Business Finance - Management Business Finance - Management Signature Assignment Part 3

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Unsuccessful Attempts at Resolution of the U.S.-China Trade War

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Unsuccessful Attempts at Resolution of the U.S.-China Trade War

The trade war between the U.S. and China has been ongoing for a couple of years, with mutual tariffs slapped on each nation and with accusations of unfair trade practices. Both countries have tried to negotiate their way through this crisis, but most strategies seemed to fail due in large part to the conflicting interests in trade policies, national security concerns, and geopolitical rivalry. This section shall look at how attempts by both the United States and China have sought to resolve the trade conflict but failed and for what reasons.

The Phase One Agreement: A Short-Lived Success

One of the most high-profile attempts to end the U.S.-China trade war was the "Phase One Agreement signed in January 2020. It commits China to buying an additional $200 billion worth of U.S. goods and services over the next two years," beyond what it bought in 2017 (Bown, 2022, par. 9). The U.S. committed to easing some tariffs on Chinese products in return. It did nothing to solve the root causes of the trade war, although it temporarily relieved tensions. The Phase One Agreement focused on tariff reduction and increasing purchases. Major areas of interest, such as intellectual property theft, forced technology transfers, and the state subsidies China gave to its key industries, were not affected (Ciccantell et al., 2023). As Siripurapu and Berman (2023) explain, the deal did not involve the resolution of structural gaps between the economies of the two nations, entangled deeply with China's state-controlled model of development versus the U.S.'s call for equal market competition. The narrow limits of this agreement left many contentious issues still to be negotiated for a continued trade war.

Unilateral Tariff Strategies

While tariffs have been the first option in trying to resolve the trade conflict between the two countries, the U.S. and China have continued to rely on them a great deal in what has mostly been an ineffective tool for them. The U.S. imposed retaliatory tariffs across billions of dollars in Chinese goods for what initially was a move to compel China into changing its trade practices. China eventually responded with retaliatory tariffs targeting farm products and other key U.S. industries. This approach has yielded very little result so far, as required to resolve the dispute. One of the main reasons tariffs have yet to yield the desired result is that tariffs are basically an act of hurting both economies without necessarily solving the ground problems. As Ciccantell et al. (2023) observed, the tariffs against Chinese goods have hurt American consumers and businesses through increased costs, while the tariffs laid by China against U.S. exports devastated American farmers. These have disrupted supply chains worldwide, especially in industries such as electronics and manufacturing, and make it hard for either country to maintain economic stability. The mutual damage of the tariffs did work to grow domestic opposition in both nations, but neither has been willing to jettison the strategy entirely.

Intellectual Property and Technology Transfer Disputes

Another significant failure in resolving the trade war lies in the ongoing disputes over intellectual property rights and forced technology transfers. The U.S. has long accused China of engaging in practices that force American companies to share their technologies in exchange for market access. This issue remains a central point of contention and has been a major obstacle in trade negotiations. The failure to resolve these disputes stems from the differing economic systems of the two nations. China’s state-led development model, which includes heavy subsidies for industries such as technology and manufacturing, is fundamentally at odds with the U.S. demand for a market-driven approach. As Shi (2022) points out, China’s protection of its domestic industries and its strategic focus on becoming a global leader in technology are key reasons why the U.S. has been unable to reach a comprehensive agreement on intellectual property and technology transfer issues. Without addressing these structural differences, any attempts at resolution are likely to be temporary or incomplete.

The Geopolitical Dimension

One of the most important factors is the role of geopolitics in perpetuating the failure of negotiations between the U.S. and China; both countries consider the trade war to be not just an economic dispute but also a tectonic struggle over global supremacy. As Siripurapu and Berman (2023) note, the trade war is about much more than tariffs and trade balances- it is a reflection of the broader strategic competition between the world's two largest economies. This is all the more geopolitical, making it rather difficult to resolve, for neither country would want to give in to a situation that could weaken them on the global stage. The U.S., through the Trump and Biden presidencies, has pursued a tough approach toward China, viewing the trade war as part of the overall policy of containing China in areas like technology, military power, and international trade. China, for its part, has resisted American demands, which are viewed as tantamount to obstructing Chinese sovereignty and development processes. This geopolitical standoff makes it very problematic for negotiators to find a lasting agreement that would square long-term strategic interests with short-term economic gains.

Conclusion

The U.S.-China trade war is still in the morass of an unresolved conflict despite several attempts at negotiation and resolution. The Phase One Agreement was a momentary success but could not resolve the major issues of intellectual property rights and China's state subsidies. Plainly, the unilateral tariff ways would not work; both economies were bearing negative influences, and thus, they could not settle the root causes of the conflict. This is also elaborated by the geopolitical factor in the trade war, which has further complicated efforts at finding common ground. The trade war, in all its enormous consequences on the world's economy, will thus not be stopped unless these most basic issues can be compromised on by the two nations.

References

Bown, C. (2022, October 20). Four years into the trade war, are the US and China decoupling? Peterson Institute for International Economics. https://www.piie.com/blogs/realtime-economics/four-years-trade-war-are-us-and-china-decoupling.

Ciccantell, P. S., Smith, D. A., & Sowers, E. (2023). Trade Wars and Disrupted Global Commodity Chains. Journal of World-Systems Research, 29(2), 457–479. https://doi.org/10.5195/jwsr.2023.1164.

Shi, Y. (2022). A Review of Non-Tariff Measures with Particular Focus on the U.S. and China Practices. Theoretical Economics Letters, 12(03), 601–628. https://doi.org/10.4236/tel.2022.123034.

Siripurapu, A., & Berman, N. (2023, September 26). The Contentious US-China Trade Relationship. Council on Foreign Relations. https://www.cfr.org/backgrounder/contentious-us-china-trade-relationship.