US-China Trade Wars Under The New Protectionism Trends and Production and Trade After The Covid-19 Outbreak


Trade wars, clearly initiated by the US and China in 2018, the world’s two largest economies, affected international trade in many ways. This conflict, in which trade  protectionism policies were clearly used as a weapon, caused other countries to adopt similar policies. As a result, the volume of international trade has shrunk and many countries have given up a significant part of their free trade policies, prioritizing their national interests. Institutions such as the World Trade Organization remained ineffective in this process. New protectionist measures, which started with the OPEC Oil Crisis and continued until 1980, have been re-implemented with the 2008 Global Financial Crisis1. The conflict of interests between the “Chinese Dream” and “Make America Great Again” targets, with the US President Donald Trump’s coming to power, caused the two countries to come face to face on political, security and technology issues besides trade. It can be said that the great transformation and wealth that China has achieved through market-based reforms and Chinese Socialism in the last 40 years has threatened the hegemonic power of the USA. Another event that has profoundly affected the international conjuncture is the emergence of Covid-19 in Wuhan, China in the last months of 2019 and it took the whole world under its influence in a short time. China’s closure of its factories, which is one of the most important production centers in the world, had a shock effect on the supply chain, and when the states closed the borders for security purposes, international trade came to a stagnation point. Transnational companies have come up with solutions such as diversifying their production sites to help the fragile supply chain cope with similar crises. This study will present an assessment of the trade wars between the US and China in line with the new protectionist measures, and then analyze the possible changes that may occur in production (supply chain) and trade after the Covid-19 outbreak from different perspectives.

US-China Trade Wars and New Protectionism Trends

In international trade, each country can apply protectionist policies while applying free trade policies to a certain extent. Protectionism, one of the foreign trade policies, is a concept that protects domestic producers from foreign competition and oversees national interests. 2 While the contradictions between globalization and free movement of goods and protectionism and trade wars threaten the current global economic system, these policies put into practice to overcome crisis periods carry the risks of recurrence of new crises in the medium and long term. Protectionist policies and methods can be examined as traditional-classical methods and new modern methods. As examples of traditional-classical methods can be customs duties, taxes with equivalent effect, quantity restrictions (quotas), import prohibitions, nationalization of foreign trade; new modern methods include subsidies, non-tariff barriers, voluntary export restrictions, voluntary increase in imports, anti-dumping, anti-subsidies, research and development expenses, and customs union.3

With the 2008 Global Financial Crisis, serious damage to the banking, financial and real sectors of developed countries made it necessary for states to intervene in the economy. Although the G-20 countries, which gathered in November 2008 after the crisis, promised that they would avoid taking protective measures, the World Bank declared that 17 out of 20 countries took protective measures that restrict foreign trade.4  The main reason for the rise of the new protectionism, which is frequently mentioned today, is shown as the perception of global powers that their national economic interests are under threat.5 Faced with unemployment and economic stagnation with the Global Financial Crisis, states tried to reduce the damage of the crisis with new protectionist measures. 

According to Professor Sadık Ünay, the inability to achieve sustainable development on the basis of fragile banking and finance sectors has prompted national actors to take new protective measures6 to revive their industries. For this reason, developed countries led by the Trump administration of the USA and European leaders apply a number of policies, incentives and subsidies to attract the industrial organizations abroad to their own countries.7 US President Donald Trump made it clear what kind of a foreign policy he would follow if he was elected, by using slogans such as “Make America Great Again” and “America First” in the election campaigns he conducted in 2016. During his campaigns, he claimed that China was engaged in unfair trade activities by keeping the currency worthless against the US dollar and threatened China with economic sanctions.8 Moreover, he has frequently emphasized that China is turning globalization against America. 9 Trump, who started to question bilateral and multilateral free trade agreements after coming to power, took some steps to protect the American economy. For example, in May 2017, Robert Lighthizer (US Trade Representative) notified the House of Representatives of the White House’s request for the renewal and revision of NAFTA (North American Free Trade Agreement). 10 With this declaration, the Trump administration aimed to eliminate the subsidies given to Mexico and Canada, which are the other parties of the treaty, in order to close the deficits in the US economy, and aimed to negotiate the issues of reorganizing production. 11

