Answer to Question 1

The US-China Trade War – a tale of two superpowers seeking global dominance

The US, for more than a quarter of a century, viewed China as a state that with the right set of incentives
would in due course of time be part of the world order as a responsible stakeholder. The attitude of
convergence towards China is all but dead, and the government views China as a rival, a rule breaker. It
sees China as a threat to leadership and dominance not just in Asia but across the globe. What began with
Vice President Mike Pence’s attack on the government of China quickly turned into a cold war. i

China, on the other hand, has, for a long time, viewed America as a country that would block its progress.
Ever since the financial crisis of 2008, when the US suffered a setback and China’s growth thrived, the
“Chinese Dream” has stood tall. China has been using the “hiding its strengths and biding its time” for a
long time. With time by its side, the Chinese economy that has been growing at twice the rate of US and
country leading investments in the technological sector has given reasons to fear for the US. Many see this
as the turning point as far as setting norms when it comes to how one superpower deals with another.

How the trade war has played out so far and what tariffs have been imposed?

The trade war between the US and China has been a bitter battle. For more than a year now, two of the
world’s biggest economies have forced tariffs on one another’s goods that are worth more than billions of
dollars. With US President Donald Trump accusing China of unfair trade practices and theft of intellectual
property and China seeing this as efforts from the US to curb its growth, negotiations between the two
countries have been tough. This situation of uncertainty, in turn, has adversely affected the businesses and
the global economy as a whole.
To comply with US President’s policies aimed at encouraging more domestic consumers to purchase
American products the imported goods have been made more expensive. To date, tariffs of more than $360
billion have been imposed on China produced items imported to the US. In retaliation, more than $100
billion tariffs have been imposed on US-produced goods. The most recent development from the US end
being levying 15% duty on Chinese items, from meat to musical instruments. China has countered by
imposing a 5% duty on US crude oil for the first time.ii The charts belowiii show the timeline of how tariffs
have been imposed by two countries on each other since the trade war began last year.
Effect of imposed duties and worst hit products
The sales of a wide array of products ranging from machinery to motorbikes have been affected. The US
has announced that it plans to increase the tariffs on some of the Chinese products to 30% and then further
go on to add a new range of products, from footwear to telephones to a long list of products on which it
would levy heavy duties. Effectively meaning the imposition of tariff on almost all Chinese imported items.
China, on the other hand, has planned to retaliate by doing the same to over 3000 America manufactured
products by the end of 2019. It has also strategically targeted products US-made products like soya beans
which can be purchased elsewhere.
What led to this stand-off between the two nations?

One of the key issues behind this situation

is the growing trade deficit between how
much US imports and how much it has been
able to export to other nations. US has a
trade deficit of $419 billion with China – a
key challenge that Trump wanted to address
through his trade policies.iv

The largest US imports include $77 billion

worth of computers and $70 billion in
cellphones. While its export to China
comprises of $16 billion of commercial
aircraft and $12 billion in soybeans. China
effectively owns around 30% of the US
public debt to foreign countries.

