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Donald Trump's protectionist economic policies led to the introduction of tariffs on $250 billion of imports from China. President Xi Jinping responded with tariffs of his own, affecting some $110 billion worth of US-made products. As the two global economic behemoths enter a trade war, what are the implications for both economies and the rest of the world?

Positions

Arguments supporting this position

Details

China Trade war US

Context

What these tariffs aim to do is cripple the Chinese economy and force China to change its economic relations with the US. The main mechanism to that goal is attacking crucial Chinese exports, without which Chinese GDP may flounder.

The Argument

China relies on the US for 18% of its exports, a massive number for the $11 trillion behemoth of the nation. With President Trump pledging to place tariffs on most of those imports, a large proportion of Chinese businesses might find their goods more expensive, uncompetitive, and languishing on US shelves. This slowdown in sales for businesses has the potential to translate into a slowdown for the Chinese economy, and a tangible impact on Chinese workers and business owners. This is particularly damaging given the significant role export goods play in lifting people out of poverty. With tariffs already placed on $34 billion of Chinese goods, and the US increasingly belligerent towards Xi's administration, it seems likely that Pres. Trump's tariffs have a big impact on the Chinese economy. What's more, because of China's economic reliance on export-led growth, they are less able to sustain the prolonged damage of US sanction and will lose the trade war.

Counter arguments

The impact of the tariffs on China's economy may be being overestimated. It still has large markets all across the world, and has diversified enough of its manufacturing to allow it to weather the brunt of the war. While China may be badly hit, the same is true for the US, which relies on its cheap consumer and industrial goods. Rather than China being the first to break under the pressure of sanctions it may be the Trump administration, under the pressure of rising prices that impact Trump's key constituents. China has the very real potential of outlasting the US in this trade war.

Premises

1. China is reliant on US exports to maintain its level of growth. 2. Targeting those exports through large tariffs will cause huge damage to the Chinese economy. 3. The US will be able to sustain the damage for longer than China, which means a loss of the trade war for China and a capitulation to US demands. 4. The impact of tariffs on China will be overwhelmingly bad.

Rejecting the premises

2. Targeting those exports through large tariffs will cause huge damage to the Chinese economy. China is capable of exporting to other places 3. The US will be able to sustain the damage for longer than China, which means a loss of the trade war for China and a capitulation to US demands If China manages to hold on longer than the US, it could be better off than the US.

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This page was last edited on Thursday, 19 Jul 2018 at 19:01 UTC