The USA and China. The return to protectionism?

Table of Contents

1. Introduction

2. Theoretical Background

2.1 Literature Review

2.2 Current State of Research

2.3 Research gap

3. Political Impact of the Trade War

4. Game Theoretical Approach

4.1 Effects of the Trade War

4.2 Case Study: Huawei

5. Outlook

6. Conclusion

Research Objectives and Key Themes

This paper examines the background, emergence, and consequences of the trade war between the USA and China, evaluating whether protectionist measures have successfully achieved their stated goals through both economic analysis and a game-theoretical model.

• The historical development of US-China trade relations and the return of protectionism.
• Economic impacts of tariffs on consumers, domestic producers, and global value chains.
• Political drivers of trade policy and the use of retaliatory measures in election-sensitive regions.
• Application of game theory to explain the self-sustaining nature of the trade conflict.
• Case study analysis of the impact of trade restrictions on technological entities like Huawei.

Excerpt from the Book

Summary of Chapters

1. Introduction: Outlines the emergence of the US-China trade war starting in 2018 and defines key terminology essential for understanding the subsequent analysis.

2. Theoretical Background: Reviews academic literature regarding trade liberalization versus protectionism and summarizes the current state of research and existing knowledge gaps.

3. Political Impact of the Trade War: Explores how retaliatory measures were strategically targeted at specific regions to influence political electoral outcomes.

4. Game Theoretical Approach: Uses a payoff matrix to demonstrate why both nations remain trapped in a protectionist cycle despite the damaging long-term consequences, supported by a case study on Huawei.

5. Outlook: Analyzes the ongoing high-tenions and the continuation of protectionist policies under the Biden administration despite a change in presidential leadership.

6. Conclusion: Summarizes the findings, noting that economic losses currently outweigh marginal gains and advocating for a return to fair market conditions.

Keywords

Protectionism, Trade War, USA, China, Game Theory, Nash-Equilibrium, Tariffs, Huawei, Trade Deficit, Neoliberalism, Made in China 2025, Global Value Chains, Retaliation, Economic Policy, Free Trade

Frequently Asked Questions

What is the core focus of this research?

The work focuses on the return of protectionist trade policies between the United States and China, analyzing the motivations, economic consequences, and political implications of the ongoing trade dispute.

What are the primary thematic areas covered?

The paper covers the historical evolution of the conflict, the political alignment of tariffs, the use of game theory to explain the "prisoner's dilemma" between the two nations, and the impact on international business and technology.

What is the main research objective?

The objective is to determine if and to what extent protectionism has returned, while critically scrutinizing the effects and success of these measures toward achieving national economic goals.

Which scientific method is utilized in the analysis?

The paper employs a mixed-method approach, combining a review of existing literature and empirical studies with a dedicated game-theoretical analysis of the decision-making processes of both nations.

What topics are discussed in the main body of the work?

The main body examines the "America First" strategy, the economic impact of tariffs on welfare and market share, the political targeting of trade measures, and the case study of Huawei as a tech entity affected by national security justifications.

Which keywords best characterize this work?

Representative keywords include Protectionism, Trade War, Game Theory, Tariffs, Nash-Equilibrium, and Global Value Chains.

How does the author explain the "prisoner's dilemma" in this context?

The author uses a payoff matrix to show that while individual rational choices lead each country to prefer protectionism, this results in a collective outcome that is more damaging than if both had remained committed to free trade.

What is the significance of the Huawei case study?

The Huawei example illustrates how a trade dispute can expand into a technological "cold war," where national security claims are used to justify blacklisting companies, leading to significant drops in sales and revenue for the affected firm.