Presentation made by MBA students of Trade war between USA & China

1. VPM’s Dr.V.N.Bedekar Institute of
Management Studies
Under the Guidance
of
Prof. Siddhesh Soman

2. Trade War United States v/s
China

3. A Trade War is an Economic Conflict resulting from extreme
protectionism in which states raise or create tariffs or other trade
barriers against each other in response to trade barriers created
by the other party.
What is Trade War
?

4. How Trade War is Born?
• Country1: Imposes high tariffs.
• Country2: Response with many high
tariffs.
STAGE 1
• Country1: Even more tariffs.
• Country2: Retaliates further and
makes threats.
STAGE 2
• Country1:
• Country2:
STAGE 3 Trade War Started

5. Why Trade War?
 Balance Trade deficits.
 Nations refuse to make compromise.
 Shielding Domestic business and jobs from foreign competition.

6. PROS
Increases demand for domestic goods.
Protects domestic companies from
unfair competition.
Improves trade deficits.
Promotes local job growth.
Punishes nation with unethical trade
policies.
CONS
Increases cost and induces inflation.
Causes market place shortages, reduces
choice.
Discourages trade.
Hurts diplomatic relations, Cultural
exchange.
Slows economic growth.

7. United States of America
The United States of America (USA), commonly known as
the United States. It is the third most populous country in the world.
The United States is a highly developed country and continuously
ranks high in measures of socioeconomic performance. The United
States is the world's largest importer and the second-largest exporter
of goods. In 2019, the total U.S. trade with foreign countries was
$5.6 trillion.That was $2.5 trillion in exports and $3.1 trillion
in imports of both goods and services.

8. China
China, officially the People's Republic of China (PRC) is a country in East
Asia. It is the world's most populous country. After economic reforms in 1978
and its entry into the World Trade Organization in 2001. China is the
world's fastest-growing major economy and the world's largest manufacturer
and exporter. The value of China's exports in goods annually surpasses the
amount it imports from the rest of the world. In 2018, China exported $2.49
trillion in goods while it imported $2.13 trillion. The majority of China's
surplus comes from trade with the US and Hong Kong.

9. The list of products included in the round of tariffs was released on July 11,
2018, and was set to be implemented within 60 days. On June 19,China
retaliated threatening its own tariffs on $50 billion of U.S. goods, and
stating that the United States had launched a trade war.
When did trade war between US v/s China
started?

10. Actions taken by Us & China resulting in Trade War
March 22, 2018
March 22 2018 Trump initiates investigation to
apply tariffs on US $50-60 billion worth of goods on section 301 of the Trade
Act(1974) for the left of IPR.
April 2, 2018
Ministry of Commerce of China responded by Imposing Tariffs on 128 Products
including Airplanes, cars and Soybeans(25%) as well as Fruits, Nuts and Steel
Piping(15%).
June 15, 2018
Trump declared that United States would impose a 25% tariff on $50 billion of
Chinese exports. $34 billion would start by July 6 with further $16 billion to begin at a
later date.
August 14, 2018
China filed a Complaint with the WTO stating that US tariffs on foreign solar panels
clash with WTO ruling on Solar PV products.

11. Sept17, 2018
US announced its 10% tariff on $200 billion worth of Chinese goods would
begin on 24 sept, increasing to 25% by the end of the year
Sept 18, 2018 China retaliates promptly with 10% tariffs on $60 billion of US on imports.
November 30, 2018
President Trump signed the revised US-Mexico-Canada agreement. The
USMCA also aims at preventing any non-market economy, especially
China from taking advantage of the agreement.
December 1, 2018
The planned increase in tariffs were postponed. The white House stated that
both the parties will Immediately begin negotiations on structural changes.
May 5, 2019
Trump stated that previous tariffs of 10% level in $200 billion worth of
Chinese goods would be raised to 25% on May 10.

12. June 1, 2019
China announces that it will raise tariffs on $60 billion worth of
US goods.
June 29, 2019
During the G20 summit, Trump announces he and Xi Jinping
agreed to a “Truce” in the trade war until negotiations are
complete.
August 5, 2019
The US department of treasury officially declared China as a
Currency Manipulator. China stops purchases of US Agriculture
Products
August 9, 2019
China announces an accelerated decrease of US treasury
holdings, targets 25% of its current holdings of $1.1 million.

13. Gains:
 Low Unemployment rates due to better self dependency.
 Bull run in the US stock market.
 Lower Trade deficit.
Losses:
 Hurts Rising cost of imported materials for manufacturing.
 The agricultural sector.
 Economic Slowdown.
Gains & Losses of United
States

14. Gains:
 Growth of China’s GDP as lower dependence on USA
Losses:
 Lower export surplus.
 Shanghai composite (SSE) fell by 17% since 2018.
 Forced to bear rising costs to make exports economically feasible.
 China’s reputation on a global scale.
Gains & Losses of China

15. Effect of Trade war on World
Economy
 A Trade war may improve a nation’s trade deficit in the short run but it could cost
warring nations their economic growth in the long term.
 The effected countries has signed new trade agreements with other countries and
have left U.S. out of the Loop.
 According to a model-based assessment by the Bank of Finland, tariff increases
currently in place will slow global GDP growth by around 0.7 of a percentage point.
The trade dispute has already diminished trade flows between the United States and
China.

16. Macrobond and Calculations by Bank of
Finland

17. According to the World bank a full blown Trade war can
effect:
 Reduce global exports by up to 3% (at a cost of US $674 billion.
 Reduce global income by up to 1.75 (US $1.4 Trillion).
 Half of the global income loss of 1.7% would be due to loss of income by
developing countries.
 A third of the global experts decline of 2.7% would be due to the loss of exports of
developing countries.
 Trade tensions would depress trade, disrupt global, supply chains and divert trade
away from developing countries.

18. Effect of Trade War on India
 India’s share of World exports rose to 1.71 percent in the first quarter of 2019 from 1.58 percent in the
fourth quarter of 2017.
 Chinese imports of Indian goods surged 31 percent in the past years mainly due to substitution of US
exports to other Asian economies.
 The Indian Rupee has declared that due to higher current account deficit and lower FDI because of the
Trade war.
 Improve implementation of support policies.

19. THANK YOU