Question

In: Economics

Why has the US-China trade tensions escalated despite the WTO agreements?

Why has the US-China trade tensions escalated despite the WTO agreements?

Solutions

Expert Solution

The United States are engaged in a trade war because both nations continue to dispute placed on goods traded among them. United States claimed that laws in China undermine intellectual property rights by forcing global firms to engage in joint ventures with Chinese companies, thus providing Chinese companies permission and access and permission to use, copy, improve, or steal technologies of global firms. Moreover China fails to recognize legitimate copyrights and patents which discriminates against global imported technology, and has instituted many non -tariff hindrances causing insulation to various sectors in the economy of China from global competition. On contrary China opposes U.S. trade practices believing they represent protectionism and unilateralism; and U.S. is ignoring the rules of WTO and ignored the calls of its own industries for decreasing the tariffs

In this trade war, there are no real winners. Countries facing new tariffs, including the United States, will face a fall in real exports as well as GDP. It will impact damage to the international economy as protectionist actions escalate. An increase of the financial stress would adversely impact the new credit flows and restrain investment, trade, and industrial production. It will impact the intellectual property rights, and transfer of joint-venture technology. Moreover international equity prices are expected to fall in a protectionist environment. Americans will be paying higher amount for a wide range of products ranging from Nike sneakers to iPhones if administration of U.S. imposes additional tariffs. China could make life tougher for United States companies operating within its borders with obstacles such as delays in customs and heightened scrutiny by regulators


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