Rising political and economic tensions between the U.S. and China, beginning with tariffs imposed on China by the Trump administration, have carried over into the Biden presidency.
Initially, the U.S. moved forward with these tariffs due to an underlying sentiment of a trade deficit between the U.S and China along with perceived unfair trade practices by the Chinese government.
Whether you believe either of those scenarios to be the case or not, the Biden administration has done nothing thus far to ease those tensions and has instead moved forward with further economic sanctions that appear to be far more politically driven.
The tariffs proved to raise U.S. consumer costs of Chinese goods and restricted the ability of China to import high-tech U.S. consumer products. The end result was an overall decrease of more than $26 billion in imported goods to the U.S. from China in 2019 alone.
The economic standoff has raged on for the better part of the last two years with no clear winner between the two. However, an analysis of the losses on each side would indicate that the U.S. and China are dependent on one another in an almost unbreakable symbiotic economic relationship when it comes to trade.
The conflict temporarily disrupted supply chains over the course of the Covid-19 pandemic. And with increased prices of Chinese products, U.S. companies turned to other countries to obtain their much-needed goods.
For example, Vietnam saw a dramatic increase in exports to the U.S. in products like cell phones, computers, furniture, and clothing that ordinarily would have come from China. Thus, the conflict between the U.S. and China served to inject an increase of $6.4 billion into the Vietnamese economy. Mexico benefited from the scenario in much the same way.
In China, the effects of the trade war have been felt mainly in the form of slowdowns in the rate of manufacturing and industrial output growth. While in the U.S., it’s estimated to have cost the American economy approximately 300,000 jobs.
In the end, the trade war between the U.S. and China has negatively impacted the economies of both countries. While the Trump era tariffs initially reduced the perceived trade deficit between the two nations in 2019, that trend reversed in 2020, resulting in an even higher trade discrepancy between the two countries than before the conflict.
Today the Biden administration appears to be evaluating its relationship with China more in terms of idealism rather than economic principles. As a result, the Trump era tariffs remain largely in place as bargaining leverage in the battle between U.S. democracy and Chinese autocracy.
Biden has strengthened ties with anti-Chinese allies and has been pushing for an America-first approach despite campaigning against Trump’s policies on China. Additionally, the Biden administration has used the economic conflict to raise concerns over human rights abuse in Tibet and Hong Kong.
In truth, so much of the fate of geopolitics and world economics lies tightly intertwined within the U.S. and Chinese relationship. If the current economic climate continues or if there’s another disagreement in the not-so-distant future, it’s clear that there are genuinely no winners.
With this in mind, all sides would be far better served with a peaceful, open, and fair trade agreement between the world’s two most significant economic powers.
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