In March 2018, President Trump, who sued the World Trade Organization for discriminatory treatment in China’s licensing practices and signed a protocol restricting China’s investments in key American technology sectors, set tariffs on Chinese products such as information technologies, aviation and machinery. Retaliation from China was prompt and in April, China imposed tariffs (ranging from 15-25 percent) on 128 products (valued at $ 3 billion), including America’s fruit, pork, wine, seamless steel pipes and recycled aluminum. 12 While mutual tariff retaliations continued, the World Trade Organization stated that world trade declined by 3/10 in the last quarter of 2018, and announced that member countries implemented a total of 137 new trade restrictive measures in 2018, including tariff increases, quantity restrictions, import duties and export taxes.13 The two countries, which have entered into an inexhaustible negotiation process since 2018, have escalated tensions by imposing retaliatory tariff barriers and restrictions on foreign technologies, thereby literally starting trade wars. Trade war is by definition an economic conflict in which states, in response to protectionism, impose trade barriers to each other, such as tariffs, restrictions, and quotas.14 Washington tries to encourage consumers to buy American products by making imported goods more expensive with the tariffs it implements. Chinese officials, on the other hand, think that the US is trying to prevent their rise as a global economic power with the trade-blocking policies implemented. While the total tariffs applied by the US on Chinese goods have reached 550 billion dollars until now, the total tariff amount applied by China on US goods has reached 183 billion dollars.15 In addition, all these developments threatened American companies operating in China.16 According to Dr. Mahfi Eğilmez, these measures taken by the US against China were not limited to China, but also spread to other countries, resulting in a worldwide trade war.17 It can be said that although commercial protectionism has short-term benefits, it can have negative effects on the economies of nations in the long run. The contraction in international trade is threatening countries with high foreign trade shares in their Gross Domestic Product (GDP) – Germany and China, for example – and increasing uncertainties for the future.

Protectionism arises from the idea of achieving development by restricting free trade practices. Donald Trump, who thinks that free trade gives China greater advantages over America, tries to improve the American economy with protectionist measures. In general, the reasons for protectionism can be listed as follows: 1. The desire to improve the terms of foreign trade, 2. The desire to protect domestic labor from the competition of foreign labor abroad, whose domestic labor is cheaper, 3. The desire to protect the national industry, which is important for national security, 4. Desire to increase employment and close the foreign trade deficit. 5. Scientific tariff view, 6. Infant industry argument, 7. Willingness to force other countries to reduce their protection rates, 8. Willing to protect domestic producers against dumping practices.18 The first four articles mentioned above can be shown as the main reasons for the protectionism policies implemented by President Trump to protect the interests of the United States.19 However, with these practices, the US seems to be moving away from its norms in the international arena.20 In a statement he made in 2017, United States Trade Representative Robert Lighthizer stated that with the “Made in China 2025” plan, China wants to be number one in all advanced technologies and economic fields, and that this is a very serious challenge not only for the US but also for Europe and Japan. He underlined that President Trump is determined to use the World Trade Organization to coerce China and to protect it from its unfair commercial activities.21

When the economic data of two countries are examined, it is seen that America and China are the two largest economies in the world in terms of nominal GDP and Purchasing Power Parity (PPP). According to the data of the World Bank, while the US has been ranked first in the world economies in terms of nominal GDP in 2019; China has been the world’s first economy in terms of Purchasing Power Parity since 2014. In 2019, the US has a share of 40.75% and China 34.27% in the total world nominal GDP and Purchasing Power Parity. According to the data of the World Bank, the rate of trade in China’s GDP in 2018 was 38.25%. In the same year, this rate for the US is 27.54%.