Effect on Financial Market and Global Trade War

This ongoing trade war has been a cause of concern in the financial market, and has resulted in the
weakening of investors’ confidence across the globe and contributed to losses. Hang Seng Index of Hong
Kong has reported a fall of 13% while the Shanghai Composite has gone down by 25%. Despite some
recovery in 2019, the stability of yuan has taken time as it fell by over 5% against the US dollar in the
previous year. There has also been a knock-on effect on other countries as a result of this. According to
International Monetary Fund (IMF), the tension between the two countries has been a key factor that has
led to a "significantly weakened global expansion"v leading to a cut in the global growth forecast for the
upcoming year. Countries who happen to be trading partners and for whom the US and China are key in
the supply chain have also been at the receiving end of this battle.
As a result of this trade dispute US goods have been imposed with 25% tariffs by the European Union on
goods worth $8.2 billion. Canada has also gone ahead and imposed tariffs on $12.6 billion worth of goods.
While economists around the world believe deglobalization and global decoupling are unlikely scenariosvi,
trade diversion and failure to address multilateral imbalances where one trading partner is able to pressurize
the other is expected to rise and eventually lead to shifting of trade to high costing foreign sources and
would adversely impact US which lacks a long term strategic framework.
Why we chose this market phenomenon for analysis?
US and China are two of the world’s biggest economies in the world that dictate how the world functions.
The two countries together constitute almost two-fifth of the world’s total GDPvii. Thus, a trade war
involving the two would have its implications on businesses across the globe as they have the potential to
disrupt the growth of the global economy. The market phenomenon was taken up for analysis to study and
try and identify the intricacies involved in foreign policies. How they can be analyzed using ethical
frameworks and what drives decisions, negotiations, and actions of key stakeholders.
Define also your “unit of analysis” of the market phenomenon
It is important to note that the trade war between the two countries has a long and wide range of implications
for almost all major economies as can already be seen in the impact on financial markets. However, the key
driver of this phenomenon happens to be the US administration led by its President Donald Trump who
rose to power on support of these very issues that he advocated during his campaigns. Thus, while the
analysis has been done to account for all major stakeholders involved the focus of analysis in the US
administration and specifically its president Mr. Donald Trump.
Why do you choose this unit of analysis? Justify your choice.
From win-at-any-cost to overt name-calling right from the time of campaigning for presidential elections
to the result of these actions having an impact on the 2020 election race, the unit of analysis understudy
presents an intriguing case study from an ethical standpoint. And any action that is undertaken by the
driver of the global economy has an impact and is widely imitated across the globe by developing
countries. Hence it is essential to understand the causes and effects and analyze them at the source of
these affairs. viii
Answer to Question 6

Who was right, who was wrong?

The US-China has often been referred to as “The Right Fight, The Wrong Way”.ix The trade war has had a
detrimental impact, especially, on the manufacturing sector and all other businesses are reluctant when it
comes to launching products, setting prices and hiring more people. So, before answering who was right
and who was wrong it is important to look at why did the US President initiate this cold war in the first
place and has, he been able to accomplish what he wanted to and was there a better way to deal with it. One
that would have provided more fruitful results.
When Donald Trump challenged China, valid reasons were provided including cyber-theft and technology
transfers taking place. This led to the indictment of a Chinese intelligence officer who was allegedly trying
to steal trade secrets from three aerospace firms of the US. Several other similar actions were taken against
Chinese startups like Jinhua Integrated Circuit Co. which was accused of theft of intellectual property from
Micron. The US administration was right in challenging this behavior that would eventually threaten and
disrupt global supply chains and commerce, the timing coincided with the slowdown in the Chinese
economy.
However, the strategies employed under the leadership of Trump, have yielded undesired results. The
pending tariff hikes have made the process of planning difficult for even his own domestic manufacturers.
With prices being as high as thrice the current, US factories have been hurt and some have even shut down
owing to the impending threat of tariffs. The biggest risk to global economic growth has adversely impacted
all stakeholders in the process. Thus, while the intention of the US government was right their actions did
not materialize into the same as their instruments of choice fundamentally misunderstood the problem of
solving trade deficit that it spotted as the biggest cause of concern. Where it failed to realize that a country
at one point in time is more than likely to have a surplus as well as a deficit with different countries and
hence balancing it out on the whole.x
Reverse Moral Justification

Step Reverse Moral Justification Assessment of Justification

E Trump’s Trade War is the wrong
way to solve the right problem
Taking into account the two criteria used to
characterize moral principles – Supremacy and
Universal, attempts made by the US administration
have failed on the moral front as their actions have on
more than one occasion violated the norms that a
world leader is expected to abide by. The organization
culture itself whose precedence was set by Trump has
implications that have negatively impacted all key
stakeholders involved.

For instance, practices like using unsubstantiated

claims to call out to China to investigate its political
rivals including former vice president Joe Biden.
While at the same time it was also accusing multiple
Chinese firms for stealing intellectual property
without having concrete proof increased the tensions
and reduced chances of any possibility of quick
resolution of the problem through dialogue that might
have taken place otherwise.

