Analysis of the Impact of the US-China Trade War on the China’s Macro Economy

Abstract

The US-China trade war started in 2018 by Trump’s administration, which has had a lasting influence on trade between China and US. Both countries have broken the initial trade agreement and raised tariffs to counter other country's products. It has a further impact on the US and China’s macro-economy and small firms’ business. The trade war has not only decreased the economy’s efficiency but also make the extra cost during the normal production process. Eventually, it has a bi-directional impact on both US and China. This essay has discussed the reason why the US started trade sanction on China and how China fights it back, which is the starting of the trade war. During trade war, tariff has been an important method to sanction other countries’ exports and limit their imports, and further protects their domestic goods. Focusing on soybean trading between US and China, the trade war has a significant impact on both country’s economy and related industries. Both China and US have suffered from economic inefficiency and also confronted precarious relationships due to the trade war’s further effects.