THE TRADE WAR BETWEEN USA AND CHINA AND ITS EFFECT ON GLOBAL ECONOMY

Abstract

The USA and China are the most powerful countries in the global economy. They have been partners in international trade for almost twenty years and they represent more than 40% of global GDP. The two countries contributed in building one another’s economy by constructing a solid relationship that helped in global economic growth. Throughout the history, the trade war that happened before had no winners. The trade-war between the US and China will contribute in global slowdown related to international economy that is based on international trade and global production as both of the parties contribute in a big share of the global production. The rise of tariffs was up to 17% between bilateral trade and had a decrease of only one percent in 2020. The trade war has resulted in a significant decline in trade between the US and China in 2019, as well as significant trade redirection to imports from other areas, resulting in a restructuring of Asian value chains. The research consists on representing the reasons behind the tension between both countries and analyses the causes of it. In addition, we will look in the outcomes that might result on this trade war and how it will affect some certain fields and certain countries. This paper aims to represent the raise of tariffs related the imports exports between China and USA in the past three years that lead to rise of tension between both parties.