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Trade Wars and Tariffs: Understanding their Impact on the Global Market

Huixian Chen, Lu Feng


As the two largest economies globally, the trade relationship between China and the United States holds crucial significance for the
world economy. This paper aims to comprehensively assess the impact and effectiveness of U.S. trade barriers on Sino-American trade, as
well as the combined effects of trade wars and tariffs on the global market. Analyzing using Porter’s Value Chain Model, Okun’s Law, Marshall’s Demand Curve, and Porter’s Five Forces Model, the paper highlights the influence of U.S. trade policies on the global supply chain,
unemployment rates in both China and the U.S., and companies seeking exports to the world market. The research reveals that U.S. tariff
barriers have led to a 1.05 percentage point increase in the U.S. unemployment rate, simultaneously causing a 0.7 percentage point increase
in China’s unemployment rate. Furthermore, trade wars and tariffs have negatively impacted the purchasing intentions of consumers in both
China and the U.S. By considering the multifaceted effects of trade barriers and tariffs, this study underscores the urgency of critically evaluating trade policies to better understand their intricate repercussions on the global market.


Tariffs; Trade Wars; Okun’s Coefficient; Trade Policy

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DOI: http://dx.doi.org/10.18686/fm.v9i2.12438