International Trade and Shipping Management (Research Paper Sample)

IMPACT OF TRADE WARS ON THE SHIPPING INDUSTRY
RESEARCH PROPOSAL
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TABLE OF CONTENTS TOC \o "1-3" \h \z \u CHAPTER 1: INTRODUCTION PAGEREF _Toc70324993 \h 3Research Questions PAGEREF _Toc70324994 \h 3Aims and Objectives PAGEREF _Toc70324995 \h 4CHAPTER 2: LITERATURE REVIEW PAGEREF _Toc70324996 \h 4Review of Historical and Current Trade Wars PAGEREF _Toc70324997 \h 4Review of Previous Quantitative Research PAGEREF _Toc70324998 \h 7CHAPTER 3: RESEARCH METHODOLOGY PAGEREF _Toc70324999 \h 10The framework of The Study Methodology PAGEREF _Toc70325000 \h 10Computable General Equilibrium Model and Data PAGEREF _Toc70325001 \h 12Summary of the Methodology PAGEREF _Toc70325002 \h 13References PAGEREF _Toc70325003 \h 14
CHAPTER 1: INTRODUCTION
Shipping is essential to international trade because it is the most cost-effective way of transporting tons of cargo globally. The advancement from a world of isolation to an interconnected global society has been made possible by shipping and maritime trade. The exchange of goods and services between two countries is known as international trade. International trade and shipping are inextricably linked. Consumers and governments benefit from free trade because they are open to products and services unavailable in their own countries or are more costly domestically. These benefits are limited or cannot be realized if countries go into a trade war. A trade war occurs when one country fights back against another by increasing import rates or imposing other restrictions on the latter's imports. A trade war hurts both sides' economies and causes trade flows to deviate. Trade wars can seriously impact the shipping industry. However, these wars may establish a new type of trade system that aids in the purchase of domestically produced goods. The research will look into trade wars and how they affect the shipping industry. Additionally, it will examine if the recent trade war between China and the United States positively or negatively impacts global cargo ton-miles.
Research Questions
Everyone seems to be aware of the threats and tweets that began after the United States placed rates on all imported solar panels and washing machines in January 2018. This action has since developed into a trade war between the United States and China, two of the world's three largest economies. Although a trade war between the United States and Europe was prevented at the last minute with a bilateral agreement, no one can be assured that such a war would not spread to other countries and impact current global economic development. When the United States and China are engaged in a trade war that includes rates on billions of dollars’ worth of goods and fighting negotiations, the maritime community keeps a close eye on both events, attempting to assess their potential effects on their business.
The research will therefore aim to address the following research questions:
* What effects do trade wars have on the shipping industry?
* Did the recent trade war between China and the United States positively or negatively impact global cargo ton-miles?
Aims and Objectives
The objective will be to examine the United States and China trading relationships and the two nations' so-called "trade war." The study will discuss the countries' economic ties and explore how the trade war has impacted the global cargo ton-miles. It will also look at the general effects of trade wars (negative and positive) on the shipping industry.
The study will approximate the demand for maritime transportation during global trade wars to answer the research questions. The methodology will be based on trade-cargo-container conversion and Computable General Equilibrium (CGE) models. Chapter 2 of this research proposal will be a literature review, followed by research methodology in chapter 3.
CHAPTER 2: LITERATURE REVIEW
The literature review will have two sections. First, some global historical trade wars and how they impacted the shipping industry will be discussed. The second section will overview the previous author's published research work (secondary data) on the same topic.
