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International Business: Sino-American Trade War


International business is the field that studies the trade of goods, capital, and other significant items across borders on a global level. The news article selected for this review is the one presented by Ben Chapman. The author addresses the most recent news on the so-called trade war between the U.S. and China. The major event the article presents is that the two countries agree on canceling tariffs in phases. This report will provide a summary of the article and address its relevance to the topic of international business.

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News on the U.S.-China Trade War

As mentioned above, the news article by Chapman states that the U.S. and China have decided to cancel some of the tariffs applied to these countries’ goods. The author states that Washington and Beijing have agreed to remove imposed tariff hikes in phases in the same proportions (Chapman). As of today, the countries did not set a timetable for the action. One of the possible causes of the decision the two countries have made is that the trade war is hurting their businesses significantly. For instance, within the past two years, the U.S. has imposed tariffs on more than 500 billion dollars of Chinese goods and placed some of the Chinese companies, including Huawei, on a blacklist (Chapman).

China, in its turn, applied tariffs on more than $180 billion of U.S. goods. The countries report that this week, they want to achieve a general “phase one” agreement related to trade in particular areas, including liquified natural gas and soybeans (Chapman). However, currently, there are no official documents presenting the terms of the agreement between China and the U.S. This piece of news is notable, as the removal of some of the tariffs can improve the countries’ economy and business operations significantly, which will be addressed in detail below.

Relevance to the Field of International Business

As mentioned above, the field of international business studies the topic pertinent to global trade and the exchange of knowledge, goods, and other items. The article provides information about the preliminary agreement between China and the U.S., which can affect international business significantly. For instance, the trade war has resulted in a more than 35% increased in the cost of doing business in the U.S. (Davis).

More than 40% of small business owners reported a critical increase in business costs due to the conflict between China and the U.S. As a result of the trade war, many American entrepreneurs will likely have to switch to suppliers outside China or raise prices significantly. The situation shows that local businesses are always affected by countries’ international relationships, while those engaged in global businesses may be damaged by them the most. Moreover, the trade war reveals that for many large and small companies, working with foreign suppliers, such as Chinese ones, maybe both beneficial and damaging.

The statement presented above may be illustrated by the following example. Many small businesses in the U.S. choose to work with China to decrease business costs (Davis). For them, international business is significant because it allows them to exchange goods and services across borders upon favorable terms and provide customers with higher quality items at reasonable prices. It means that doing business internationally is beneficial for many organizations. However, in the situation where countries do not agree on terms related to international trade, businesses located in these countries may also suffer damages. It means that for many companies, appropriate principles of international business may be vital to minimize possible harm and maximize benefits.

Studying International Business to Resolve Issues of International Trade

The research in the field of international business can help companies to analyze the effects of the global economy and countries’ relationships with each other, as well as the causes of possible problems. Moreover, it can predict the potential outcomes of conflicts between governments, such as the one that occurred between the U.S. and China. In addition, as an international business also studies trade, it can provide insight for organizations seeking options to avoid increased expenses caused by trade wars. Thus, research in the field can be applied to many issues, including the one described in the selected news article, as it can resolve significant challenges companies face in the process.

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The selected article presents the recent news on the trade war between the U.S. and China. It reveals that the countries are ready to make “phase one” agreements and remove some of the imposed tariffs simultaneously. Currently, the tariffs the countries have implemented are significant, and they have a critical impact on both American and Chinese businesses. This situation is related to the field of international business, as it is an example of the case in which companies’ choice to establish trade with global partners affects their businesses negatively. Studies in international business may be significant in such situations because they aim at addressing the causes of problems and the strategies organizations may implement to resolve the problems.

Works Cited

Chapman, Ben. “Trade War: China and the U.S. Agree to Roll Back Tariffs in Phases, Giving Boost to Prospects for World Economy.Independent. 2019. Web.

Davis, Christopher. “Here’s What Small Businesses, Slammed by China Tariffs, are Doing to Minimize the Impact of the Trade War.CNBC. 2019. Web.

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