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International Trade Summary

International Trade Summary

The Impact of US Trade Policy Changes

The Impact of the US-China Economic and Trade Agreement

The US-China Economic and Trade Agreement has been one of the most impactful trade policy changes in the recent past. Signed in January 2020, the policy requires both the US and China to make a few business-related structural changes. One of the major issues under the agreement is that China should cover the trade deficit between them and the US (Cigna et al., 2020). The agreement also makes significant paradigm shifts in areas of agriculture, trade, intellectual property rights, foreign exchange, and regulations. A notable commitment from the agreement is that China will purchase more products and services from the US.

Implementing the policy change has affected multinational companies’ human resource arrangements. One of the primary motivations of the policy was to protect American jobs. Therefore, non-American companies operating in the US have experienced difficulty acquiring new talent due to the policy’s implementation. Chinese multinational companies that could use talent services from their home country can hardly get Chinese employees to work in the US. In a nutshell, this protectionist policy sought to force Chinese companies to hire American talent. Since Chinese multinationals can hardly transfer talent to the US, they rely on locally available R&D developments and digitally available talent.

The Impact of the Biden’s Open Trade Policies

Unlike his predecessor, Biden was willing to work with partners on trade matters. Biden has promoted negotiations rather than unilateral decision-making on major trade issues (Congressional Research Service, 2022). To that end, the US’ relationship with peer countries and allied bodies has changed significantly. Currently, the US collaborates closely with the World Trade Organization (WTO) in making major structural decisions. The current president’s trade policy directions empower international trade bodies. Nonetheless, some of Trump’s protectionist policies remain in effect to date.

Experts’ Opinions on Long-Term Effects of Trade and Tariff Policies Changes in the Last Two Years

Some of the US’s recent trade policies will damage its desirability as a trading partner. Most countries prefer to work with partners with structured policy-making processes. Predictability is also another important consideration before countries choose their preferred trading partners. However, the US’s recent decisions on global trade policies are consistent with blackmail. Some decisions have been made in haste with the underlying objective of influencing their trading partners. As a result, the US risks becoming an undesirable trading partner.

Another long-term adverse effect of the US’s trade policy changes in the past two years is reduced trade and increased taxes for its citizens and companies. The US’s protectionist policies primarily aimed to protect local jobs. The country abandoned trade agreements with some of the world’s largest economic powers to protect jobs, but this has been counterproductive. For instance, the US imposed more tariffs on Chinese companies, hoping they would lock them out of the US market. However, the tariffs have been transferred to final consumers through increased prices.

In addition, a notable policy change that will adversely affect the US’s global trading status is the withdrawal from the Trans-Pacific Partnership (TPP). Some of the signatory members of the Trans-Pacific Partnership are the world’s economic powerhouses, including Japan, Singapore, Switzerland, and Australia (Boustany, 2020). These countries are in a good economic position and, thus, less likely to displace US labor. Instead, the withdrawal from the agreement has been counterproductive since it gave China, the US’s greatest trading rival, a chance to expand its sphere of influence. Besides, US businesses and consumers will pay taxes moving forward.

US’s unfavorable policies have also led to other countries reorganizing to survive without the US. For instance, the US’s decision to leave the Trans-Pacific Partnership led to the formation of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPA-TPP) (Boustany, 2020). Countries that were formerly in the Trans-Pacific Partnership have come up with new ways to collaborate without the US. The development has the effect of convincing countries that they can actually operate successfully without having to deal with the baggage presented by the US. In the long run, the US will lose its strong position when negotiating global trade agreements.

The Impact of Recent Trade and Tariffs Policy Changes on Employers and Individual Households

Following the US’s adverse policies on the global stage, Americans are also bound to suffer. One of the immediate impacts of the trade changes is job loss. Some countries will respond to America’s adverse policies with retaliatory policies. One of the immediate effects of America’s protectionist policies is the loss of American jobs. Companies operating in countries with which America severed relationships, like China, will experience revenue loss. Once these companies lose revenue, they will lay off some employees to reduce costs. For instance, America has lost over 55,000 jobs since the country severed trade relationships with China. Chinese factories were formerly some of the largest importers of US chemical products. However, following the implementation of these policies, the country has since cut down its imports, leading to revenue losses. In addition, America’s apparel industry was hit hard by retaliatory actions. Although much of the work for these companies, including manufacturing, does not occur in the affected countries, major operations still occur locally. The implementation of retaliatory policies means that these companies will lose revenue. When major economic powers feel threatened with adverse policies, they usually respond with retaliatory measures.

Moreover, the US’s toxic policies also hurt the stock performance of some of the country’s largest companies. Once stocks plunge, these companies lose significant revenue. For instance, Ford’s stocks plunged significantly following the severing of US-China trade relationships (Chang, 2019). The company’s operations in China reduced significantly following the developments. Ford Company had to lay off some of its workers and conduct an internal restructuring process to remain in business. It is also worth noting that some US companies have significant interests in formerly Trans-Pacific Partnership member states.

Lastly, the US-China trade impasse also led to significant losses in the aluminum industry. US companies can no longer access available aluminum products before trade restrictions. For instance, a company like Ford lost nearly $1 billion because tariffs increased (Chang, 2019). The company had no option but to lay off some employees to stay in business.


Boustany, C. (2020). Challenges for U.S. Trade Policy in 2021: A Brief Look Ahead. The National Bureau of Asian Research (NBR).

Chang, E. (2019). 14 Stocks Already Hurt by President Trump’s Tariffs.; Kiplingers Personal Finance.

Cigna, S., Meinen, P., Schulte, P., & Steinhoff, N. (2020). Working Paper Series The impact of US tariffs against China on US imports: evidence for trade diversion?

Congressional Research Service. (2022). U.S. Trade Policy: Background and Current Issues.


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International Trade Summary

International Trade Summary

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 country’s citizens 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 the world’s second-largest 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 in the US number in the thousands and provide jobs directly or indirectly 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 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. Reduced goods imports from other trading partners have offset it.
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 returned 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 two years.
Explain the effect recent changes to trade and tariff policies have had on your employer, you, or someone you know.

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