US-China Trade War – Help or Hinderance to U.S. firms?

The PBS Frontline video provides a summary of events leading to a trade war – started since July 2018 – between the United States and China under the Trump Administration to help increase domestic production of goods that will reduce the reliance on imported goods from China, thereby reducing the trade deficit. The Biden Administration has kept the tariffs in place while reopening talks with China as well as negotiating fair trade with allies. For instance, Alden from Foreign Policy noted that “The United States and the European Union have resolved a festering 17-year-old dispute over subsidies to aircraft-makers Boeing and Airbus, and they recently launched a high-level Trade and Technology Council that has begun to hammer out common approaches on foreign investment screening, export controls on sensitive products, technology standards, and securing global supply chains.” 

However, to-date domestic producers who rely on imported resources and consumers who depend on cheap imported goods from China have been suffering with less goods and increased costs/prices given the current supply-chain gridlock from the COVID-19 pandemic which is exacerbating economic growth. Lee and Varas from American Action Forum reported that “based on 2020 import levels, these tariffs currently impact over $400 billion of imports and exports and increase consumer costs by roughly $51 billion annually.”

Questions:

1. Based on the video content, share TWO takeaways you have about how the trade war between the two countries is affecting each country’s economy especially the identified firms affected by the tariffs.
2. Do you think this trade war is sustainable given the current COVID-19 pandemic that has blocked the movement of exported goods to China from U.S. and imported goods from China to U.S.? Do explain.
3. Self-reflection: Go on a treasure hunt around your home and find 3 imported products and the country where the products are made that you purchase on a regular basis.
   1. List the 3 items and their countries of origin.
   1. Do you feel guilty when buying products manufactured in a foreign country based on the consumer sovereignty concept?  Why or why not?
   1. Can the 3 products you have identified be made in the United States at a cheaper price based on the comparative advantage concept? Do explain.

Sources: PBS Frontline: Trump’s Trade War, Pixbay.com, Foreign Policy: Biden’s vague muddle of trade policy for China, American Action Forum: The total cost of U.S. tariffs, The Balance: Comparative advantage theory and examples, Intelligent Economist: Consumer Sovereignty