Review of Historical and Current Trade Wars
The United States levied rates on steel and aluminum imports in March 2018 (25 percent and 10 percent, respectively) except imports from Argentina, Brazil, South Korea, and Australia. Following failed talks with China, the United States declared that it would place 25% rates on $50 billion imports from China, with a further threat of rates on $200 billion in imports announced in June same year. The first package of 34 billion dollars of the 50 billion-dollar US measures went into effect on July 6th, and it included rates primarily on machinery and electronics. The next set, worth 16 billion dollars, was to go into effect later and included petroleum products, chemicals, and other materials, which was expected to affect container shipping CITATION Eva19 \l 1033 (Evans, 2019). China retaliated against the original USA rates in April 2018 by imposing rates worth $3 billion on shipments from the USA to China, mainly food and beverages and iron and steel items. In response, China also retaliated against the United States rates of $50 billion. The first portion of the 34 billion, out of 50 billion, came into effect on July 6th, 2018. The rates on soybeans were the most critical of these rates. Apart from that, Canada and Mexico retaliated with 12.6 billion and 3 billion-dollar rates, respectively. Around the same time, a trade war with the EU was prevented due to a bilateral trade agreement.
The Smoot–Hawley Tariff Act of the United States, which levied import rates on over 20,000 commodities, led to the most significant trade war of the twentieth century. With the whole war running from 1930 to 1934, the United States trading partners responded with boycotts and higher rates on products imported from the United States. Between 1929 and 1932, it is estimated that global trade fell by around 26% as the dry cargo market went through one of its most prolonged and most severe slumps CITATION Irw98 \l 1033 (Irwin, 1998). However, because this trade war erupted simultaneously as the 1929 Wall Street Financial Meltdown (among the worst in the USA history), and the dry cargo market was still recovering from excess supply, the trade war's consequences cannot be explicitly established. The idea that the container ships market improved slightly around 1935 and 1937 (just after Tariff Policy was lifted and before new building ships entered service) suggest that the trade war prolonged the 1929 crash's crisis and negatively affected shipping markets CITATION Gon20 \l 1033 (Gong, et al., 2020).
The third discussion focuses on a trade war that began in 2002 when Bush Administration imposed rates on steel imports (except those from Mexico, Canada, Jordan, and Israel), prompting tit-for-tat retaliation from the United States' trading partners. The trade war, which continued for about two years, did not seem to have had a negative effect on the shipping market, which grew rapidly during the same period CITATION Cha18 \l 1033 (Charbonneau & Landry, 2018). This rise appeared to be unrelated to the trade war but rather to China's rapid economic expansion, which coincided with a surge in raw material shipments. The trade war had little impact on international shipments markets because imports of steel products from tariffed countries accounted for less than 1% of global dry cargo maritime trade. The reprisals were unrelated to bulk products. On the other hand, due to increased steel production, the United States could have marginally increased its raw material import shipments. However, the (negative/positive) effect of rates on the American economy is debatable CITATION Fin09 \l 1033 (Findlay & O'rourke, 2009).
Another case study is the United States and Europe's trade war with Russia. In this event, the United States and Europe imposed economic sanctions on a number of Russian companies, which could indirectly impact the country's imports and exports and a ban on Russian oil imports. Russia retaliated by imposing counter-sanctions, mostly on agricultural goods and equipment imported from Europe and the United States CITATION Ver19 \l 1033 (Vercueil, 2019). Amid the Russian economy's downturn and economic contraction (for the first time since 2009), the restrictions seem to have had little impact on global trade, as shipments of Russian petroleum products have remained stable at around 2.80 million Bpd. Russian crude has also grown by about 15% in the last five years, owing primarily to oversupply due to past investments CITATION Kut20 \l 1033 (Kutcherov, et al., 2020).
Other trade wars seem to have little impact on bulk shipping. The trade war between the United States and Japan in 1981 included automobiles and finished goods such as motorbikes and electronics. In contrast, the battle of bananas, which existed from 1993 to 2012, was solely focused on the shipment of bananas from Latin America into the United States. Various EU and/or US rates targeting countries such as Sudan, Iran, and Syria, on the other hand, do not appear to have a significant direct effect on world trade and bulk shipping. Still, there is undoubtedly an indirect impact because these countries' growth is limited, and their trading volume is kept lower than it should be without the barriers in place.
Review of Previous Quantitative Research
Free trade under the WTO's multidimensional trade structure has resulted in global business and economic development, but trade p...