Table.1 Merchandise Trade Data of the US with China for 2015-2019

Merchandise Trade of US with China(years)Total Export ($ billion)Total Import ($ billion)  Trade Balance ($ billion)

(Source: United States Census Bureau)

As can be seen in the table above, while the US exported approximately 116 billion dollars to China in 2015; it imported about $483 billions of goods from China. In 2019, the total export rate decreased to an average of $106 billion, while the total import rate remained at around $452 billion. The trade balance, on the other hand, had serious deficits in 2015 and 2019, with approximately $-367 billion and $-345 billion, respectively. Although the US’s foreign debt surplus and its foreign trade deficit compared to China are shown as the main reasons for the conflict; China, which has undertaken projects that can change the balances in global trade – for example, the One Belt One Road Project – is known to trigger trade wars as well. In addition, China has increased its competitive advantage by constantly devaluing its currency and accordingly has become the world’s largest exporter. Devaluation, which is one of the new protectionist measures, is expressed with the concepts of “currency wars” or “competitive devaluations”, which are the policies of countries to reduce the value of their currencies to support economic growth through foreign trade.22 It is clearly stated in America’s National Security Strategy Documents that the US, which feeds its global hegemony with its economic power, sees China as a rival not only in economic but also in political, security and technology issues. Examples such as the concerns of US about maintaining its competitive advantage in emerging technologies, the Trump administration’s embargo on US technology companies on selling and serving Huawei parts, trying to exclude the big Chinese technology brand from the Android platform and prevent it from receiving software updates from companies such as Microsoft23 are proof of this. President Trump and senior US officials raise concerns that the main reason for imposing sanctions on the big tech company Huawei is its connection with the Chinese government and that its equipment could be used to spy on other countries and companies. To put it more clearly, the main target of the US policy towards Huawei is to limit the spread of “dangerous” technology products outside of China that could threaten America’s national security, provide intelligence and surveillance to allies, or facilitate the stealing of valuable information.24 Finally, the US  making it difficult for Chinese companies to invest in certain sectors of the United States can also be included within the scope of protectionist measures. The extent to which this situation is associated with national security -even in times of crisis- is clearly expressed in the speeches of NATO Secretary General Jens Stoltenberg in recent months. NATO Secretary General Jens Stoltenberg warned Western states, saying, “Don’t let the pandemic be an excuse to sell strategic assets to foreigners.”25 This warning is clearly directed towards China, which has very high purchasing power.

Production and Trade After the Covid-19 Outbreak

Covid-19 infectious disease, which emerged in Wuhan, China in the last month of 2019, spread all over the world in a very short time. The emergence of the epidemic in China, one of the most important production centers in the world, and the fact that it affected the whole world in a very short time negatively affected the global supply chain. In fact, it can be said that the coronavirus epidemic has revealed the fragile nature of the modern supply chain. With the emergence of this, steps have been taken to create smarter supply chains through the diversification of production resources and digitalization, thus providing a permanent improvement. The Covid-19 outbreak has shaken global trade and investments at an unprecedented pace and rate. For example, multinational companies (MNC) faced a supply shock. As more governments decided to implement quarantine, people who stayed in their homes for a long time turned to online shopping, which caused a demand shock. In this process, governments, businesses, and individual consumers have struggled fiercely to obtain essential products and materials. With the pandemic, the need to design smarter, stronger and more diverse supply chains has emerged.

With globalization, supply chains in the world have become significantly interconnected. This means that goods go through many stages before they reach the final consumer. The Covid-19 outbreak, which led to national quarantines and border closures, has caused unprecedented disruption in most economies, regardless of their size or stages of development. These restrictions have particularly damaged the food and pharmaceutical supply chains. It is important to examine these two supply chains as concrete examples in terms of the impact of the epidemic and what changes it may lead to in the future. These restrictions have particularly damaged the food and pharmaceutical supply chains. Examining these two supply chains as concrete examples is important in terms of seeing the impact of the epidemic and what changes it may lead to in the future. When China, the world’s largest producer of active pharmaceutical ingredients, shut down industrial production to prevent the spread of Covid-19, a shock occurred along the entire chain.26 India is the global leader in generic drug production. However, 70% of the raw materials of these drugs are imported from China. One third of this rate comes from Hubei, where the epidemic occurred.27 According to the Oxford Business Group, short-term disruptions in the pharmaceutical industry could cause China and India to reorganize their supply chains, and this disruption could benefit local industries in other emerging economies in the long run. The issue of adequate supply of foodstuffs other than medicine has been a priority for governments. After the G-20 Agriculture Ministers Meeting held on April 21, QU Dongyu, General Director of the United Nations Food and Agriculture Organization, made the following words about food safety and nutrition: “Logistics services in agriculture and food should be taken as a basis. More efforts are needed to ensure the good processing of food value chains and to promote the production and availability of diversified, safe and nutritious foods for all.”28

