Why will Trump lose the trade war?
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AbstractThe escalating U.S.–China trade conflicts have increasingly shadowed the outlook of the world economy. The Trump administration aims to achieve its strategic goals including reducing current account deficits, promoting the U.S. manufacturing sector, and curbing Chinese high-tech industries by waging the trade war against China. This paper argues that the current account deficits and the declining manufacturing sector in the U.S. are mainly driven by its internal structural factors, such as low saving rates, high labor costs, and rising service sector, rather than by the import competition from China. Moreover, the trade war further deteriorates the U.S. current account deficits and erode its comparative advantage, and it forces China to invest more in technological innovation and human capital, and thus promote its progress in high-tech industries. Thus, the U.S. will not be able to achieve its strategical goals and eventually lose the trade war.
Acceptance Date28/06/2019
All Author(s) ListLiugang Sheng, Hongyan Zhao, Jing Zhao
Journal nameChina Economic Journal
Volume Number12
Issue Number2
PublisherTaylor & Francis (Routledge)
Place of PublicationUnited Kingdom
Pages137 - 159
LanguagesEnglish-United States
KeywordsTrade policy, tariff, current account, technological progress

Last updated on 2021-13-10 at 23:44