The China-US Trade War and its Future

The trade war between China and the United States started in 2018 and the drumbeat of this big war was played by former President Donald Trump. Donald Trump acquired the US presidency in January 2017 and started a trade war with China a year-and-a-half later on July 6, 2018. Trump was a Republican president. Earlier, such a global Cold War was initiated by Democrat US President Harry S Truman against the Soviet Union. The Cold War began between the United States and the Soviet Union in the 50s after the end of the World War II. But this war; fought on ideological, psychological, practical, impractical, religious, educational and other fronts was being fought in the dimensions of the world.

Undoubtedly, it was also a business, commercial, scientific, and to a large extent, a war of nerves. One of the main fronts was the media. A key figure in the American State Department who shaped this war was Paul Nietzsche, who has been an adviser to every American Democratic and Republican president from Harry Truman to Bill Clinton and has been directly monitoring the Cold War operations. The starting point of the Cold War was the first Soviet nuclear explosion in August 1949 and the Chinese Revolution of October 1949.

After these two major events, President Truman asked the State Department to prepare a site to determine the new US security requirements, which was developed under the name of NSC 68.

The starting point of the 2018 trade war was the imbalance between China and the United States trade, which made the American political and business leadership realise that if the American trade deficit continues to grow to such an extent, the United States will become China’s market. Upon this, the United States imposed heavy duties on Chinese imports. Initially, the US government imposed a 25 per cent tariff on Chinese goods worth $34 billion. US President Donald Trump said that the balance of trade between China and the United States has worsened, so it has become necessary to impose duties on Chinese imports to reduce the bias of this trade towards China. When the United States started this trade war, duties were imposed on over $5 trillion worth of Chinese goods, while duties were imposed on over $1 trillion worth of American goods.

Within a year of the US gains on Chinese trade, another major global event occurred that dealt a historic shock to the world trade. This incident was the emergence of the Covid-19 virus in China. China decided to deal with this virus on war footings, while the American and European countries were badly affected by the Covid-19 pandemic. At the beginning of the coronavirus, the World Bank predicted that the virus will slow down the global economy and, at the same time, the economic development of the United States and China will suffer a big blow. The benefits of the trade war between the two world powers and the damage estimates are also strange. The benefit of this war went to those countries whose GDP was lower than that of the major economies, but those economies were emerging as major economies.

Experts say that the war of world powers benefited Vietnam, Malaysia and Taiwan. Vietnam was ahead in these three countries and the experts declare Vietnam as the winner of this trade war. During this period, Vietnam’s healthcare sector has doubled and has received additional funds of $6.4 billion.

A new analysis by Columbia Business School reveals that one of the global benefits of the China-US trade war has been a massive increase in the global trade. A kind of diversification occurred in the supply chains affected by the harvest, which had profound effects on the future of globalisation. It will be of interest to the readers to see what the US exports to China are. Especially after the events of 9/11 in 2001, the US exports of airplanes, motor vehicle microchips and soyabeans to China became central. China imposed tariffs on soyabeans and motor vehicles. America focused on exports of these two products.

A few years ago, there was a time when the US was the largest debtor to China. At that time, the United States owed the most to Japan and China, the first and second largest Asian countries. America owed Japan $13 trillion, while it owed around $10 trillion to China. Interestingly, China’s debt to the US fell to $10 trillion from $23 trillion and the priorities of the American trade partnerships also changed. In the current situation, the largest trading partner of the United States is its closest country, i.e., Canada. The volume of the trade partnership between the United States and Canada is over $3 billion. The second largest trading partner of the United States is its southwestern neighbour, Mexico. The volume of the bilateral trade partnership between the United States and Mexico is over $2 trillion. China is America’s third largest trading partner. The volume of bilateral trade between the United States and China is over $1 trillion. The fourth largest trading partner of the US is Japan. America owes the most in the world. The volume of bilateral trade between the US and Japan is only $75 billion.

In relation to the foreign trade of the United States, the American government also has to keep in mind that due to the bilateral trade, the employment opportunities also fluctuate. Trade with China has created 900,000 jobs for the US and 160,000 jobs created by the Chinese companies, investing in the US. It will also be interesting to note that China has also acquired a large area of land in America. When the China-Pakistan Economic Corridor (CPEC) project was being implemented in Pakistan, there was a fear in Pakistan that China would buy a large piece of land here and acquire its national rights, which would raise a question for our sovereignty.

We are not in favour of selling any piece of land in Pakistan to any other country, but it will not be without interest that China has acquired 191,000 pieces of land in America with the ownership rights. China has done this. The land is acquired in the northern states of Montana and Minnesota in the middle state of North Dakota.

It is also important to mention that what goods the US imports from China. The US imports fresh and preserved fruits, vegetables, spices and tea from China, about half of the US agricultural imports come from China. Under these circumstances, trade circles are questioning whether China can rely on its agricultural exports to the US. In 2020, the rate of the US foreign direct investment in China was over $1 trillion. This investment was 9.4 per cent more than the investment in 2019. The United States invested directly in China in the manufacturing, wholesale trade, finance and insurance sectors, while China’s foreign direct investment in the US in 2020 was $38 billion, which was 4.2 per cent less than in 2019.

Besides agriculture, China also exports industrial goods to the United States in the year that the trade war between the two countries began; that very year, from China, electrical machinery worth over $1 trillion; machinery worth over $1 trillion; furniture and comforters and linens worth $35 billion; toys and sports equipment worth $27 billion; and plastic items worth $9 billion; were exported.

The US and China are the two largest economies in the world. This race of economies did not allow the world to remain a single pillar. The trade war and economic competition between the two economies of the world is also ongoing. If this war turns into a war for better opportunities for human beings, the world peace and improvement of the environment, then this planet can be habitable for humans. The real fight of the world is with hunger, poverty, discrimination and injustice, the question is will these world powers include these issues in their priorities?