Supervised by: Yash Salunkhe BSc (Hons). Yash is currently completing his MPhil in Economic Research at the University of Cambridge. He gained his BSc Econometrics and Mathematical Economics (EME) at the London School of Economics (LSE) in 2018. From 2018-19, Yash worked in Venture Capital in Pune, India, evaluating startups with a positive social impact. From 2019-2021, he worked in Wealth Management, helping large institutions invest their portfolios above $25 million. He has co-founded 2 charities: one focuses on improving outcomes in under-funded schools in India and the other was involved in varied community development projects.
Throughout history, the United States has participated in many trade wars, affecting its economy, market share, and machinery sector. This research paper examines the implications of these conflicts on the economy by examining how trade wars affect automotive, technological, and agricultural production. First, it will explore the effect of the United States-China trade war on the automotive industry and how it changes the electric vehicle race. Additionally, it investigates the far-reaching consequences of the war on technological distribution, particularly in the context of the competitive US-China 5G technology race, analysing the implications for global digital innovation and economic relations. Then, this paper will use the analysis method to assess how inaccessibility to agricultural machinery causes conflicts in import and export rights between the European Union and the US. Furthermore, this paper provides a background on the post-NAFTA US-Mexico tensions escalating due to the Mexican presidential decree to ban genetically modified corn in 2024.
The United States has remained the supreme global economic power for many years. The US has taken extreme trade measures to remain in this hegemonic position. Specifically, in 2018, the Government placed substantially increased tariffs on exports. Consequently, demand for US products decreased immensely. As we begin to analyse the effects of the actions of the US, we will look at the trade wars that have risen with China, the European Union, and Mexico. These countries – including the United States – have all experienced numerous detriments in their respective manufacturing sectors. The US economy has taken a significant hit from tariffs on products used to make cars, creating a focus on electric vehicles. The US-China 5G trade war has deep historical roots in long-standing geopolitical tensions and economic rivalries. China’s rise as a global technology leader and its substantial investments in 5G infrastructure have raised concerns in the US and its allies, spanning beyond economic competition to encompass data security, intellectual property theft, and safeguarding national interests. As a result, the trade war holds critical significance, shaping the future of international trade and technology and impacting emerging economies. Countries in the ACP (Africa, the Caribbean, and the Pacific) struggled with competing with the Latin American countries in producing bananas since the producers in Latin America were powered and provided with the technology by the US. Therefore, the European Union introduced a new trade policy that gave ACP countries exclusive trade rights. This started a large-scale trade war between the EU, the US, the ACP, and Latin American countries that lasted almost 20 years. Mexico has struggled with increased competition from US imports and tariffs on Mexican steel and aluminum, culminating in US demand to shift away from Mexican machinery that can produce higher-end products, including the technology to produce genetically modified organisms (GMOs). The US experienced the most significant economic decline in machinery in the sectors mentioned above. This research paper will analyse the evidence and explore the multifaceted effects of US trade initiatives on various sectors of the machinery industry, including agriculture, automobile, and technology industries, shedding light on the implications of these actions for global trade and technological development.
Exploration of the effect of the US-China trade war on the industrial sector and the electric vehicle race.
Background and sectors affected:
The US-China trade war has resulted from an attempt by the US to pressure the Chinese government to alter their trade practices. Fundamentally, the endeavor aimed to slow the growth of China’s economy and become independent from their courses. However, the fact is that the US depends on China more than the Chinese do on them. The US imports over US$506 billion of goods from China, whereas US exports to China have a value of US$151.1 billion. Of the goods the US imports, 47% or US$241.5 billion are imports of machinery (USDOC, 2021). Of the immense sectors covered under machinery, the automotive industry has taken the most substantial hit and the absence of necessary products has caused the US and China to switch their focus to creating electric cars. In essence, the US-China trade war has diminished relations and access to automotive machinery among both countries, which has led to increased initiatives in the electric vehicle industry.
How have automobile tariffs changed China’s economy?
