The return of protectionism: The impact of the Sino-US trade war

Since 2018, Sino-US economic and trade relations have become increasingly tense. Between 2018 and 2019, the US imposed seven rounds of tariffs on China, to which China responded with retaliatory measures. The simple average tariff rates on US imports from China rose from 4.07% in January 2018 to 24.43% in December 2019, while the simple average tariff rates on Chinese imports from the US increased from 9.32% in January 2018 to 22.53% in December 2019 (see figure 1).

Consequently, the share of Chinese goods in US imports declined significantly — from a peak of 21.6% in 2017 to 14% in 2023. As the world’s two largest economies, the trade conflict between the US and China is expected to have far-reaching implications not only for their trade and welfare, but also for the global economy.

In a recent review article (doi: https://doi.org/10.1016/j.ceqi.2024.09.003) published in the KeAi journal China Economic Quarterly International, two researchers in China reported an overview of the Sino-US trade war, analyzing its background, evolution and effects on the global economy.

“Existing literature indicates that the Sino-US trade war has resulted in significant welfare losses for both countries, with surprisingly little impact on employment,” says co-author Hong Ma from Tsinghua University. “Specifically, the additional tariffs imposed by the US on China have neither effectively addressed trade imbalances nor brought manufacturing jobs back onshore.”

The study also examined the reshaping of global supply chains resulting from the Sino-US trade conflict. “The ongoing trade tensions between China and the US have revealed vulnerabilities in the global supply chain and intensified the trend toward regionalized production networks,” shares co-author Jingxin Ning from University of International Business and Economics. “Interestingly, although China’s share in US imports has fallen dramatically since the outbreak of the Sino-US trade war, in terms of value-added imports, the US’ dependence on China’s products has actually increased.”

The authors highlight that unilateral trade policies have limited effectiveness in addressing the complex economic and social challenges brought by globalization, and suggest future research focus on the interdisciplinary impacts of trade policies and developing a balanced strategy that promotes economic growth, distributive justice and political stability.

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References

DOI

10.1016/j.ceqi.2024.09.003

Original Source URL

https://doi.org/10.1016/j.ceqi.2024.09.003

Funding information

Hong Ma thanks the financial support of the Social Science Foundation of China (Grant No.23&ZD046) and Tsinghua University Scientific Research Program (Grant No.2023TSG08102). Jingxin Ning thanks financial support from the Fundamental Research Funds for the Central Universities in UIBE (Grant No.23QD10).

About China Economic Quarterly International

China Economic Quarterly International (CEQI) seeks to promote the understanding of how the experience of China’s economic development and institutional change can contribute to economic theory. The journal welcomes papers studying the process and consequences of China’s economic reforms, the social and economic impact of important domestic and international policies, the economic linkage between China and other countries, and the comparison between the development process of China and that in the rest of the world. Issue-driven papers that develop insightful ideas from the real world and have general implications are particularly encouraged.