D Given the situational context of the
economy under scrutiny and actions
undertaken the moral rules are
teleological and violate the concept
of distributive justice
C The actions and thought process in
place is violates multiple moral
standards. Hence the moral
justification that the action
undertaken by the US govt under
Trump is morally incorrect stands
true.
B The moral stand of Trump-led US
government is at odds with both –
deontological principle of non-
malfeasance and the Golden axiom:
Do unto others what you would like
others to do unto you.
A The policies promoted and executed
as well as the conveyed by the moral
stature pose major problems in the
application of ethical theory to
actions with respect to deontology
and distributive justice as well as
ethics of human dignity and virtue
Steps The iterative steps undertaken to
E-A understand moral reasoning and
backward judgement provide
justification of the earlier claim
made by delving deep into the
actions of the person of interest and
then analyzing it from the
perspective of judgement, rules,
standards and theories.
Understanding whether this moral judgement for the
most important key stakeholder can help in gaining
insights into his mind and identifying how he
processes and reacts to events and what moral values
and standards are in line with this school of thought.
The behavior displayed by him is teleological in
nature as he is someone who believes in setting
ambitions and pursues them irrespective of morality.
These have impacted a large section of the population
in China, US, and other countries indirectly affected
by the changing supply chain dynamics between the
two countries. Thus, leading to injustice as a result of
immoral actions of one key stakeholder who decided
to wield the power his leadership position provided
him and entrusted him with. xi
The current US government is seen as one that works
for instrumental good and is driven by egoism while
claiming to be working towards enlightened egoism.
The actions of the US government under his
leadership defy virtues of ethic, accountability, and
have led to unfair distribution of common good with
less than a handful of total population benefitting from
his actions. The actions of the US government have
led to the unjust treatment of multiple stakeholders,
including their own suppliers and contractors. The
ones working in the manufacturing sector have
suffered the most.
From win-at-any-cost to overt name-calling right from
the time of campaigning for presidential elections the
moral principles behind the US president’s actions do
not comply with the ethics of leadership or moral
critical thinking. Specifically, he has time and again
violated the ethics of human dignity by brushing aside
sections of the community from the very start.
While Trump believes that he is a deontological
thinker who has his own ideas of what is right and
wrong his actions do not reflect that. Neither is he
willing to learn morality through the application of
rules and principles to be followed nor does rather
prefer to study them with respect to the outcomes of
his actions.
The actions of the Trump-led government to launch a
cold war to try and solve the problem of trade deficit
and try to control the Chinese prowess is morally
incorrect as it fails to solve the problem in the right
manner. And ultimately leads to taking actions that
adversely affect a huge proportion of people and at the
same time also violates the action that the leader of
world’s largest economy is expected to undertake
from the moral standpoint.
 Forward Moral Justification
Step Forward Moral Justification
A The case presents major problems in the
application of ethical theory to actions
with respect to deontology and
distributive justice as well as ethics of
human dignity and ethics of virtue when
seen from the perspective of US president
Trump.
B Deontological principle of non-
malfeasance and the Golden axiom: Do
unto others what you would like others to
do unto you.
C Concept of distributive justice,
teleological, concept of instrumental
good and egoism, as well as virtues of
ethic, accountability have been taken into
consideration in the evaluation of moral
standards of the case.
D To focus on the situational context and
attribute the actions undertaken to a
particular principle or theory teleological
and concept of distributive justice
E While the idea of solving the problem of
trade deficit and exploitation of
intellectual properties was noble but the
steps undertaken through a trade war by
the US President is not justified based