The machinery sector, or more specifically, the automobile industry, is expected to have the highest welfare loss among all sectors of the Chinese economy. For instance, the total imports of the sector are expected to decrease by US$2.26 billion, with an annual welfare loss of US$678 million (Du, 2020). This is because 11% of Chinese imports are vehicles, and over 35% of total imports have been related to manufacturing automobiles (Salzman, 2018). With the tariffs in effect, the Chinese government must look to alternative suppliers to keep production parallel with demand. These manufacturers include Germany, Japan, and the UK. The cost of products in these countries is inherently higher and will be far less cost-effective than previous imports from the US. Therefore, the prices of automobiles in China will inevitably increase. From a consumer standpoint, there is a guarantee that demand for imported cars will decrease, invoking a challenging situation for car manufacturers.
Detriments from a poorly planned initiative:
In the US, automobile manufacturers are facing different setbacks. For example, the inability to access the necessary products to build cars has stalled the US automobile manufacturing industry. President Trump intended to reduce imports from China to bridge the gap between the exports of both countries. However, he needed to account for the most integral function of the products the US received. The materials China exported to the US were vital to producing cheaper cars and, as a result, bolstered the US automotive sector. As a result, the US became obligated to limit the production of vehicles for over a year. It is essential to note that the revenue of the US automotive industry decreased by 8.2%from 2021 to 2022 (Tysons, 2023). In addition, the tariffs placed on automotive and machinery have increased from 15% to 40%. As a result, average automobile prices in the US have increased by 9% and the output and exportation of US products have decreased by 1.5%. The decrease alone will leave 195,000 workers without a job. In conclusion, the US economy took a significant hit from the automotive tariffs, and if they do not find alternative consolidation, the industry could never be the same again.
A shift towards electric vehicles:
The decreased economic activity regarding automobiles inevitably sparked innovation in a growing sector. As one of the most rapidly expanding industries in the world, the electric car space is an outlet of competition through which China and the US can bolster their respective automotive industries and make up for the losses endured in the trade war. In the current landscape, China is far ahead of the US in EV production. For instance, China sold 1,255,000 electric vehicles in 2018 opposed to 361,307 sold by the US (Lee, 2021). Furthermore, the Chinese government has already implemented more measures to reach its goal of having all-electric or hybrid vehicles on the road by 2035. Specifically, China has over 400,000 more charging stations than the US and has already forced regulations upon its citizens. In major cities like Shanghai or Beijing, electric vehicles are the only cars with access to the city centre. The US also has goals to become predominantly electric by 2035. Out of the 50 states, 17 have already mandated that all cars on the roads are electric in just about a decade. Interestingly, 44% of US citizens believe that they will drive an electric vehicle in the future, whereas only 6% of Chinese citizens feel the same way (David, 2019). In conclusion, the Chinese EV industry may have taken more significant strides in the past, but it seems that the US will have an advantage in the future due to its citizens’ increasing demand for electric cars.
Bridging the gap in the race:
As established before, the US has some catching up to do regarding the EV race. This being said, let us take an in-depth look at their proposed initiative for electric vehicles in the future. In order to keep level competition with China, the US has begun its grand-scale investment in the world of electric cars. Over the last decade, the US emerged and quickly fell as the leading EV manufacturer. With the rise of such technologies, both the EU and China attempted to take advantage of American innovation and have successfully done so. The US will need to protect domestic resources while effectively increasing innovation in the sector. Tesla and other major corporations have already begun their work on creating new and efficient EV solutions, producing a battery without China in particular. The process will be very tedious; this being said, it is vital to understand the Chinese EV initiative as well. The Chinese electric plan has derived from the tariffs the US placed on its products and the world’s rapidly changing climate. China is attempting to turn into an electric-based country to mitigate the losses of the automotive industry. Since they are a leader in manufacturing both electronics and car parts, it will be more cost-effective for them to install EV plants.
Why does the US need China?
