MID EXAMINTATION RESEARCH METHODOLOGY

“The Impact of US and China Trade War Tariff in Global Economic Growth
2018-2020”

NAME: SYAFA AZIZAH WAHYU PRADIAS

STUDENT ID: 016 2018 00017
CLASS: DEFENSE 1

President University
2020

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1.1 Baground of the Study
The trade war between the US and China is becoming a major topic frequently
discussed and observed by international relations students. This dispute started because the
United States is the country with the most powerful economic and technological level in the
world ,the United States economy is also a quarter of the world's nominal GDP. US
percapita income is itself the highest per capita income in the world. The United States is the
third-largest producer of petroleum and the second-largest producer of natural gas in the
world. Meanwhile, China has a GDP per capita of US $ 12.24 trillion in 2017 below the
United States[ CITATION The20 \l 1033 ] . In the last few years, China has had a relatively
fast rate of economic growth. China has developed into a country with the second-largest
economy in the world. The United States seeks to collaborate to balance global economic
conditions and remove trade barriers between the two and increasing the value of bilateral
investment between the two countries. By joining China with the WTO is a strategy to
improve trade relations between China and the United States. Exports of US products to
China increased by 81% in the first three-year period of China's WTO membership,
compared to just 34% in the last three years before China joined the WTO [ CITATION
Hon01 \l 1033 ]. On the other hand, imports from China increased 92% in the first three
years of China's membership in the WTO, which previously only amounted to 46% in the
previous three years.
After being elected president of the United States, Trump began to issue several
policies. On March 8, 2018, the United States announced a global steel and aluminum
import tariff policy by increasing import taxes to 45%. The policy was created to protect US
producers and is a critical form of the national security of the United States. Donald Trump
also accused China of manipulating the value of its currency to undermine the
competitiveness of American producers. US President Donald Trump also said he would
sign a regulation imposing a 10 percent tariff on steel imports and a 25 percent tariff on
aluminum imports. Also, the new 25 percent tariff will cover 1,300 industrial, transportation,
and medical technology products. This is a punishment from the US for China, which is
accused of the practice of forcing the transfer of intellectual property to US companies
operating in China. In addition to imposing import tariffs on Chinese goods, the Trump
administration is also considering limiting the amount of Chinese investment in US
companies [ CITATION Sta18 \l 1033 ]
Given the joining of the United States and China with the WTO, the policy to impose
this tax rate is considered to violate one of the policies in the WTO, namely Free Trade and
the enactment of MFN (Most-Favored Nation). Where in this free market policy or free trade

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contains that there is no discrimination where the goods or services come from. The
implementation of free trade also aims to make world trade more open, so that world trade
flows can develop accompanied by reduced barriers both in the form of tariffs and non-tariff.
The policy of increasing import tariffs for Chinese products by the United States has had a
major impact on China's economy. Because this affects the number of Chinese exports.
Therefore, China is taking it very seriously. With this tariff increase, one of the highest
markets for Chinese products, namely the United States, will disrupt China's income. With
the policy of increasing import tariffs for Chinese products, China considers this policy a form
of threat and the trade war between the two countries is open.

1.2 Research Questions

How United States and China trade war tariff can impact the global economy growth in 2018-
2020?

1.3 Research Objectives

This research to explore and explain what kind of situation that happens between the
US and China, what are the negative and positive impacts that will be obtained by other
countries and also the world, and what possibilities will happen in the future. By focusing on
certain books, journals, and government publications, I will analyze how the impact of rising
tariffs between the US and China can have an impact on world economic growth in 2018-
2020.

1.4 Literatur Review

This section will examine nine journal pieces of literature with relation to the title and
objectives of this research and will consist of nine journals and categories the nine journals
into three groups, there are IV-DV Relations, IV Relations, and the last is DV Relations.

