The US-China Trade War: Causes, Timeline and Possible Scenarios

Abstract

The causes and timeline for the US-China trade war are determined in the paper. The U.S.-China trade war is the culmination of longstanding trade frictions that the two countries have been unable to resolve through official channels. Washington’s grievances arise from China’s use of protectionist trade policies, such as export duties and quotas, state subsidies, restrictions on market access, and deliberate intellectual property rights (IPR) theft. Beijing, on the other hand, underscores China’s developing country status and has disputed the legality of various U.S. anti-dumping and countervailing measures. The main causes of the US-China trade war are: a battle for global economic dominance; the US accuses China of unfair trading practices, of stealing intellectual property, it also wants Beijing to make changes to its economic policies, which unfairly favor domestic companies through subsidies; the US trade deficit; midterm elections members of the Congress; the trade war is supposed to bring American jobs back home, to reduce high-tech capacity of China, to prevent the growth of China’s military strength. The trade war began July 06, 2018, as the U.S. implemented the first round of China-specific tariffs. Subsequently, four more rounds of tariffs ensued. As of January 2020, tensions have finally eased as the two sides have signed a partial Phase I deal. The document agreed to roll back tariffs and expand trade purchase. Three future scenarios for the US-China relations are determined in the paper: 1 – the U.S. and China reach a Phase 2 Deal & Comprehensive Settlement; 2 – the U.S. and China continue their negotiations for a Phase 2 deal but find it difficult to reach agreement; 3 – the U.S. and China break off discussions on a final Phase 2 settlement of the trade war after negotiations fail and they pursue hostile trade policies toward each other.