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China in International Trade: China's Relations with The United States

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In 2001 China joined the World Trade Organization, which allowed China access to trade with the US and paved the way for China’s success, in just five years China surpassed Mexico as the second biggest trade partner after Canada. Its trade rose from $5 billion in 1980 to $230 billion in 2004 after they joined the WTO. This shows how much of an impact joining the trade organization has had on China’s economy and how much it has helped them rise and become one of the world’s most important trade partners which makes China’s current relationship with the US and its free trade critical. For my term paper I will be discussing the current trade war between China and the US, why it is important for international relations and will be examining this case from a realist approach.

When President Trump came into office he began making drastic changes and distancing many of the ties that the US has had with other countries including the EU, NATO and Canada. This past March Trump began targeting the US ties with China by establishing extensive tariffs on as much as $60 billion on Chinese imports to the US, after accusing China of high-tech thievery which ultimately led the US into a trade war against China. A trade war is defined as, “When a nation imposes tariffs or quotas on imports and foreign countries retaliate with similar forms of trade protectionism. As it escalates, a trade war reduces international trade”.

The new tariffs that President Trump has imposed on China is said to be interfering with the Global Free Trade System and it could cause a new cold war between China and the US. China is ready to defend itself against these new tariffs by retaliating its own 25% in tariffs on goods being imported to China estimated to be $36 billion. The list of items being taxed between each state is unbelievable, ranging from soybeans to pork, these new tariffs are starting to have a large effect on the consumers, farmers, and sellers in the middle of the trading war. An example of this trade war impact would be China’s retaliation on the tariff on soybeans, they have cancelled all contracts on purchasing soybeans from the US ,which US farmers count on and sell one-half of their crop to, and replaced the US beans with those from Brazil. China isn’t affected by this tariff, only the US and its farmers have started to see the consequences by having an oversupply and a drop in soybean prices.

To have a realist approach entails the following viewpoints of the world; (1) humans are self-interested and egoistic, (2) lust for power, (3) belief that there is no perpetual peace, a war can happen at any time, (4) belief that we live in an anarchic world where they rank self- preservation, (5) strong belief in unipolarity because today’s friends could be tomorrow’s enemy and for that reason you can’t trust or rely on other states. The overall aspect of a realist perspective is the belief that the world is an anarchic place filled with people who have a lust for power and the belief that “The strong do what they can and the weak suffer what they must” (Thucydides History of the Peloponnesian War). In terms of proving that realism is the right approach for my case I will be focusing on classical realism in particular and how its views have been applied to this particular trade war, due to Trump’s self-interested motives and his lack of cooperation with the states that he has distanced himself from and the fact that China has retaliated in their approach of offensive realism.

During this trade war the US is looking after its own interests and benefits and disregarding the fact that China will work together and gain allies with the other states that are being affected by these tariffs and will eventually not need to rely on the US to import its goods, but rather find other routes to get their goods to consumers without having to pay these extreme tariffs that were set by President Trump. Trump’s realist perspective is what is differentiating himself from past presidents and what’s firing up this trade war, he sees it as a way of retaliating for all the money that the US has paid China over the years and using China’s high tech thievery as justification, but he isn’t thinking of how disrupting the Global Free Trade System will affect everyone. It is in China’s best interest to have a Free Trade System and to work with the US as it has proven effective over the years for their economy.

In the past, the US has had presidents that have had a more liberal view when it came to the WTO and let China continue to succeed with the comfort of the US gaining from its success and staying out of each other’s way to be successful by cooperating in fair trade. But now that president Trump has come in to office he immediately started distancing the US from organizations that the US was highly involved with, in particular NATO, which Trump stated the US was gaining nothing from protecting countries that weren’t paying their share as first agreed, and tired of being the main provider. From this realist approach, Trump thinks about his countries own self-preservation and focuses on concerns over relative gains and compares them to what China has gained over the US and the other states that haven’t been cooperating and gaining more than his country has. Because of this Trump threatened to pull the US out of NATO if other countries didn’t start behaving the way that they should by paying their share, eventually his hard tactics worked and got the other countries to agree to his terms of paying 4% GDP in a short amount of time. Trumps realist approach worked for him in his favor in that example because he took on a topic that other presidents weren’t as persistent to do something about and did what he needed to do for his state’s economic survival, even if it was accomplished in a rash way. Trump’s whole presidency campaign revolves around his slogan of “Make America Great Again”, and to his beliefs he is doing just that at any costs. Trump’s self-interest for his country is what fuels his decision-making whether it be good or bad decisions.

Trump’s realist approaches have led him to singling out the US and separating it from other countries that it once worked with and protected. As any realist, he is thinking of his countries own self-interest and what’s best for his own country despite what effect it might have on other countries. Trump slowly began his tariffs on imports of steel and aluminum and justified it by saying that it was in the US best interest because it would lead to an increase in jobs in America and remove the heavy pressure from imports that the steel and aluminum industries have been under. Trump’s decisions were made with the intention bettering his own country regardless of the outcome, this approach supports Thomas Hobbes belief that people are born naturally selfish and brutal. This trade war increased within just a few months and started sweeping tariffs on China in hopes that they would be able to lower the US deficit and start to gain control over their country again.

China began showing its own realist approach when it retaliated against the US with its own tariffs on US imports to secure themselves from any further damage proving that they are not weak and will be an aggressor and raise their own tariffs and go to other countries if needed which will show that they are powerful enough to take on the world’s hegemon if they feel threatened to do so. The approach that China is taking on is quite similar to John Mearsheimer neorealist approach of offensive realism. Offensive Realism is the belief that “the anarchic nature of the international system is responsible for aggressive state behavior in international politics” (Mearsheimer.) China relies on the free trade heavily and are better off being on the US good side but Trump isn’t giving any options he is standing his ground and focusing on America and its own problems need. The US put itself in a sort of security dilemma where they started making changes to strengthen its own country and causing other countries, China and Japan, to worry about their own needs and changing their own focuses to their own countries since the US is doing so. The security dilemma is generally used to reference other states that are expanding their military power and it lead to other countries worrying about their own safety and working on their own military power to make sure that they are not vulnerable. But in this case Trump has made decisions that are in favor of bettering the US without concerns of other countries, China, Japan, Russia, and in doing so he causes a distance that leads to other countries wanting to retaliate and be on the same level as China is doing in this trading war.

It is quite straightforward to have a realist approach in this case because it is obvious what each county wants and why they are causing these trade wars. Trump isn’t content that imports are the reason behind China’s lower deficit, compared to the US. The US solution is to place tariffs and make up for the losses over time. However, China disagrees with the US and believes that it’s unfair to impose new tariffs, which led China to retaliate with their own tariffs on imports from the US to prove that they are not a country to be reckoned with. Without cooperation from both countries they will be going back and forth until something big happens, like a war, which could’ve been avoided if these two countries, specifically the US, had a liberalist approach and continued to cooperate and gain from each other rather than having a realist approach and fight until one loses.

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