upon the analysis done in the above steps.
Steps The iterative steps undertaken to
A-E understand moral reasoning and
backward judgement provide justification
of the earlier claim made by delving deep
into the actions of the person of interest
and then analyzing it from the perspective
of judgement, rules, standards, and
theories.
Assessment of Justification
The set of theories chosen here have been done so in
order to ensure there are valid and concrete
justifications of the same in the actions undertaken by
the stakeholder under scrutiny. And that they do not
contradict or are irrelevant to facts needed to evaluate
it from the lens of moral responsibility.
Violation of the ethics of human dignity by brushing
aside sections of the community from the very start as
well as unfair moral treatment which would never be
accepted if it were at the receiving end of it highlights
the violation of golden axiom in trade wars.
The actions of the US government under his leadership
defy virtues of ethic, accountability, and have led to
unfair distribution of common good with less than a
handful of total population benefitting from his actions.
The actions of the US government have led to the unjust
treatment of multiple stakeholders, including their own
suppliers and contractors.
The situation resulting is that of injustice as a result of
the immoral actions of one key stakeholder who
decided to wield the power his leadership position
provided him and entrusted him with.
The organization culture itself whose precedence was
set by Trump has implications that have negatively
impacted all key stakeholders involved. Understanding
whether this moral judgement for the most important
key stakeholder can help in gaining insights into his
mind and identifying how he processes and reacts to
events and what moral values and standards are in line
with this school of thought.
The actions of the Trump-led government to launch a
cold war to try and solve the problem of trade deficit
and try to control the Chinese prowess is morally
incorrect as it fails to solve the problem in the right
manner. And ultimately leads to taking actions that
adversely affect a huge proportion of people and at the
same time also violates the action that the leader of the
world’s largest economy is expected to undertake from
a moral standpoint.
Thus if we were to look at it as a generic case at hand it
would be better to first try and understand the driving
forces behind a person’s or organization’s thoughts and
then try and look at their actions and results of the same
from that perspective to gain a better understanding
with regard to their sense of morality and the resulting
consequences.
i
The Economist China v America, 18 October 2018 | The end of engagement
https://www.economist.com/leaders/2018/10/18/the-end-of-engagement
ii
BBC News, 2 November 2019 | A guide to the US-China trade war https://www.bbc.com/news/business-
45899310
iii
DANIELE PALUMBO & ANA NICOLACI DA COSTA BBC News, 10 May 2019 | US China trade battle in charts
https://www.bbc.com/news/business-48196495
iv
KIMBERLY AMADEO, November 29, 2019 | The Balance - US Trade Deficit With China and Why It's So High
https://www.thebalance.com/u-s-china-trade-deficit-causes-effects-and-solutions-3306277
v
GITA GOPINATH, April 9, 2019 | The Global Economy: A Delicate Moment
https://blogs.imf.org/2019/04/09/the-global-economy-a-delicate-moment/
vi
STEPHEN S. ROACH, Nov 25, 2019 |After the US-China Trade War
https://www.project-syndicate.org/commentary/after-us-china-trade-war-by-stephen-s-roach-2019-11
vii
The World Bank: World Development Indicators: Structure of output, available at
http://wdi.worldbank.org/table/4.2.
viii
NIKOLAS K. GVOSDEV 20 August, 2019 | Ethical Considerations in a Trade War with China
https://www.carnegiecouncil.org/publications/articles_papers_reports/ethical-considerations-in-a-trade-war-
with-china
ix
JEREMY ANDRUS JEREMY ANDRUS, Nov 8, 2018 |The Right Fight, The Wrong Way: A Manufacturer's Perspective
on the U.S.-China Trade War https://www.forbes.com/sites/jeremyandrus/2018/11/08/the-right-fight-the-wrong-
way-a-manufacturers-perspective-on-the-u-s-china-trade-war/#18a3f4b228ce
x
CERI PARKER, 27 Feb 2019 | A Chinese economist explains what we get wrong about the trade war
https://www.weforum.org/agenda/2019/02/a-chinese-economist-explains-what-we-get-wrong-about-the-trade-
war/
xi
ERIC BOEHM, 8th June 2019 | The Escalating Trade War Is Bad News for Pretty Much Everyone
https://reason.com/2019/08/06/the-escalating-trade-war-is-bad-news-for-pretty-much-everyone/