Pains or gains? Assessing the Impact of the United States-China Trade War on the United States Economy

Abstract

Since the emergence of China as a force in the global political economy, the United States of America and China have been entangled in different dimensions of the struggle for dominance. Under Donald Trump’s administration, the rivalry between the United States and China assumed the dimensions of the trade war and escalated to its highest points in the modern history of economic relations between the two countries. China is the third-highest trading partner of the United States by volume of trade. The annual volume of trade between the two countries is valued at about 600 billion dollars, with the balance favouring China. Under the leadership of Donald Trump, the United States imposed series of trade tariffs on China in an effort to balance trade or gain a trade advantage over China. However, this sparked a trade war between the two countries as China retaliated by imposing 15% to 25% tariff worth $185 billion on goods imported from the USA including raw materials, manufactured goods, and agricultural produce, amongst others. Using Game theory as a framework of analysis, this study examined the impact of the US-China trade war on economic development in the United States under Donald Trump’s administration.