1.4.1 First Group, IV Relations

The idea of the Trade War effect in tariff was support by journals 4-6, there are
Ajami (2019), Scheipl (2019), and Punjayati (2018). The three journals have
some differences but they can be said to complement each other. Ajami (2019)
and Scheipl (2019) both reveal that other countries that are not involved with the
two countries will experience bad impacts, but the journal by Punjayati (2018)
also reveals the same thing, but Punjayati reveals that in addition to the bad

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 impacts caused by the two countries The trade war also had a positive impact.
An example is the country of Indonesia, although Indonesia will be negatively
affected, the trade war between the US and China could be a new opportunity for
Indonesia because it can increase market penetration for products from
Indonesia.
The first journal by Ajami discusses the policy of increasing import tariffs on
imports of Chinese products by the US which has the potential to trigger a trade
war with related countries. Moreover, China has also responded by taking the
same policy for products from the US. The trade war that was carried out by
limiting imports from each of the two countries not only had an impact on the
economies of the countries involved in the war, but also other countries
[ CITATION Ria19 \l 1033 ].
While the second journal by Scheipl and his friends discusses the increase in
import tariffs on steel and aluminum imports from China, the number of imports of
these two types of products is reduced. Furthermore, both types of products will
be difficult to find in the US market. [ CITATION Tho19 \l 1033 ].
Meanwhile, the third journal discusses the impact of the trade war between the
US and China on other countries, for example, Indonesia. The US restrictions on
imports of steel and aluminum products from China prompted China to seek other
markets. This means that China will increase sales of steel and aluminum to
several other countries, including Indonesia. The protectionist policies of US
President Donald Trump have triggered Indonesia's vigilance because of its
impact on the world economy. This is because Indonesia is the only country in
ASEAN whose trade balance is in deficit with China[ CITATION Adi18 \l 1033 ].
However, the essence of the three journals is that the increase in the prices of
goods from the two countries due to high tariffs makes the goods they sell
become scarce, if any, the price is more expensive. Expensive raw materials will
certainly affect the price of the final ready-to-sell product which is also expensive.
Not only producers but consumers who need these products are also inevitably
affected, namely having to pay dearly for the products they need. Similar to
China, import restrictions for products from the US such as soybeans, wine, fruit,
cars, planes, and others also affect China's domestic economy. Countries that
are involved in a trade war must experience inflation and a slowing pace of
economic growth. In general, consumers in countries that were not involved in
trade wars were not affected. The entry of products from both the US and China
will provide more choices, including in terms of price.

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 1.4.2 Second Group, DV Relations
The idea of a trade war that can impact global economic growth in 2018-2020
was support by journals 7-9 by Kalsie (2019), Kapustina (2020), and Badiri
(2020).
This first journal by Kalsie discusses The tensions in US-China trade relations
that threaten the entire global economy. The trade war between the US and
China is holding countries' trade hostage against each other. Not only is it
detrimental to opposing countries, but restrictions on imports in this trade war are
also actually detrimental to the domestic economy and as a result of the US-
China trade cut, global growth can be expected to decline by 0.5% in 2020 While
the target of the International Monetary Fund (IMF) alone at 3.9 percent of world
economic growth [ CITATION Kal19 \l 1033 ].
The second journal by Kapustina (2019) discusses the possible impact of the
trade war between the two countries, this can be positive or negative. The
positive impact, other countries have the opportunity to become suppliers or
export products to countries that are involved in a trade war, in this case, both the
US and China[ CITATION Lar19 \l 1033 ].
Meanwhile, the third journal by Badiri (2020) discusses import restrictions
imposed by the US and China which will certainly affect the limited demand for
products in the two countries. The increase in import duties imposed by the US
on Chinese products has prompted China to seek alternative countries that are
capable of supplying its products. [ CITATION Ist20 \l 1033 ].
The three journals have many similarities, it's just that the journal by Kalsie
(2019) projects that in 2020 global economic growth will decline by 0.5%, while
the second journal by Badiri (2020) also states that there is a global economic
decline but only a different year. , Badiri said that global economic growth in 2019
fell 0.2 percent, from 3.2 to 3.0. Although some of the products needed in China
are supplied from the US, in terms of quantity, the US imports more of its
products from China. That is the US level of dependence. In recent years, China
has experienced fantastic economic growth, which has made it an economically
strong country. Not only do economic development in the country, but China is
also investing in several countries. Call it Hong Kong, Australia, Singapore,
Pakistan, Sri Lanka, South Africa, Canada, Russia, and including Indonesia.

