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How Smart Power Influences Economic Power – A Brief Overview on the Sino-American Tariff War from 2018 to 2021

Author

Listed:
  • Maria Mirona Murea
  • LenuÅ£a Ella Nica
  • Aimée Andrada Theodora Georgescu

Abstract

Today’s Transnational Companies (TNCs) have gained an increased role in the diplomatic realm, due to recent globalization developments. International relations focus around trade liberalization and creation of deep interdependencies limiting the use of hard power as a coercive method. The 1990’s, Joseph’s Nye concept of soft power has gained importance in the political and economic diplomatic negotiations, influencing also the TNCs internationalization decisions, leading to a deeper market globalization. The speed of globalization development and dynamics of international relations brought to the forefront a new type of power: smart power. Today’s world is dominated by two major economic actors: USA and China, and their sensitive bilateral relations has brought into light a modern Thucydides’ Trap. To avoid a potential war, each country used different smart power strategies: China had a long run-oriented strategy with smaller gains, while the USA aimed for a big impact in a short period of time, obtaining opposite results influencing the global business environment, and the TNCs performances worldwide. The research objective is to analyze the impact of the two opposite smart power strategies on the main TNCs by country, comparing their revenues, profits and changes in profit, of the first top 10 rankings presented in Forbes 500 during a time period starting 2018 (since the “tariff war†began) to 2021 (present). The main results emphasized that economic power is divided among TNCs from the USA and China, despite the existence of tense diplomatic and economic relations.

Suggested Citation

  • Maria Mirona Murea & LenuÅ£a Ella Nica & Aimée Andrada Theodora Georgescu, 2022. "How Smart Power Influences Economic Power – A Brief Overview on the Sino-American Tariff War from 2018 to 2021," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 25(83), pages 46-56, June.
    • Handle: RePEc:rej:journl:v:25:y:2022:i:83:p:46-56
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    References listed on IDEAS

    as
    1. Eichengreen, Barry, 2020. "Why hasn’t the impact of the trade war been greater?," Journal of Policy Modeling, Elsevier, vol. 42(4), pages 820-828.
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    More about this item

    Keywords

    TNCs; tariff war; Sino-American relations; smart power; economic power;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F19 - International Economics - - Trade - - - Other
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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