Moreover, Trump promised that US will renegotiate the trade agreements that it is a party in like "North America Free Trade Agreement", and withdraw from "Trans-Pacific Partnership". Thus, the paper explains the economic and political consequences of US-China trade war through discussing the previous literature on trade openness, restrictions, wars and their economic and political impact, and tackling a recent case which is trade war between USA and China in 2018. It also analyses patterns of US exports of goods and services to China and trade deficit between them since 2000s using graphs with their descriptive analysis. Eventually, the paper gives a summary about the case and the main findings of the study. Literature Review: International trade is considered the "Engine of growth" for many centuries and it proved to have advantages to the global economy. Liberalizing international trade was one of the important principles that the neoliberals who dominated the western governments and international financial institutions after World War Two called for. The advocates of developed countries and international organizations like ''Bretton Woods'' institutions and ''World Trade
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3Organization'' called for trade openness and eliminating protectionist policies and trade barriers, and it was one of the main principles recommended in ''Washington Consensus'' (Symoniak, 2010/2011). A free trade is defined as a policy of unrestricted foreign trade with no tariffs or subsidies on imports or exports or no quotas or other trade restrictions (Drozdz & Miskinis, 2011). Free trade can be done unilaterally by a country or bilaterally by entering regional trade agreements with other countries like NAFTA and TPP. Famous economists like Adam Smith and David Ricardo supported free trade in their theories. To begin with, Free trade enhances competitiveness and innovation by technology transfer across countries which increase total factor productivity, and labour can acquire more skills so this leads to accumulation of human capital which eventually increases economic growth. Moreover, it simulates job opportunities by increasing employment particularly in efficient industries, unlike protectionism. This will promote higher wages, higher standards of living and therefore higher growth of income per capita. It enables consumers to buy better quality products at lower costs (Boudreaux & Ghei, 2017). Moreover, trade openness improves the investment climate and promotes FDIs. Trade promotes efficiency since the countries having lower comparative advantage in certain product can import it from other countries having higher comparative advantage, and it similarly can export goods in which it acquires higher comparative advantage, according to comparative advantage theory of David Ricardo (Dominick, 2013 ). Over time, the expansion of international trade contributed to raising incomes of the poor higher than the international poverty line, thus lifting millions of people out of poverty in developing countries (M & P, 2018).
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