US-China Trade War: Was It Really Necessary?

Abstract

The business world has observed another shocking measure taken by the US president to impose 25% tariffs on Chinese imports worth USD 150 Billion in total to the USA in order to reduce the deficit of US-China bilateral trade. The counter measure was the quick anti-tariff on USD 50 Billion US goods to China. The net result might be the reduction of bilateral trade between the two countries substantially. The most likely conclusion of this country specific impose of tariffs is the substitution of imports from other countries by US importers other than China. While the US trade deficit with China might fall and with other countries it will continue to rise, meaning the US trade deficit with the rest of the world will not be considerably changed. Majority of the experts and economists argue that the combined trade deficit with the rest of the world can only be reduced either by increasing the internal demand and meet that demand by local products (importing less from outside) or simply by exporting more to the other countries. As China has the largest market for many consumer and industrial products, there is a huge potential for the US to increase its exports like agricultural products, energy automobile; and services like education and tourism to Chinese market. The paper aims at discussing the alternatives of imposing tariffs and addressing the concept of ―reasonable trade‖. The sources of this descriptive paper are the published news, articles and information in web. The authors are hopeful that this paper will come to the help of academicians wishing to investigate more on this issue and the policy makers of the business world who seek better alternatives of trade war.