Trumpism, Sino-US Trade War and its Implications for Global Economy

Abstract

With the rise of Donald Trump as U.S. President, his tariff war against China as well as tensions between the U.S. and other major trading partners have contributed to uncertainty that is hurting business and consumer sentiment, so are international supply chains. For now at least, the escalating trade tensions between Washington and Beijing have not stopped Apple from deepening its manufacturing footprint in China, the company`s most significant production base. Nevertheless, according to Goldman Sachs report, Taiwan and Malaysia will suffer the most in the near term if a U.S.-China purchasing agreement goes through, while South Korea and Japan also have much to lose. Peaceful economic coexistence between the U.S. and China is the only way to prevent costly trade wars. However, economic interests of other economies might be compromised by the emergence of a Sino-US condominium or G2 in the global economy, Japan and the EU in particular. The salient example is the auto sector landscape which has been reshaped as China veers toward an ultra-competitive electric future and Sino-US collaboration in electric vehicles ( EVs) . As a result, Tesla and BYD have emerged as global leaders in the EVs market, while traditional auto champions such as German Volkswagen and Japanese Toyota are relegated to hardware providers. In addition, the US and China are also dominating in the artificial intelligence (AI) and the 5G race as well. Both Japan and the EU are lagging behind the two superpowers. However, the US and China might get emotional and believe no deal is better than a bad deal. If that is the case, then a new Cold War based on technology and trade would be inevitable.