ECONOMICS
BARRIERS TO TRADE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The U.S. government stops all trade with China.
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Canada and the U.S. have no restrictions on trade.
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Either A or B
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None of the above
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Detailed explanation-1: -The executive order prohibits all U.S. investors (institutional and retail investors alike) from purchasing or investing in securities of companies identified by the U.S. Department of Defense as “Communist Chinese military companies.” As of January 14, 2021, 44 Chinese companies were identified.
Detailed explanation-2: -Let’s look at some fact and figures. In a very simplistic world, if America stops trading with China, China lose that ($462–$115) = $347B of GDP or 3.1% of the overall GDP. China’s GDP is expected to grow at 6%/yr.
Detailed explanation-3: -After the trade war escalated through 2019, in January 2020 the two sides reached a tense phase one agreement; it expired in December 2021 with China failing by a wide margin to reach its targets for U.S. imports to China. By the end of the Trump presidency, the trade war was widely characterized as a failure.