The research questions would be : the causes of Sino-US trade war and its impact in South-east Asia from 2018-2022

The Causes of Sino-Us Trade War and Its Impact in Southeast Asia from 2018-2022 Name Course Professor Institution City Date The Causes of Sino-Us Trade War and Its Impact in Southeast Asia from 2018-2022 Abstract The research focuses on the factors behind the Sino-U.S. trade war and its results through international relations theories of power transition and hegemonic stability. The first goal is to identify the main economic and political factors that instigated and fueled the trade war and, later, its consequences for the regional economic relations of Southeast Asia. Through qualitative analysis of economic data statements from reputable sources and scholarly literature, the study finds the trade war originated from China's expanding capabilities and ambitions challenging U.S. economic leadership, coupled with domestic political factors enabling escalation. The empirical assessment showed that the trade war led to trade diversion but more significantly disrupted regional supply chains and amplified economic uncertainty. Power transition theory provides insight into deliberate U.S. policies to counter China's rise, while hegemonic stability theory contextualises indirect turmoil from superpower tensions. Trade and output data reveal Southeast Asia faces growth fluctuation as US-China relations fracture. The research concludes that domestic politics critically accelerated structural macro-level drivers toward confrontation and confirms Southeast Asian vulnerability to spillovers from great power competition. It stresses the importance of initiating the dialogue between the United States and China to halt de-coupling. It calls for a strategic collective effort within the region to reshape and bring pragmatism into the increasingly fractured relationship between superpowers. Using international theory as a prism to analyze empirical data, the research offers a relevant perspective on how the Sino-U.S. conflict is fundamentally changing the economic geography of Asia. Contents TOC \o "1-3" \h \z \u Abstract PAGEREF _Toc158842449 \h iiChapter 1: Introduction PAGEREF _Toc158842450 \h 21.1 Background PAGEREF _Toc158842451 \h 31.2 Research Questions PAGEREF _Toc158842452 \h 41.3 Methodology PAGEREF _Toc158842453 \h 4Chapter 2: Literature Review and theoretical framework PAGEREF _Toc158842454 \h 52.1 Causes of Trade Wars PAGEREF _Toc158842455 \h 52.2 Power Transition Theory PAGEREF _Toc158842456 \h 72.3 Hegemonic Stability Theory PAGEREF _Toc158842457 \h 82.4 Sino-US Relations and Trade PAGEREF _Toc158842458 \h 92.5 Trade Relations in Southeast Asia PAGEREF _Toc158842459 \h 102.6 Gap in Literature PAGEREF _Toc158842460 \h 112.7 Theoretical Framework PAGEREF _Toc158842461 \h 122.8 Power Transition Theory in Theoretical Framework PAGEREF _Toc158842462 \h 122.9 Hegemonic Stability Theory in Theoretical Framework PAGEREF _Toc158842463 \h 132.9.1 Integrated Theoretical Model by merging them PAGEREF _Toc158842464 \h 14Chapter 3: Methodology PAGEREF _Toc158842465 \h 153.2 Data Collection and Analysis PAGEREF _Toc158842466 \h 163.3 Reliability and Validity PAGEREF _Toc158842467 \h 17Chapter 4: Evidence-Based Analysis of Trade War Drivers PAGEREF _Toc158842468 \h 174.1 Economic Causes PAGEREF _Toc158842469 \h 174.2 Political Causes PAGEREF _Toc158842470 \h 194.3 Applying Theoretical Frameworks PAGEREF _Toc158842471 \h 21Chapter 5: Impacts on Southeast Asian Trade PAGEREF _Toc158842472 \h 225.1 Trade Diversion Effects PAGEREF _Toc158842473 \h 225.2 Supply Chain Disruptions PAGEREF _Toc158842474 \h 235.3 Economic Slowdown PAGEREF _Toc158842475 \h 255.4 Applying Theoretical Frameworks PAGEREF _Toc158842476 \h 26Chapter 6: Discussion and Analysis PAGEREF _Toc158842477 \h 28Chapter 7: Conclusion PAGEREF _Toc158842478 \h 317.1 Summary of Findings PAGEREF _Toc158842479 \h 317.2 Limitations PAGEREF _Toc158842480 \h 327.3 Recommendations PAGEREF _Toc158842481 \h 34References PAGEREF _Toc158842482 \h 36 Chapter 1: Introduction In the twenty-first century, the trade war between the United States and China is becoming more intense and changing geopolitics and the world economy. High-stakes trade conflicts between the two largest economies in the world have a substantial impact on supply chains, financial markets, and international trade networks. The Trump administration heightened trade tensions by imposing wide penalties on Chinese goods valued at over $250 billion. China was accused of unfair trade practices, including coerced technology transfers, intellectual property theft, and other issues. China responded by imposing substantial duties on various American commodities, including cars and agricultural products. Amidst China's swift economic growth in recent decades, the trade war emerged, leading to fierce strategic rivalry between Beijing and Washington and debates over a power transition between the two nations