Apart from short-term shocks in the supply chain, it is thought that structural changes may occur if the current pandemic lasts longer. Forecasts are that some emerging markets in China, Brazil, Mexico, and Southeast Asia may lose their central position in the global supply network. This is based on two reasons. The first is the shocks experienced by China-based supply chains with the industrial shutdown across the country in February and March. The second reason is that the US-China trade war has prompted some companies to turn to different production sites.29 The Covid-19 outbreak has accelerated the tendency of US companies to establish their supply chains in regions closer to them, such as Mexico. Apart from this, companies have started to use diversification methods that will reduce future risks by moving their supply base to ASEAN countries such as Vietnam, Indonesia, Thailand and Malaysia. As a result, in the long run, the shift of supply chains to locations and places outside of China will bring a cost-related expanse in the West and the fast consumption habit will inevitably be replaced by more durable consumer goods.30

The World Trade Organization expects the volume of merchandise trade to decrease by 13% – 33% in 2020.31 The IMF, on the other hand, predicted a 3% contraction in the world economy and stated a more optimistic figure. According to the report published by the United Nations Conference on Trade and Development (UNCTAD), both challenges and opportunities await policy makers in the field of investment and development regarding the transformation of international production in the post-pandemic period.32 The main challenges that international production will face in the new era may be in the form of relocation, divergence of investments and reduced competition for foreign direct investment (FDI) seeking efficiency.33 New opportunities may arise for developing economies, thanks to investors seeking to diversify their supply bases to increase production flexibility. As a matter of fact, supply chain flexibility is very important for the development expectations of countries with a more fragile structure in issues such as economic growth and employment creation. Again, according to the report published by UNCTAD on Covid-19, improvement will depend on policy makers who secure a trade and investment policy environment that gradually supports production networks. Zhang Ye, conference official said: “The changing context of international production may be based on regional demand and services. In addition, the development strategies for investing in green and blue economies can be refocused, as well as investing in the development of these services.”34 Some scholars have claimed that Covid-19 will cause globalization to work in reverse. For example, Heng Wang stated that the pandemic has raised concerns about over-reliance on a country’s supply resources and production.35

Businesses in many industries are faced with uncertainties caused by Covid-19, as well as Brexit and trade wars. Although it varies by industry, some businesses, such as tech companies, may start using robots that can replace humans more widely. The widespread use of smart robots in global supply chains can help lower production costs and ensure continuity in production; however, the rapid acceleration of this trend can lead to an increase in major social problems such as high unemployment and income inequality.36 With the epidemic, it is predicted that the roles of governments increase and may increase even more. This can be seen as something positive by advocates of the mercantilist conception of trade. Indeed, according to economic nationalists, the increasing role of the state in the economy and trade is essential in terms of accumulating power and wealth. In addition, state aids and some expropriation initiatives provided in order to keep some sectors damaged during this process alive are of great importance in terms of protecting national interests and providing or increasing competitive advantage. According to realist thinkers, the scope of protectionist policies may expand due to the epidemic. Countries may put in place various regulatory mechanisms to keep national capital and investments in, and tightening of preventive measures may be in question, especially for companies operating in critical sectors to be bought by foreigners.37 Economic liberals, on the other hand, think that trade restrictions should be abolished in the post-Covid-19 period and that all states should engage in commercial activities in solidarity in order to act in accordance with common interests. According to them, preventive policies should be established and implemented in the post-Covid-19 period, instead of trade barriers whose number and impact have increased significantly. They underline the need for a new international organization to be responsible for these preventive policies and to undertake risk assessment and monitoring. They also claim that the hostile virus can be defeated by a multilateral action in harmony.38 It can be said that the capacity of trust and national governance for trade will again be distinctive for the post-pandemic period.


