The US-China Trade War: Technological Roots and WTO Responses

Abstract

The outbreak in 2018 of a rapidly escalating trade war between the United States and China is a watershed event that is reshaping the global economic and political order. The main complaints made by the United States against China, while increasingly widely accepted and repeated, do not individually or collectively provide a compelling casus bellum. We must look to technological developments that induce strategic trade and investment policies to find a sufficiently valuable bone of contention to explain the conflict. By the same token, solutions framed around the US complaints will fail to restore trade peace. The necessary response is to reform the multilateral trade and investment framework to constrain the strategic behavior induced by the emerging data-driven economy and to channel the rivalry into constructive technological competition – for all parties.

Keywords: Trade Wars, Data-Driven Economy, Big Data, Artificial Intelligence, Machine Learning, Strategic Trade Policy, Thucydides’ Trap, Geoeconomics, Geopolitics

JEL Classification: F13, F15, F51, F55, K21, K24