within the Asia-Pacific region. The research analyses the fundamental economic and geopolitical drivers underlying the origins of the Sino-American trade war that accelerated in 2018 by utilising two major international relations theories - power transition theory and hegemonic stability theory. The research further examines how the trade disputes and accompanying protectionist policies enacted by both sides impacted Southeast Asian trade and investment flows, as the region has extensive trade and investment ties with China and the United States both in raw material and finished goods. Specifically, the analysis seeks to measure how the trade diversion away from China and the United States, where trade diversion effects refer to the phenomenon where regional trade agreements lead to a shift in trade patterns, whereby lower-cost imports from non-member countries are displaced by higher-cost imports from member countries due to the elimination of tariffs between member countries, supply chain disruptions, and the reshaping of trading relationships affected export revenues and foreign direct investment patterns across Southeast Asian economies amid the constantly evolving landscape of the trade war. Insights from this study aim to ascertain how regional economies recalibrated their external economic relations during escalating tensions between the two largest economies of the 21st century. 1.1 Background The escalating trade war between the United States and China has emerged as a defining geopolitical conflict of the 21st century. With the two largest economies engaged in high-stakes negotiations and tit-for-tat tariffs, the impacts are being felt across global supply chains and international trade networks. This research explores the causes and consequences of the Sino-U.S. trade war, focusing on impacts on trade relations in Southeast Asia. The origins of the trade war can be traced back to the rapprochement between the U.S. and China in the 1970s, which laid the groundwork for China's industrialisation and economic integration into the global trade system. As China's economy boomed and its exports surged, concerns grew in the U.S. around massive bilateral trade deficits, loss of manufacturing jobs, and unfair Chinese trading practices. The election of Donald Trump exacerbated these tensions, as he pursued an "America First" agenda and took an aggressive stance against China's trade policies and economic practices (Boylan ., 2020). After failed negotiations in 2018, the U.S. imposed tariffs on US$34 billion of Chinese goods, and China retaliated with tariffs on US$34 billion of U.S. products (Mullen, 2022). The Phase One trade agreement signed in 2020 offered a partial truce but left major structural issues unresolved. As strategic rivalry intensifies, trade policy has become a key arena of US-China competition and a significant downside risk for the global economy. Southeast Asia finds itself caught in the crosscurrents of this great power contest. With deep economic ties to the U.S. and China, the region is vulnerable to trade war impacts; for example, it disrupted the supply chain, which southern Asia relied on (global.upenn.edu, 2023). This tension on supply chain disruption greatly affected Southeast Asia. Major questions emerge around trade diversion effects, supply chain disruptions, and broader economic consequences for Southeast Asia (global.upenn.edu, 2023). Understanding these dynamics through an analytical lens of power transfer and hegemonic stability theory can provide important insights. 1.2 Research Questions This research aims to address the following research questions: 1. What are the main causes underlying the Sino-US trade war? 2. How does the Sino-U.S. trade war, arising from factors identified in question 1, affect foreign trade relations in Southeast Asia across dimensions of trade flows, supply chains, and economic performance? 1.3 Methodology The study employs a qualitative approach, analysing existing economic data from websites such as ASEAN stats, World Bank and others, policy documents, and official statements from United States government sources such as the Office of the United States Trade Representative and Congressional Research Service reports, as well as Chinese government sources including China's Ministry of Commerce and National Bureau of Statistics. Finally, data is obtained from secondary scholarly literature from Cheung's book "China Factors". Power transfer and hegemonic stability theories are key theoretical frameworks to explain causal factors. Source materials are critically examined to assess trade war impacts on Southeast Asia and derive policy implications. Chapter 2: Literature Review and theoretical framework The chapter reviews different research that gives information on the Sino-US trade war. Different scholars have explained the instigating factors that fueled the Sino-U.S. trade war, which ranged from political to economic. The chapter also looks at theories about how these trade wars impact other countries caught in between, like those in Southeast Asia. The chapter surveys theories and analysis of the root causes of economic conflicts between big powers. Concepts like power transition theory and hegemonic stability theory help shed light. It also researches the wider ripple effects of trade wars - how other nations face consequences even when not directly involved in tensions between bigger states. The two elements help establish a conceptual framework to guide the research investigation on reasons behind the current US-China trade clashes and their impact on Southeast Asian nations. 