Effectiveness of Protectionism in the Trade War: Case of the U.S. and China

Abstract

Protectionism refers to the economic policy of a country to limit foreign trade by imposing tariffs, quotas, or other barriers on imported goods and services. The trade war between the United States and China, which began in 2018, has been one of the most notable exemplifications of protectionism in recent times. The aim of this study is to examine the effectiveness of protectionism in the trade war between the United States and China.

The U.S. government imposed tariffs on Chinese imports to reduce the trade deficit with China and to protect American businesses from unfair competition. The tariffs were designed to incentivize American companies to relocate their manufacturing operations to the United States and diminish reliance on imports from China. However, the tariffs also had negative effects on the U.S. economy. American businesses and consumers had to pay higher prices for imported goods, and U.S. companies that relied on Chinese inputs for their production faced significant difficulties.

In China, the government responded to the U.S. tariffs by imposing its own tariffs on American imports. The Chinese tariffs aimed to reduce the impact of the U.S. tariffs on the Chinese economy and to support Chinese businesses. However, the Chinese tariffs also had a negative impact on the Chinese economy. Chinese businesses and consumers had to pay higher prices for imported goods, and Chinese companies that relied on American inputs for their production faced significant difficulties. The trade war between the United States and China has adversely affected the worldwide economy. Declines in trade between the two nations have resulted in diminished economic growth and higher unemployment rates. Moreover, the trade dispute has introduced uncertainty and instability into the global economic landscape, causing hesitation among businesses and investors to engage in new ventures. To sum up, the trade dispute between the United States and China has illustrated that protectionist measures are not an effective remedy to the challenges posed by international trade.