Policy Briefing

Policy Briefing

Abstract

The United States has always enforced protection policies in order to promote economic growth as well as protect American citizens. This practice has been common all through history since the great depression up to date. An example of these protection policies is the recent trade tariffs President Trump raised on China goods and caused a cold war between the two countries for the past two years now. In 2018, more than two-thirds of America’s imports from China faced higher customs. About $112 billion Chinese imports faced 25% taxes. The US imports many goods from China, including electronics, aluminium, steel, and furniture, which were all facing a 25% tax. The reason behind these tariffs was that Trump accused China of stealing intellectual property and other unfair practices. Trade tariffs have affected both China and the US, causing an increase in the cost of living, with even the cost leadership businesses like Walmart Inc. increasing prices of goods. There is a necessity to control these tariffs to restore the balance in America’s economy (BBC. News, 2020).

Trumps tariffs

Trump has always advocated for tariffs to subsidize the huge trade deficit. According to Trump, this would promote local business. Some of the US economists argued that this would leave the economy into chaos, but other economists reasoned that some trade tariffs would be needed to fix the huge trade deficit. Therefore in 2018, President Donald Trump set trade barriers on China exports with the aim of forcing China to rectify its unfair trade practices such as intellectual property theft and siphoning of American technology. One of the affected goods was electronics, which faced 25% levies. China, in return, raised billions of tariffs on US imports which caused prices of many goods to increase.

These tariffs have not only affected partnership with China but with other countries. For instance, other countries like Australia have increased trade activities with China. UN stated that the trade wars were harming both of the countries’ economies. The US was breaking its codes and mission as a member of the UN of promoting the welfare of the people. Countries like Brazil and Mexico have benefitted from the trade war. Switzerland also increased its exports to China, whereas Europe retaliated from trading with the US (BBC. News, 2020).

Relevance to US foreign policy

The protection trade tariffs of USA are harming both its economy and its relationship with other countries. The US has to drop these protection trade tariffs for it to go back to its rightful position as an as a global trade partner. The relationship between these countries have been strong for decades, and each has benefitted from the other. Upholding the trade tariffs will only make it worse for the US as it will lose its major market, China. The trade war is benefiting other countries such as Brazil, Switzerland, and Mexico at the expense of the US. The trade deficits are also affecting the US economy, making the cost of living very expensive for the local people (Johnson, 2020).

Recommendations

I would recommend that America considered withdrawing all the trade tariffs implemented on China goods. It should enter into new agreements on the protection of intellectual properties. The two countries should also join a truce that no country gets to implement trade tariffs on the other. It should consider increasing international trade deals to reduce the trade deficit instead of using trade tariffs (Johnson, 2020).

Expected outcomes

By withdrawing the protection trade policies, the US will encourage trade relations with China. It will also position itself centrally, encouraging countries to trade with it. This will work in its favor because China will withdraw the tariffs it implemented, therefore, reducing the cost of living. The US. More trading will be a start for settling the huge US deficit. Political relationships between the US and China will strengthen once again. The US will go back to its political status in the world. The US was once an ambassador of free trade and globalization, especially in Obama’s administration, and dropping tariffs will help it get back there. This will promote political ties even in the future. Dropping the trade tariffs reduces the chances of developing trade war between the two countries. It promotes peace both in the national and international platforms (BBC. News, 2020).

Source: department of labour, department of commerce, Goldman Sach Global Investment Research

References

BBC. News. (2020). A quick guide to the US-China Trade War. Retrieved from https://www.bbc.com/news/business-45899310

Fitzgerald, M. (2019). This chart from Goldman Sachs shows tariffs are raising prices for consumers and it could get worse. Retrieved from https://www.cnbc.com/2019/05/13/this-chart-from-goldman-sachs-shows-tariffs-are-raising-prices-for-consumers-and-it-could-get-worse.html

Johnson, K. (2020). 5 Takeaways From Trump’s New China Trade Pact. Retrieved from https://foreignpolicy.com/2020/01/16/trump-new-china-trade-pact-takeaways/