2.1 Causes of Trade Wars The US-China trade war can be linked to economic disputes related to China's state capitalist system, state subsidies, technology transfer policies, I.P. enforcement issues, and managed trade practices that the U.S. views as undermining fair competition and market principles (Qin, 2019). These unresolved frictions over China's unique economic model contributed to trade policy conflicts. The structural power shift is another trigger; it was driven by China's rapid economic growth and technological progress and increased fears in the U.S. over the erosion of its economic dominance and leverage. China's ambitions to upgrade its industrial capacities through plans like Made in China 2025 using state support exacerbated U.S. anxieties over a rising strategic challenger (Zhu, 2005 pp.1–24). Domestic political change in China and United States fueled trade tensions, the Trump Administration's hardline economic nationalist posture sharply politicised trade issues with China. On the other hand, Xi Jinping consolidated political control in China, permitting more defiant, assertive foreign policies (Li, 2017 pp.69–73). A rich scholarly literature further analyses the underlying drivers of trade wars and impositions of tariffs between nations. Economists have examined macroeconomic and political factors that can spur trade policy conflicts. Several works point to domestic politics as a key cause of tariffs and protectionism. Political cleavages within nations shape trade policy preferences. The Stolper-Samuelson theorem holds that tariffs benefit scarce factors of production and hurt abundant factors (Basco et al., 2020). Thus, owners of scarce production input lobby for trade barriers. Hisahiro finds that political polarisation and electoral systems impact protectionist policies. Governments facing tight contests may erect trade barriers to satisfy constituent demands (Wagner and Plouffe, 2019). Other studies highlight macroeconomic imbalances as triggers for trade wars. Large bilateral trade deficits, especially vis-à-vis a geopolitical rival, generate political pressure for new trade barriers (Wolff ., 2023). Chapter II, n.d., shows how unsustainable capital flows between nations can cause financial crises and demands for tariff protections. Edwards, n.d. models how exchange rate misalignments lead governments to enact compensatory trade measures. Realist international relations scholarship examines power dynamics between states as drivers of economic conflict. Some scholars describe trade policy as a means for dominant states to seize power advantages. Barbieri (1996) empirically finds that power transitions increase conflictual trade interactions between major powers. Teixeira (2021) theorises how rising powers challenge declining hegemons economically before security rivalries emerge. Analysing the role of domestic interest groups, electoral pressures, macroeconomic imbalances, and power shifts provides insights into trade war origins. This research will draw on these explanations to examine Sino-US tensions. 2.2 Power Transition Theory Power transition theory offers a perspective on economic conflicts between rising and established powers. First formulated by Organski in 1958, it argues that the international system is hierarchical, with one dominant nation at the apex. Power transitions occur when a dissatisfied challenger rises to overtake a weakened leader, resulting in war or rivalry. A key assumption is that dominant states aim to uphold the status quo while rising challengers seek to revise the system (Mitra., 2022). As China's power grows, this drives greater assertiveness in its economic policies and fuels U.S. fears of displacement. A hegemonic clash becomes likely once power ratios pass thresholds of stability. Scholars have examined power transitions, specifically manifesting in trade policy disputes. Shaffer (2021) models how rising states gain economic leverage to renegotiate unfair treaties, provoking economic clashes with dominant powers. Trade policy is an early arena for power struggles before security tensions erupt. Rapid power shifts incentivise assertive trade actions by rising and declining states. Other scholars have used power transition theory to explain US-China relations. In his book "Rising Titans, Falling Giants," Joshua Itzkowitz uses this theory to examine periods of power shifts between established and rising states, like the case of the US-China. He argues such transitions increase the risks of confrontations as the declining power fears its displacement. Thus, the theory can help explain the tension between China and the United States, with China acting as the rising state and the United States a dominant state. The tension later affects other nations, such as those in Southeast Asia who depend on China and the United States directly or indirectly on trade matters. 