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Can the Trading System Survive US–China Trade Friction?

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  • Robert Z. Lawrence

Abstract

Donald Trump has sought to change US trading relationships by raising protection at home and taxing the offshore activities of US companies abroad. These measures, which both use and violate trade rules, have provoked retaliation from other countries. Such friction has restricted and distorted trade and investment, undermined the rules‐based trading system and perhaps permanently damaged global value chains that depend on stable rules for market access. Trump has justified some of his measures as a response to China's alleged unfair practices and indeed, China has adopted industrial and technology policies that are formally neutral between domestic and foreign firms but in practice have led foreign firms to complain about discriminatory practices that favor Chinese firms. The US friction with China is unfortunate because instead of trying to bully China into submission in a tariff war, the US could have dealt with many of its concerns more effectively by cooperating with other countries and taking actions that are consistent with maintaining the rules‐based system. While the US has undermined its leadership role, the overall damage to the trading system could still be limited if other countries, especially China, take actions that sustain and strengthen it.

Suggested Citation

  • Robert Z. Lawrence, 2018. "Can the Trading System Survive US–China Trade Friction?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 26(5), pages 62-82, September.
    • Handle: RePEc:bla:chinae:v:26:y:2018:i:5:p:62-82
    DOI: 10.1111/cwe.12256
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    References listed on IDEAS

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    1. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
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    2. Zhuo Chen & Bo Yan, 2022. "The impact of trade policy on soybean futures in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 1152-1163, June.
    3. Neha Bhardwaj Upadhayay, 2020. "Uncovering the proliferation of contingent protection through channels of retaliation, gender and development assistance," Erudite Ph.D Dissertations, Erudite, number ph20-02 edited by Julie Lochard & Catherine Bros.
    4. Neha B. Upadhayay, 2020. "Are only men fighting trade wars? Empirical evidence from the Temporary Trade Barriers (TTB) data," Erudite Working Paper 2020-03, Erudite.
    5. Zhang, Yuhan & Chang, Cheng, 2021. "Modeling the US-China Trade Conflict: A Utility Theory Approach," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 5(2), pages 84-88.
    6. Ruoxi Yu & Xingneng Xia & Tao Huang & Sheng Zhang & Wenguang Zhou, 2024. "Has the Establishment of High-Tech Zones Improved Urban Economic Resilience? Evidence from Prefecture-Level Cities in China," Land, MDPI, vol. 13(2), pages 1-24, February.
    7. Jiangyun Li & Mingbao Chen, 2023. "Spatiotemporal Evolution and Influencing Factors of Social-Ecological System Vulnerability in the Guangdong–Hong Kong–Macau Greater Bay Area," Land, MDPI, vol. 12(4), pages 1-15, April.
    8. Liu, Li-Jing & Creutzig, Felix & Yao, Yun-Fei & Wei, Yi-Ming & Liang, Qiao-Mei, 2020. "Environmental and economic impacts of trade barriers: The example of China–US trade friction," Resource and Energy Economics, Elsevier, vol. 59(C).

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