Why Does the US Face Greater Disadvantages in the Trade War with China?

Abstract

The rhetoric used by President Trump regarding the trade war against China is rife with misinterpretation. The actual American trade deficit with China is much lower if evaluated in the correct terms of value-added. The deficit is mainly a result of insufficient domestic US savings. In addition, as the US dollar is an international currency which is being increasingly held as a result of increases in world population, income, prices and transaction intensity, Americans can benefit from having trade deficits of hundreds of billions of US dollars each year. My analysis, as well as a model of the Bank of England, reveals that the trade war is not only mutually harmful but also actually hurts America more than China. The Thucydides Trap is likely avoidable in the current nuclear era of assured mutual destruction and because China, facing many structural impediments, is still far behind America in technology and military power.

How does GVC reconstruction affect economic growth and employment? Analysis of USA–China decoupling

“…Using Eaton and Kortum's 2002 multi-sector, multi-country general equilibrium model with intersectional linkages, Guo et al (2018) found that the USA would experience large social welfare losses, whereas China may lose or gain slightly depending on the effect of the trade war on the USA-China trade balance. A conclusion shared by Ng (2020). Bouet and Laborde (2018) evaluated the potential impact of trade wars on the USA, China, and Mexico and found that there is no scenario under which the USA benefits from either protectionism applied on these two trading partners or a trade war with them.…”

U.S. Imports Price of Goods Forecasting by Customs Basis from China using SARIMA Model

“…The United States and China struck a first-phase deal in January 2020, but the tariffs remain in place. Therefore, there is still a great deal of uncertain situations concerning the two nations' commercial and economic connections [8]. Predicting customs prices can help businesses and governments better manage risk.…”