1.4.3 Third Group, IV-DV Relations

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 The statement that the existence of a trade war between the US and China in
taxes can have an impact on other countries and also have an impact on the
global economy in 2018-2020 is supported by journals 1-3 by Lin (2018), Chong
(2019), and Kwan (2019).
Lin's (2019) first journal argues that the US could benefit under unilateral
sanctions against China, but it would lose out if China took retaliatory action.
Comparing the effect under the joint trade war, China will lose more than the US.
Introducing a non-tariff barrier trade war will intensify its negative effects, and the
negative effects relative to China are greater than those of the US [ CITATION
Chu18 \l 1033 ].
Meanwhile, the second journal by Chong (2019) makes a scenario analysis,
which shows that in the worst-case scenario, China will experience a 1.1%
reduction in employment and a 1% GDP loss, which cannot be ignored, but
manageable for China [ CITATION Ter18 \l 1033 ].
The third journal by Kwan (2019) has a different opinion from the other two
journals. Kwan stated that the US was experiencing an impact that was worse
than the impact received by China [ CITATION Chi19 \l 1033 ].
The three of the journals discuss the impact and what might be caused by the
trade war between the US and China from 2018, even though the third journal by
Kwan (2019) has a different opinion from the first and second journals because
Kwan argues that the US is experiencing an impact. which is worse than China,
while the first and second journals argue that China is getting a bigger negative
impact than the US.

In conclusion the studies I have done before, they emphasize that in addition to many
countries being affected by rising prices for goods, it turns out that these two countries have
a negative impact as well. The existence of a trade war between the US and China will have
an impact on many countries. However, what distinguishes there are only a few countries
that have experienced a positive impact and there are a few countries that have experienced
a negative impact. The trade war between the US and China has been going on for more
than 18 months, even though the two have carried out various negotiation processes. The
two sides, on the other hand, also continue to counteract tariffs for imported products in their
respective countries. Although last month, US President Donald Trump said the two
countries had reached a substantive agreement. However, until now this is still questionable
because there is no more detailed explanation.

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This study will provide a summary of books, journals, and government data. I will find more
info about the problems I discussed, besides that, I will also add some data such as tables
and grafic to make it easier for readers to understand the topic.

Bibliography

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Lai, H. H. (2001). Behind China's World Trade Organization Agreement with the USA .
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(SCIO), T. S. (2020). Foreign Exchange Receipts and Payments for the First Three Quarters
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Chunding Li, C. H. (2018). Economic Impacts of the Possible China–US Trade War. DOI:
10.1080/1540496X.2018.1446131.
Li, T. T. (2018). Understanding the China–US trade war: causes, economic impact, and the
worst-case scenario. Francis Online, 185-202.
Kwan, C. H. (2019). The China–US Trade War: Deep‐Rooted Causes, Shifting Focus and
Uncertain Prospects. Francis Online.
Ajami, R. A. (2019). US-China Trade War: The Spillover Effect. Journal of Asia-Pacific
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Thomas Scheipl, V. B. (2019). Trade War between the USA and China: Impact on an
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Arora, K. a. (2019). US–China Trade War: The Tale of Clash Between Biggest Developed
and Developing Economies of the World. Special Issue S4: “Global Trade Wars - A
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Larisa Kapustina, L. L. (2019). US-China Trade War: Causes and Outcomes.
https://doi.org/10.1051/shsconf/20207301012 .
Badiri, I. (2020). Analisis Ekonomi Politik Internasional dalam Studi Kasus Perang Dagang
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