positively influenced compared to China.
 Turkey forges stronger economic links with China, seeking to increase bilateral trade amidst global
uncertainties.
 Despite the widening trade gap due to rising imports from China, Turkey strives to leverage its proximity to
European markets and cost advantages to enhance trade and mitigate potential consequences of ongoing
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Trade Wars Shake Global Economy: Declining Trade
and GDP, Shifting Dynamics, and Rising Distrust
 Trade wars have had significant negative consequences for global trade, GDP, and political
dynamics.
 They have led to a decline in worldwide export growth and a loss of approximately 1.5% in the
global economy.
 The adverse effects of trade wars are attributed to tariff increases, fluctuations in dollar supply,
and currency manipulations.
 The rapid spread of Global Value Chains (GVCs) has increased the political power of foreign
actors in domestic politics, causing concerns about the negative impacts of globalization.
 The US-China trade war has resulted in a restructuring of key supply chains and increased
distrust of foreign actors, particularly from China.
 This has potentially shifted policy making on trade and investment back towards national actors.
 The consequences of trade wars highlight the need for careful consideration of their long-term
effects on supply chains and international economic relations.

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References
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2.
2. Özkaya, Mehmet Hilmi, Elif Tuğçe Bozduman, and Halit Yilmaz. "Küresel Ticarette Yeni Korumacılık: Ticaret
Savaşlarının Dünya ve Türkiye Ekonomisine Olası Yansımaları." 7th SCF International Conference on “The
Future of the European Union and Turkey-European Union Relations. 2019.
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3. LİMAN, Yağmur SAĞLAM, and Filiz ERATAŞ SÖNMEZ. "Ticaret Savaşlarının Dünya Ekonomisi Üzerindeki
Etkileri: Ampirik Bir Analiz." Manisa Celal Bayar Üniversitesi Sosyal Bilimler Dergisi 20.Özel Sayı: 123-140.
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4. https://www.mahfiegilmez.com/2019/11/ticaret-savaslarnn-kuresel-refaha-ve.html
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5. Teker, Suat, Dilek Teker, and Irmak Orman. "International trade between Turkey and China." PressAcademia
Procedia 16.1 (2023): 179-191.
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6. Curran, Louise, and Jappe Eckhardt. "The structure of international trade, global value chains and trade wars in
the twenty-first century." Research Handbook on Trade Wars. Edward Elgar Publishing, 2022. 27-46.
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7. https://www.piie.com/research/piie-charts/us-china-trade-war-tariffs-date-chart
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8. https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS
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9. https://data.worldbank.org/indicator/NE.IMP.GNFS.ZS
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10. Şanli, Orhan, and A. T. E. Ş. İsmet. "ABD-Çin odaklı ticaret ve kur savaşlarının dünya ekonomisi üzerine
etkileri." Adnan Menderes Üniversitesi Sosyal Bilimler Enstitüsü Dergisi 7.1 (2020): 75-101.
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11. Bayramoglu, Arzu Tay, and Deniz Sukruoglu. "Non-Energy import demand function in Turkey: New
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12.
12. https://data.tuik.gov.tr/Bulten/Index?p=Foreign-Trade-Statistics-April-2021-37416&dil=2

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In my presentation, I aimed to explain some significant topics
including the origins and impact of trade wars, Turkey-China
trade relations and economic growth, consequences and future
implications of trade wars, analysis of US trade policies,
Turkey's trade statistics and challenges, and global trade
dynamics.

For any further inquiries, feedback, or to reach out, please feel

free to contact me via sabirbaharirem@gmail.com.

Thank you for your interest in my presentation.

Best regards,

Bahar İrem SABIR

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