Effects of Eliminating the US–China Trade Dispute Tariffs

Abstract

This paper examines the economic implications of the tariff increases by the United States and by China during the Trump era trade dispute and the gains from their potential removal. The increases were dramatic, with the US raising tariffs on industrial products by a factor of six – with particularly large tariff increases on intermediate and capital goods – and China increasing its tariffs on US agricultural products more than five-fold. These changes distort trade and production decisions in both countries and undercut the global trading system. They resulted in substantial economic losses to each country, with import volumes reduced by 4.9% in China and 4.5% in the USA, and bilateral trade patterns were massively distorted. Their cost to the United States rose at the end of 2021, when the import expansion provisions of the Trump era Phase One Agreement expired. Negotiating the abolition of these costly and disruptive tariffs would generate substantial real income gains for both countries and help lower US consumer prices.

Tariffs and Vietnam’s exports of Mach and Elec products to CPTPP partners

“…However, the positive change was minimal because a sizable portion of Vietnam's electronics industry's exports to Europe before the EVFTA went into effect were extremely low or even no taxes. According to Zheng, Zhou, Li, Padula, and Martin (2023), under the Trump era, tariffs on trade volumes by commodity and sector. There was a dramatic decline in China's industrial exports, mainly including oilseed, transport equipment, and electronics.…”

The impacts of price insulation on world wheat markets during the 2022 food price crisis

“…Whether price‐insulating policies can explain the different responses of domestic to world prices is an important question. Despite China's market‐oriented reforms as part of the WTO accession process (Bhattasali et al, 2004), China's policymakers still have some discretion on imports and pricing, especially following the increases in tariffs on imports from the United States arising from the Trump tariff war (Zheng et al, 2022), which make it more difficult for private firms to import from the United States. India's policymakers certainly retain the ability to influence domestic prices and used this policy discretion to impose a wheat export ban from May 2022.…”

Modelling trade war between two countries under the international division of Labour

“…Zheng, Zhou, Li, Padula, and Martin (2022) [ 47 ] investigated the economic repercussions of the trade war during the Trump administration, specifically focusing on the increased tariffs imposed by the United States and China. The United States increased tariffs on China's industrial goods by a factor of six, with substantial increases observed in tariffs on intermediate and capital goods.…”