The electric vehicle race is more complex for the US than it may seem, particularly due to China’s abundance of essential raw materials needed to create batteries. Materials such as lithium, nickel, cobalt, and graphite are all mined in China. In 2022, the US imported US$9.3 billion worth of batteries from China (Richter, 2023). Even with the higher costs, the US is “mandated” to buy batteries from China as there is no alternate supplier. As of 2023, China controls 70% of the world’s cobalt and 44% of lithium production, and has invested heavily in the leader of nickel production, Indonesia, which owns 39% of the metal (The Meghalayan Bureau, 2023). In addition, China has low-cost labour and inherently has lower EV prices. Furthermore, the US finds itself in a short-term crisis after President Biden signed the Inflation Reduction Act. The Inflation Reduction Act allows the US to gain incentives from free-trade partners; however, the components used to produce batteries can not be imported. Ultimately, this eliminates suppliers such as South Korea, the supplier of 26% of the world’s batteries (Green Car Congress, 2022).
What can the US do to become independent?
The US will need to look for a long-term solution for creating EV batteries. The solution can be reached by investing in areas with high lithium and cobalt concentrations in the United States itself. Investment in areas such as Minnesota and California’s Salton Sea will allow access to both materials. This being said, the US has already begun investing millions of dollars to seize lithium production potential. In fact, the Salton Sea is estimated to produce 600,000 tons of lithium annually (Brigham, 2022). On the other hand, reserves in Minnesota provide the US with 640,000 tons of cobalt each year (Orr, 2020). To take advantage of this resource endowment, the US must continue to invest and mine in new areas. This process will be very tedious and take upwards of ten years; however, once the US achieves efficiency, it will be able to revolutionise its EV industry. The initiative will pay dividends before 2035. As a result, the US will be able to mitigate the effects of the trade war by increasing domestic investment in the EV space.
The US-China trade war has diminished relations and access to automotive machinery among both countries, which has led to increased initiative in the EV industry. Due to the escalation of the US-China trade war, both countries’ respective industrial sectors have experienced an enormous detriment. Specifically, the automotive industry has experienced the most significant harm from the tariffs on all types of machinery. This has resulted in an increased interest in the development of the EV industry. Naturally, the US and China changed focus to create efficient solutions for their EV initiatives to flourish. In the future, the world will inevitably become electric, and by getting a headstart and alleviating the effects of tariffs placed on automotive machinery, the US and China will be able to flourish. The US-China trade war may have no definite end, but the EV space will only continue to grow.
5G Technological competition between the US and China
The 5G trade war between the US and China is not merely a product of recent events but has deep historical roots in geopolitical tensions and economic rivalries that have been brewing for decades. In the digital era, China’s remarkable rise as a global technological leader and its strategic investments in 5G infrastructure have raised significant concerns in the US and its allies. These concerns span beyond economic competition and extend to critical areas such as data security, intellectual property theft, and safeguarding national interests. With the global 5G services market projected to reach an astounding US$84.31 billion in 2023 and over US$3.8 trillion in 2035, the trade war assumes critical significance, not only shaping the future of international trade and technology but also having far-reaching implications for emerging economies (OEC, 2021).
To understand the 5G trade war, it is essential to delve into the origins of China’s assertive pursuit of technological advancement, exemplified by its “Made in China 2025” initiative in 2015 (Forbes, 2019). This ambitious programme was designed to transform China into a global powerhouse of technology, and it has triggered apprehensions among US policymakers. The fear stems from the potential impact of this transformation on American technological dominance and global competitiveness. However, it is vital to recognize that this pursuit of leadership in technology is not isolated but part of China’s broader economic strategy to secure a stronger position in the international arena. Furthermore, the trade war has been influenced by concerns over data security and intellectual property protection, which have contributed to the existing tensions. Various reports have highlighted instances of cyber-espionage in the digital age, where unauthorised access to computer systems or networks has raised alarms among nations, including the US and its allies regarding property rights of foreign businesses and technologies (CSIS, 2023). These concerns have created complexities in separating the trade war from issues related to data security and fair trade practices.
China’s Dominance in 5G:
One of the key drivers of the trade war is China’s rapid adoption of 5G technology, giving it a considerable advantage over its competitors. With approximately 30% of 5G adoption in 2021, China has already deployed 1,000,000 5G base stations, dwarfing the 100,000 stations deployed by the US. These investments, amounting to US$50 billion in 5G infrastructure are primarily driven by China’s state-owned enterprises, which enjoy significant government support (BDO Global, 2022). This dominance raises concerns about market concentration and unfair competition, as well as the potential implications for global telecommunications standards.
