US-China Trade War: Causes and Outcomes

Abstract

The article reviews the chronology and analyses the causes and possible consequences of the trade war between the US and China. The authors identify four main reasons that led to the greatest trade conflict between the two economies in history associated with intentions of the US: a) to reduce the deficit of bilateral trade and increase the number of jobs; b) to limit access of Chinese companies to American technologies and prevent digital modernization of the industry in the PRC; c) to prevent the growth of China’s military strength; and d) to reduce the federal budget deficit. It is confirmed and concluded that trade wars have no winners. Taking into account the two countries’ GDP scale and export volumes, the US-China trade war will come amid a slowdown in the global production and international trade. The article analyses the outcomes of the trade confrontation based on the scenario methodology. The authors identify 4 scenarios by making assumptions about the response pattern and conjectural variation in the bilateral economic relations. The US protectionist policy has its political dimension. The constraints of the bilateral trade is one of the tools for slowing China's military and economic power growth.

Keywords

• trade war
• protectionism
• trade policy
• trade balance
• bilateral trade
• high-tech capacity
• global dominance
• global supply chains