In this study, the trade wars between the US and China are evaluated in terms of new protectionism trends. In addition, the changes that may occur in production and trade after the Covid-19 epidemic, which caused governments, institutions and people to think and debate about a “new world order”, were examined from different perspectives. Although China, which has managed to benefit more from the blessings of globalization than the US, states that it does not have a goal of becoming a global hegemonic power at every opportunity, with its global projects and devaluation practices that will bring China to the level of the number one exporter; China has entered into a struggle with the US, who is aware that it is not as strong as it used to be, almost reminiscent of a new Cold War. The difference is here; the key point of the struggle is not nuclear weapons, but economy, knowledge and technology. This struggle, which started with President Donald Trump’s coming to power, led to retaliatory tariffs and posed a threat to the functionality of the current global trade system by directing many countries except the US-China to implement protectionist policies. The current global economic system, trying to recover after the 2008 Global Financial Crisis, was shaken again by the Covid-19 epidemic, as well as the Brexit and trade wars. The virus originated in China, one of the most important production centers in the world, and the closure of factories across the country to control the spread of the disease has caused a great shock in supply chains. Diversification of production facilities or the use of robots in some businesses are solutions developed to minimize risks in case of a similar threat that may occur in the future. Although the advocates of the economic liberal approach suggest that states reduce protectionist policies and take some measures instead, in the post-pandemic period; the increase in the role of states with the private sector remaining in the fight against the epidemic is most likely to be a harbinger of more stringent protectionist policies in the future.


1 Sadık Ünay ve Şerif Dilek, “Yeni Korumacılık ve Ticaret Savaşları”, Seta (2018 Ocak), s.16. (erişim 20.06.2020)

2 İrfan Kalaycı, “2008 Küresel Finans Krizi Sonrasında Dış Ticarette Korumacılık: Paradigma Kayması(mı?)”, Maliye Dergisi, (2011 Temmuz-Aralık), s.76-104. (erişim 20.06.2020)

3 Selahattin Tuncer, “Korumacılık Teori ve Uygulama”, Maliye Araştırma Merkezi Konferansları, (2012 Ocak), s.244-245. (erişim 21.06.2020)

4 Mona Haddad ve Ben Shepherd, “Managing Openness – Trade and Outward Oriented Growth After the Crisis”, The World Bank, (2011 Mart), s.64-73.(erişim 20.06.2020)

5 Sadık Ünay ve Şerif Dilek, “Yeni Korumacılık ve Ticaret Savaşları”, Seta, (2018 Ocak), s.17. (erişim 20.06.2020)

6 Sadık Ünay ve Şerif Dilek, “Yeni Korumacılık ve Ticaret Savaşları”, Seta, (2018 Ocak), s.17. (erişim 20.06.2020)

7 Sadık Ünay ve Şerif Dilek, “Yeni Korumacılık ve Ticaret Savaşları”, Seta, (2018 Ocak), s.17. (erişim 20.06.2020)

8 Fred Imbert,”Trump accuses China of ‘currency manipulation’ as yuan drops to lowest level in more than a decade”, CNBC, erişim 20 Haziran, 2020, ew-low.html

9 Daniel C.K. Chow, William McGuire and Ian Sheldon, “A Legal and Economic Critique of President Trump’s China Trade Policies”, University of Pittsburgh Law Review, (2017 June ), p.219-225. (erişim 20.06.2020)

10 Megan Cassella, “Trump launches NAFTA renegotiation”, POLITICO, erişim 21 Haziran, 2020, of-nafta-238552

11 Ümmügülsüm Çavuş, “Donald Trump Yönetimde ABD Dış Politikası”, Mütekabiliyet, erişim 21 Haziran, 2020,

12 Dorcas Wong and Alexander Chipman Koty, “The US-China Trade War: A Timeline”, China Briefing, erişim 19 Haziran, 2020,

13 “Overview of Developments in The International Trading Environment- Annual Report (2018) by The Director General”, Dünya Ticaret Örgütü, erişim 19 Haziran, 2020,

14 Wolfgang Lechthaler ve Mariya Mileva, “Who Benefits from Trade Wars?”,Intereconomics, (2018 February), p.24-26. (erişim 24.06.2020)