2.3 Hegemonic Stability Theory Hegemonic stability theory also provides insights into trade conflicts between leading economic powers like the U.S. and China. Developed by Kindleberger in 1973 and Gilpin in 1987, it holds that a stable international system requires a single dominant power. The hegemon provides collective goods like an open trading system (Makale and Aydin, n.d.). When hegemonic decline occurs, it brings instability and conflict as other states defect from the system. The theory suggests that U.S. hegemony underpinned the postwar liberal order, while its erosion now threatens trade wars and fragmentation. Economic openness requires a robust hegemon willing and able to lead. Scholars have applied hegemonic stability theory to analyse trade policy coordination and disputes. Hegemonic decline leads to more bilateral trade conflicts, and trade wars are more likely to occur in periods of hegemonic transition (Hopewell, 2021, pp.1025-1043). As U.S. leadership has waned, China's market power gives it greater leverage to assert nationalistic trade policies. Kirshner, in his book "American Power after the Financial Crisis”, uses hegemonic stability theory to argue that relative U.S. decline compared to a rising centralised Chinese state undermines prospects for liberal economic order. However, critics argue that hegemons do not act altruistically, and other factors shape cooperation. It may overstate the degree of historical U.S. trade leadership. Hegemonic stability theory also downplays domestic politics, interests, and institutions, causing trade conflicts. As an overly structural theory, it has limits in explaining state motivations and trade policy decisions. Nonetheless, this perspective on shifting power balances and strains on the postwar order is useful for examining current US-China trade tensions. The theory suggests that the eroding U.S. hegemony and China's rise threaten trade stability between the established and rising superpowers. 2.4 Sino-US Relations and Trade Analysing the 50-year history of diplomatic and commercial relations between the U.S. and China provides context on the profound economic interdependence that is now under stress from the trade war. After the rapprochement in 1972, bilateral ties initially focused on security before progressing to trade and finance. This established an economic relationship of mutual advantage and growing imbalances and friction. Through the 1980s and 90s, scholars like Harding in 1992 examined the political dynamics of China's export orientation to the U.S. market (Cheung, 2017). Chen and Zha (2023) highlighted the policy reforms catalysing Chinese manufacturing exports. By the 2000s, China's entry into the W.T.O. brought a surge in bilateral trade and a widening U.S. deficit and job losses that provoked criticism from politicians and scholars (Boylan., et al., 2022, pp.23-40). However, despite growing economic ties, trade, human rights, and security issues deteriorated. Strategic distrust was embedded even as bilateral flows hit new highs. The Trump era brought these tensions to the surface through aggressive tariffs but left core conflicts unresolved (Siripurapu and Berman, 2023). This history illuminates how unmanaged power shifts and domestic economic pressures resulting from deep integration without mutual understanding set the stage for today's heightened trade conflicts. It provides essential context for examining the trade war's contested origins and contested consequences. Future hostilities were particularly sowed by the insufficient address to growing domestic pressures in both countries due to economic imbalances and concerns about China's rapidly developing capabilities. Despite overt cooperation, absent proper accommodation of leadership anxieties and constituent interests, bipartisan distrust and tensions were primed to intensify, awaiting a catalyst to bring them up. Fissures transition from latent to acute due to inadequate mitigating policies. Nationalist domestic strains ultimately overpowered proactive crisis management as efforts to transition power increased and cooperation weakened. As a result, tensions built up over time and dramatically overflowed into open economic conflict from regulated trade rivalry. This has shown itself in the current trade war, severely damaging bilateral relationships and global supply chains that rely on stability. 