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The Thucydides Trap as an Alternative Explanation for the US–China Trade War

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  • Imad A. Moosa

Abstract

The current trade war between the USA and China is perceived to be motivated by the US desire to curtail the bilateral trade deficit, on the assumption that reducing the deficit boosts economic growth. This flawed proposition indicates gross misunderstanding of the national income identity and the basic principles of macroeconomics. The imposition of tariffs will not reduce the trade deficit as the assumptions and conditions required for a smooth working of the process are unrealistic and counterfactual. The notion of an economic Thucydides trap is put forward to explain why the trade war is motivated by US apprehension about China’s rising economic power.

Suggested Citation

  • Imad A. Moosa, 2020. "The Thucydides Trap as an Alternative Explanation for the US–China Trade War," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 12(1), pages 42-55, January.
    • Handle: RePEc:sae:emeeco:v:12:y:2020:i:1:p:42-55
    DOI: 10.1177/0974910119896644
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    References listed on IDEAS

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    1. Daniel Gros, 2019. "This is not a trade war, it is a struggle for technological and geo-strategic dominance," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(01), pages 21-26, April.
    2. Imad Moosa & Larry Li, 2017. "The mystery of the Chinese exchange rate regime: basket or no basket?," Applied Economics, Taylor & Francis Journals, vol. 49(4), pages 349-360, January.
    3. Moosa, Imad & Naughton, Tony & Li, Larry, 2009. "Exchange Rate Regime Verifi cation: Has China Actually Moved from a Dollar Peg to a Basket Peg? Peg?," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 62(1), pages 41-67.
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