15 Dorcas Wong and Alexander Chipman Koty, “The US-China Trade War: A Timeline”, China Briefing, erişim 19 Haziran, 2020,

16 Dorcas Wong and Alexander Chipman Koty, “The US-China Trade War: A Timeline”, China Briefing, erişim 19 Haziran, 2020,

17 Mahfi Eğilmez, “Ticaret Savaşları”, Kendime Yazılar, erişim 19 Haziran, 2020,

18 Nazım Engin, “Uluslararası Ticarette Korumacı Eğilimler”, İstanbul Ticaret Odası, (1992 ), s.11-16. (erişim, 20.06.2020)

19 Melek Kaya, “ABD-Çin Ticaret Savaşları ve Türkiye”, Türkiye Mesleki ve Sosyal Bilimler Dergisi, (2019 Kasım), s.18-26. (erişim 20.06.2020)

20 C.Fred Bergsten, “China and the United States: The Contest for Global Economic Leadership”, China&World Economy, 26:5 (2018 Sep), s.15. (erişim 20.06.2020)

21 Adem Behsudi, “Lighthizer: ‘Made in China 2025’ a threat to global system”, POLITICO, erişim 26 Haziran, 2020, o-global-system-223188

22 Sadık Ünay ve Şerif Dilek, “Yeni Korumacılık ve Ticaret Savaşları”, Seta, (2018 Ocak), s.23. (erişim 20.06.2020)

23 Sadık Ünay, “Küresel Dengeleri Sarsan Şirket: Huawei”, Fikir Turu, erişim 18 Haziran, 2020,

24 Roslyn Layton, “Trump Just Extended The Huawei Ban. Is The Policy Working?”, Forbes, erişim 25 Haziran, 2020, cy-working/#4603a5a03492

25 Kenneth Rapoza, “Watch Out For China Buying Spree, NATO Warns”, Forbes, erişim 25 Haziran, 2020, 252d017581

26 Shawn Donnan, Christoph Rauwald, Joe Deaux, and Ian King, “A Covid-19 Supply Chain Shock Born in China Is Going Global”, Bloomberg, erişim 20 Haziran, 2020,

27 “The impact of Covid-19 on global supply chains”, Oxford Business Group, erişim 26 Haziran, 2020,

28 “FAO urges at G20 meeting protection of food supply chains amid COVID-19 threat”, Food and Agriculture Organization of United States, erişim 26 Haziran, 2020,

29 “The impact of Covid-19 on global supply chains”, Oxford Business Group, erişim 26 Haziran, 2020,

30 Emrah Zarifoğlu, “Covid-19 Sonrası Küresel Sistem: Eski Sorunlar Yeni Trendler”, SAM, (2020 Nisan), s.107-110. (erişim 20.06.2020)

31 “Trade set to plunge as COVID-19 pandemic upends global economy”, World Trade Organization, erişim 25 Haziran, 2020,

32 “World Investment Report 2020”, United Nations Conference on Trade and Development, erişim 25 Haziran, 2020,

33 “World Investment Report 2020”, United Nations Conference on Trade and Development, erişim 25 Haziran, 2020,

34 “COVID-19 will likely transform global production, says UN report”, UNCTAD, erişim 25 Haziran, 2020,

35 Heng Wang, “How world trade will be affected by Covid-19”, UNSW, erişim 24 Haziran, 2020,

36 Nurullah Gür, Mevlüt Tatlıyer ve Şerif Dilek, “Ekonominin Koronavirüsle Mücadelesi”, Seta, (2020 Haziran), s.70-77. (erişim 25.06.2020)

37 Nurullah Gür, Mevlüt Tatlıyer ve Şerif Dilek, “Ekonominin Koronavirüsle Mücadelesi”, Seta,(2020 Haziran), s.70-77. (erişim 25.06.2020)

38 Pascal Lamy ve Eduardo Pedrosa, “Challenges and Opportunities Post COVID-19 – Economics:
Trade and Connectivity in the Post-COVID-19 World”, World Economic Forum, erişim 25 Haziran,