International Trade Policy

International Trade Policy

The United States plays a major role in the global economy. The trade policy decisions that are made by the country affect more than just the countries involved. This kind of phenomenon is evident in the recent trade and tariff policies that have been implemented by President Donald Trump’s administration. This paper examines the impact of these policies on the current and possible future global economy.

How U.S. Trade Policy Changes in the Last Two Years Affect Global Trade Activities by Multinational Corporations

            The United States has one of the largest economies, affecting a large percentage of the global economy. Therefore, the country’s trade policies have significant effects on the global trade activities of multinational corporations. Significant changes in the American Trade Policy have influenced multinational companies. One of the biggest policy changes was the U.S.-China trade war that started in 2018. In 2018, President Donald Trump started making some changes in the country’s trade policy concerning China (Huang et al., 2018). For example, he announced new tariffs on various products from China, such as solar panels and washing machines. This led to an ongoing tariff war between China and the U.S., each country aiming to discourage the importation of the other’s products. The trade war between the U.S. and China, which lasted about three years, had serious implications for global companies. A lot of companies that depend on raw materials from China experienced an increase in the costs of their production, and their businesses were interrupted amid the back-and-forth policy conflicts between the U.S. and China (Huang et al., 2018). Chinese companies that depend on the American market also suffered from a significant decline in sales caused by the increased tariffs on their products. Both American and Chinese traders suffered from the decisions that were made by the United States government and the resultant choices made by the Chinese government. This led to a lot of businesses calling for the U.S. and China to come together and find an agreement to help reduce the impacts of the trade war on their businesses.

The Long-term Effects of Trade and Tariff Policies in the Last Two Years

            The trade and tariff policy changes that have been made in the Trump government in the past two years will likely have a lasting effect on both the American and the overall global economy. An article published by Zambrun and Davis (2020) for the Wall Street Journal argued that the trade policy changes did not achieve the originally intended purpose of boosting American manufacturing. Instead, many businesses were hurt by their limited access to the raw materials and other goods that they acquired from the Chinese market. The CEO of the US-ASEAN Business Council also said that it is in everyone’s interest to see the trade relationship between China and the United States improve (Finley, 2019). These two countries have such big economies that trade conflicts between the two have the possibility of causing lasting effects on the global economy. The trade and tariff changes affect the decisions that are made by companies around the world and not just companies in the two countries that are in a trade war. For instance, if the countries continue to be in war, many businesses may be forced to move their manufacturing from China and the United States (Finley, 2019). This may lead to the decline of these two economies, which both have significant effects on the global economy.

The Effect of Recent Changes to Trade and Tariff Policies on Individuals and Employers

            The policy changes that have been made in the past two years do not just have an effect on global companies, but also on individuals. The change in tariffs has caused a lot of businesses to significantly decrease the demand for goods from China. For instance, the demand for solar panels from China declined by at least 12% when President Trump imposed tariffs against these products. While I may not know a person who has been personally affected by these changes, the logical effect of decreasing business is a decline in overall financial performance. Many businesses will need to find a way to cover for the increased costs of getting their goods from the Chinese market. As a result, there is a risk of downsizing to cover for costs. Additionally, businesses have been forced to move their practices away from the conflicting markets. For example, Nintendo moved its production from China amidst the trade wars (Takashi, 2019). When production is moved, it means that a lot of people lose their jobs to the new market that the business chooses to venture into. Therefore, the U.S. needs to be careful of the possible effects of its trade policy actions on both individuals and businesses.

References

Finley, K. (2019, Aug 26). Trump’s trade war isn’t just a U.S.-China Problem. https://www.wired.com/story/us-china-trade-war-spills-over/

Huang, Y., Lin, C., Liu, S., & Tang, H. (2018). Trade linkages and firm value: Evidence from the 2018 US-China trade war (No. 11-2018). Graduate Institute of International and Development Studies Working Paper.

Takashi, M. (2019, Jun 12). Nintendo moves some switch production out of China, adopting to tariff threats. https://www.wsj.com/articles/nintendo-moves-some-switch-production-out-of-china-adapting-to-tariff-threat-11560328484

Zambrun, J. & Davis, B. (2020, Oct 25). China Trade War didn’t boost U.S. Manufacturing Might. https://www.wsj.com/articles/china-trade-war-didnt-boost-u-s-manufacturing-might-11603618203

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

International Trade Policy

Promoting international trade is not a zero-sum game. It is a win-win proposition; both parties gain from trade.

Consider the following:

Tariffs are paid by the citizens of the country imposing tariffs, not by the citizens of the country producing the products upon which the tariffs are levied.
The term “trade deficits” is a misnomer. Every country’s trade is always in balance.
Trade deficits do not mean the US no longer produces anything to export. The US is the world’s second-largest manufacturer and exporter of manufactured goods.
Trade deficits reflect a strong economy. Trade deficits rise during economic expansions and fall during economic contractions. Unemployment falls as trade deficits rise and rise as trade deficits fall.
Imports and exports are complements, not competitors. Both are necessary, and both contribute to economic growth.
Roughly one-third of all US imports and exports are traded between US multinational companies and their overseas subsidiaries.
Foreign-owned companies operating in the US number in the thousands and provide directly or indirectly jobs for more than 13 million US workers (roughly, 10% of the US workforce).
The US trade deficit in goods in 2018 (as a % of GDP) was the same as it was 5, 10, and 15 years earlier.
The rise in the US goods trade deficit with China has not increased the US total goods trade deficit. This has been offset by reduced imports of goods from other trading partners.
There is a strong correlation between the rise in world trade and:
The rise in world GDP
The dramatic fall in the world’s extreme poverty rate
The rise in world life expectancy
For every US manufacturing job lost to trade between 2000 and 2010, seven US jobs were lost to domestic productivity improvements. Those seven jobs cannot be brought back from overseas because they never left the US.

Write a 700- to 1,050-word evaluation of credible economists’ unbiased opinions on the benefits, costs, and results of current US trade and tariff policies. Complete the following in your evaluation:

Evaluate how US trade policy changes in the last 2 years affect global trade activities by multinational corporations.
Discuss credible economists’ opinions on the long-term effects of trade and tariff policy changes in the last 2 years.
Explain the effect that recent changes to trade and tariff policies have had on your employer, you, or someone you know.

Cite at least 2 academically credible sources.