Historicism Project

It has been a popular topic in the news in the past several years where China and America have been battling over the $1 trillion debt that America is in to China. Since the early 1980’s, America and China have been exchanging goods in an agreement that America would pay U.S dollars in exchange for Chinese labor, manufacturing and goods. However, over time this has caused a massive trade deficit, so much that it is nearly impossible for America to repay the Chinese. Products like steel, plastics, and technology are all imported to the United States to use for industry, businesses and consumer satisfaction. China, in return receives a plethora of money and corn and beans. President Trump campaigned in 2016 and used this trade deficit as a main point of running. Aside from Trumps difficulties doing personal business in China, since he’s been in office he has been relentlessly attacking President Shen. Trump has imposed a 10-25% tax on over half of Chinas net exports. In turn, China has had no choice but to also stick taxes on our goods and services that we want to buy or sell to them. Recently, there has been rumors of the two parties coming to an agreement on these tariffs that would potentially roll back a portion of these tariffs on both sides. This would be beneficial for both economies as in the short-term China has struggled to grow economically. 

Introduction and Abstract

Background Information

Before the trade war, two countries’ GDP grow in their own patterns, and their GDP growth rates are shown in the following graph:

Initial Status before Tariff

Future Predictions

The Chinese came to an agreement with President Trump several months ago that would roll back a large portion of the tariffs on each others products. This article states that both parties have been working together to properly address the concerns of both sides, and have agreed to cancel the tariffs in stages. About 58%, or $360 billion worth of Chinese goods that are being imported from the United States are being taxed between 10%-25%. Trump has been met with a lot of opposition as the two parties, “globalists” and “nationalists” in America are fighting over the long-run effects that this will have on our economy.

Trumps “Nationalist” mentality that promotes American businesses and domestic manufacturing means little foreign investment and trade. This means that we will have a rapid decrease in sales because China is a massive consumer of our products. American companies will now seek external countries to buy their goods and none will pay as pretty a penny or the quantity that China did. Because of this, domestic prices of goods will increase as businesses compensate for the lost sales in China. The long-term cost to America is that our economy will become less efficient.

Citations

“China GDP Annual Growth Rate.” Trading Economics. https://tradingeconomics.com/china/gdp-growth-annual Accessed 27 Nov. 2019.

“Percent Change of Gross Domestic Product [CPGDPAI].” U.S. Bureau of Economic Analysis, retrieved from FRED, Federal Reserve Bank of St. Louis, 30 Nov. 2019, https://fred.stlouisfed.org/series/CPGDPAI, Accessed 29 Nov. 2019.

Rushe, Dominic. “Here are reasons for Trump’s economic war with China.” 23 Aug. 2019, https://www.theguardian.com/us-news/2019/aug/23/trump-china-economic-war-why-reasons Accessed 29 Nov. 2019.

Swanson, Ana., Bradsher, Kaith., and Rappeport Alan. “U.S. and China Agree to Roll Back Some Tariffs If Deal Is Struck.” The New York Times, 7 Nov. 2019, https://www.nytimes.com/2019/11/07/business/china-trade-trump.html?searchResultPosition=32 Accessed 20 Nov. 2019.

“Trade in Goods with China.” United States Census Bureau. https://www.census.gov/foreign-trade/balance/c5700.html Accessed 27 Nov. 2019.

-“Chart of the Week: New Tariffs Could Already Be Impacting Imports from China.” Visual Learning Center by Visme, https://visme.co/blog/china-trade/. -Daniele Palumbo & Ana Nicolaci da Costa. “Trade War: US-China Trade Battle in Charts.” BBC News, BBC, 10 May 2019, https://www.bbc.com/news/business-48196495.

Kimball, Spencer (May 5, 2019). "Trump says tariffs on $200 billion of Chinese goods will increase to 25%, blames trade talks". CNBC. Retrieved May 6, 2019.

Diamond, Jeremy. "Trump hits China with tariffs, heightening concerns of global trade war". CNN. Retrieved March 22, 2018.

"Trump's Rumored Tariff Plan Sparks Fears of Sino-U.S. Trade War - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.

"Update: Sino-U.S. Trade War Begins - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.

"China Vows Retaliatory Tariffs on $60 Billion in U.S. Goods - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.

"Marriott Data Breach Is Traced to Chinese Hackers as U.S. Readies Crackdown on Beijing", New York Times, Dec. 11, 2018

"Notice of Modification of Section 301 Action: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation". Federal Register. May 9, 2019.

U.S. Bureau of Economic Analysis, Percent Change of Gross Domestic Product [CPGDPAI], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CPGDPAI, December 1, 2019.

International Monetary Fund, National Accounts: Real Gross Domestic Product for China, P.R.: Mainland [CHNNGDPRPCPPPT], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CHNNGDPRPCPPPT, November 30, 2019.

March 22, 2018: Trump asked the United States trade representative (USTR) to investigate applying tariffs on US$50–60 billion worth of Chinese goods. He relied on Section 301 of the Trade Act of 1974 for doing so, stating that the proposed tariffs were "a response to the unfair trade practices of China over the years", including theft of U.S. intellectual property.

July 6, 2018: American tariffs on $34 billion of Chinese goods came into effect. China imposed retaliatory tariffs on US goods of a similar value. The tariffs accounted for 0.1% of the global gross domestic product. On July 10, 2018, U.S. released an initial list of the additional $200 billion of Chinese goods that would be subject to a 10% tariff. Two days later, China vowed to retaliate with additional tariffs on American goods worth $60 billion annually.

December 1, 2018: The planned increases in tariffs were postponed. The White House stated that both parties will "immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft.

May 5, 2019: Trump stated that the previous tariffs of 10% levied in $200 billion worth of Chinese goods would be raised to 25% on May 10.

The Ohio State University, Macroeconomics

Noah Blazek, Yijiang Shen, Xueying He

Macroeconomics Article analysis

Current Status on Tariff