Why did the Trade War between the United States and China start?
As we know, the Asia's strategic position has been defined throughout the 21st century, reaching infinite importance in global politics.
And it could be said that until now, its main “rival” in the fight for hegemony in the international system, that is: the United States, has a lot to do with it.
It was the foreign policy of the Obama Administration which sponsored the change of the continent. Its focus on the Asia-Pacific region managed to favor the Asian giant in such a way that. Today, it is unstoppable.
TPP signing
Obama signed the TPP (Free Trade Agreement between several Asian States and the United States, whose objective was to increase economic interdependence), and therefore, strengthened its relationship with ASEAN and the Indo-Pacific region.
From which, as one might suppose, the People's Republic of China benefited, since the current president Xi Jinping reached the General Secretariat of the Central Committee of the Communist Party, has strengthened its expansionist tendency.
And for a few years now, China has had the power to change the status quo predominant since the 20th century: in terms of Purchasing Power Parity (PPP), overtook the United States in 2014, according to data from the IMF (International Monetary Fund). Besides, represents 18% of the Gross Domestic Product globally and is second country with the highest military spending (Green, 2017).
Trump Administration
La Trump Administration, characterized by the tendency to isolationism, has tried - not with good results - since his arrival at the White House in 2016 stop China.
It began with the breakup of the TPP and continued with the implementation of a “hard” line of foreign policy (as stated in the National Defense Strategy documents, 2017 and 2018).
For the North American, China is a revisionist power that attacks the United States by trying to displace it from the Indo-Pacific region and by acting - directly - against American interests and values.
And so The Trade War began. The White House imposed a 25% tariff taxes on 34 billion Chinese goods. To which the People's Republic responded with the same 25% for soybeans and other agricultural products, as well as automobiles.
What is the reason for the increase in negotiations between China and the US?
Let's remember the economic interdependence between these two giants and that China is the main importer of raw materials from the US.
Just as the Donald Trump's main support for his re-election in 2020 is the primary sector, which, in turn, has been the most harmed.
Therefore, facing a presidential election, which, knowing the American electoral system, we know depends largely on interest groups, this new change could be foreseen in the negotiations between Xi Jinping and the American President.
In the following table we can see the decline in 2019 in this sector, and, therefore, the need to reverse the situation:
Source: Open Secrets
This, together with the “technological race” between both countries, and the need for an agreement between the powers for international trade, has given rise to talk of the end of this economic dispute.
Last December (2019) Donald Trump announced the signing of the first phase of this possible agreement; in which topics such as technology transfer, intellectual property, trade expansion and the establishment of dispute resolution mechanisms.
We will continue to be aware of what, it seems, will continue to be a current topic of 2020!
LL.M in International Business Law and Law from ISDE and graduated in Law and International Relations from Loyola University. CEO and business internationalization consultant at Reáculoateypunto.
