Macroeconomy Amid Trade War IV

Clashes of the titans in trade May prolong the struggling state.

This depiction of macroeconomy amid trade war between the two titans continues. Before bringing few other factors into the sketch, it is pertinent to look at the means and counter means employed in this trade war. Tariffs and entry restrictions are identified as the key tools at the heart of this trade war. In addition, security reasons, rules of origin,legislation designed to achieve the desired goal are also employed.

• Section 301 of the US trade act of 1974,Entity list,Foreign Direct Product Rule (FDPR) and Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act allows US govt to impose tariff on Chinese goods and provides incentives to promote import substitution industry. CHIPS for America Act allows US authorities full control of technology used in semiconductor fabrication. That means the US can deny rights of using the technology to manufacture semiconductors to other countries.^{1 & 2}
• Rules of origin provision in regional trade agreement barred use of Chinese components in goods like automobiles.¹
• President trump imposed tariffs on Chinese washing machines,solar panels and electronic goods.¹
• China retaliated by imposing tariffs on soybean,cars,aircrafts,aluminium and pork.¹
• US put Huawei into Entity list and restricted it buying american parts and warned US companies buying equipments from it.
• In US states like Florida, purchase of agricultural lands,lands near military installations are planned to be prohibited.²
• Storing data of US citizens into Chinese servers is also prohibited.²
• Denying applications like TikTok on govt devices.²
• In Florida,schools are being instructed not to receive any gifts from China.²

Entry barriers and other forms of restriction exist long before the trade war. China does not allow X, Google,Amazon and Facebook in the country. US and EU do not provide certifications to aircrafts made-in-China to operate in their territories. This is not part of the tools designed for trade war. Rather,it captures the protectionist mindset of the two rivals. Despite being members of WTO,both countries use punitive/countervailing tariff( endorsed by WTO on the ground that partner country is using subsidies to an extent that could harm welfare of the greater consumers) to restrict entry of rival's goods.

Source:

1. China-United States Trade War. Link:https://en.m.wikipedia.org/wiki/China%E2%80%93United_States_trade_war
2. The China and American Trade War---Where Will 2024 Take It? Link:https://www.eezyimport.com/the-china-and-american-trade-war-where-will-2024-take-it/?utm_source=google&utm_medium=cpc&utm_campaign=21105015484&utm_adgroup=&utm_term=&utm_content=&gad_source=1&gclid=EAIaIQobChMIyPqO_47RhgMVZ6RmAh3ToAGIEAAYASAAEgKtjPD_BwE