2.5 Trade Relations in Southeast Asia Southeast Asia has become an important trading hub integrated into global supply chains and closely tied to the U.S. and China economically. Analysing its trade dynamics and linkages provides a critical context for assessing the regional impacts of the trade war. Through the 1980s and 1990s, Southeast Asian countries like Malaysia, Thailand and Singapore experienced export-oriented growth and became major manufacturing centres, deeply entwining them with the international economy (Yeung, 2016). By the 2000s, the region was described as "Factory Asia," with China at the centre of regional supply chains (Southeast Asia: Prospects and Challenges, n.d, p 60). However, countries like Vietnam and Indonesia also became important links in production networks. Southeast Asia’s strategic location and trade agreements made it a nexus between East and South Asia. Recent literature Marston (2023) examines Southeast Asia amidst rising US-China competition. Strategic analysts argue the region wants to avoid binary choices between superpowers and maximise economic returns (Stromseth, 2020). However, Southeast Asia's close trade integration with the U.S. and China also leaves it vulnerable to negative consequences from growing strategic tensions and economic decoupling between the two powers. Tariffs and supply chain shifts due to the Sino-U.S. trade war challenge the region's efforts to balance relationships and thrive economically. Southeast Asia faces declines in exports and growth from Sino-US tensions as major industries rely on access to U.S. and Chinese markets. 2.6 Gap in Literature While extensive analysis exists of economic and political drivers of historical trade conflicts, prior scholarship demonstrates growing engagement with power transition and hegemonic stability frameworks applied to the contemporary Sino-U.S. case, though without fully exhaustive exploration. For example, Robert (2016) utilises power transition theory to assess policy shifts amid China's rise, potentially challenging U.S. predominance. Beeson's (2009) Book Hegemonic Transition in East Asia adopts hegemonic stability perspectives to examine the implications of relative U.S. decline (Beeson, 2009, pp.95–112). However, further integrating systematic evidence with multifaceted theoretical examination remains vital for enriched understanding. This research aims to build on these studies by providing an expanded qualitative evaluation of causal drivers and Southeast Asian trade impacts using integrated power transition and hegemonic stability lenses. In doing so, it supplies supplementary fact-based investigation to complement existing applications of these theories in interpreting contested origins and consequences of the intensifying US-China economic confrontation. The goal is to provide additional empirically grounded perspectives to support and stretch established theoretical frameworks and applications seeking to explain pivotal dynamics in this defining global relationship. 2.7 Theoretical Framework The research employs two key international relations theories—power transition theory and hegemonic stability theory—to analyse the contributing factors of the Sino-U.S. trade war and assess the impacts on Southeast Asian trade. This chapter outlines the core arguments of each theory and develops an integrated theoretical model to examine the research questions. 2.8 Power Transition Theory in Theoretical Framework Power transition theory, developed by Organski (1958) and expanded by other scholars, provides an explanatory framework for understanding conflicts that emerge between rising challengers and established dominant states in the international system (Mitra., 2022). At its core, power transition theory is built on the premise that the global order is hierarchical, with a single leading power at the apex. This dominant power aims to uphold the status quo over which it holds a privileged position. In the decades since World War II, the United States has filled the role of the hegemonic state within the international hierarchy. However, the theory holds that rising challengers will eventually emerge and seek to change the system as their material capabilities grow. As potential rivals develop economically and militarily, they become increasingly dissatisfied with the global order that disproportionately favours the dominant power. Power transition theory posits that the rising challenger will initiate efforts to revise the system through assertive policies to expand its influence. In this situation, intensifying competition and outright conflicts between the hegemon and the rising challenger become likely as power dynamics shift. Even before the challenger reaches full parity, the closing power differential can spark rivalries and wars if it crosses certain thresholds that bring the system disequilibrium (Mitra., 2022). In applying power transition theory to current international dynamics, China represents the rapidly ri...