However, it is essential to recognise that the 5G landscape is dynamic, and the US is not far behind. Analysts predict that by 2025, 63% of North American connections will be 5G, compared to 52% in China (BDO Global, 2022). This progress is driven by the relatively greater spending power of US consumers, leading to increased investments in 5G phones and services. US telecom providers face fierce competition for 5G revenues, spurring faster network rollouts, especially with the emergence of cloud-native 5G technology. China’s strategy, with state-owned enterprises as key investors, contrasts with the US, where private companies drive 5G network development, resulting in distinct market dynamics.
M&A activity also diverges, as US telecom companies have made 92 5G-related acquisitions, while Chinese telecoms have focused mostly within their country’s borders. As both nations seek to assert their positions in the evolving 5G landscape, these developments influence the underlying tensions of the trade war. Understanding the nuances of their strategies and market dynamics is crucial in shaping the future of 5G trade relations and its broader implications for the global digital economy.
Geopolitical Motivations and Security Concerns:
Beyond the economic aspect, the 5G trade war is inextricably entwined with geopolitics and national security considerations. China’s close ties between state authorities and technology companies have led the US to view this relationship as a potential threat to global data security and sovereignty. Concerns over Huawei, a leading Chinese technology company, have been particularly notable due to allegations of its involvement in cyber-espionage activities (Forbes, 2019). Additionally, Huawei’s founder’s military background has raised questions about the company’s connections with the Chinese government. Consequently, the US and its allies have taken measures, such as banning Huawei from their 5G networks, setting a precedent for other nations to follow.
Impact on Emerging Technologies:
As 5G forms the foundation for emerging technologies like artificial intelligence, autonomous vehicles, and the Internet of Things, the consequences of the trade war extend beyond telecommunications (IMF, 2021). The rivalry between China and the US for 5G dominance can significantly shape the trajectory of these transformative technologies, dictating global innovation trends and influencing the competitive landscape of various industries. The technological standards established by the winners of the trade war will have a lasting impact on future market shares and global influence.
The Role of Huawei:
Huawei’s role is central to the trade war, given its prominence in the 5G landscape and close ties to the Chinese government. This has made the company a focal point of security concerns for the US and its allies. Bans on Huawei equipment in 5G networks exemplify the contentious relationship between the company and US authorities (Forbes, 2019). Striking a balance between national security and fostering economic collaboration has proven challenging, and the implications of Huawei’s involvement have further complicated the trade war.
Strategies Employed by Nations:
Both China and the US have adopted distinct strategies to assert their positions in the 5G market, reflective of broader geopolitical and economic goals. China’s state-owned enterprises have leveraged significant government support to mobilise resources quickly and strategically invest in technological development. Conversely, the US has prioritised domestic innovation, technological collaboration with allies, and economic partnerships to maintain its global technological leadership. These differing strategies highlight the varying approaches to achieving and retaining dominance in the rapidly evolving 5G landscape (OEC, 2021).
Global Trade Policy Implications:
The 5G trade war raises fundamental questions about existing global trade policies and necessitates updated regulations to accommodate the digital age. The competition between the US and China in dominating the technologies of the future has resulted in import and export bans of 5G network technologies, semiconductors, social media platforms, and data-based security applications across multiple countries. Policymakers must navigate this complex landscape of technological competition, data security, and national interests to develop frameworks that foster fair trade and innovation. Striking the right balance between economic growth, technological advancement, and national security necessitates collaboration among nations and multilateral institutions to establish inclusive and equitable trade policies. The interconnectedness of the global economy further underscores the need for collective efforts in crafting viable solutions. Furthermore, according to the IMF’s analysis of the digital trade wall, policies have seen fluctuations in recent years, with loosening policies decreasing almost to nothing in 2016 while tightening policies increased to approximately 45%. In 2015, both loosening and tightening policies were in place at around 8%, highlighting the challenges posed by emerging technologies and the need for forward-looking trade policies (IMF, 2019).
Potential for Resolution and Diplomacy
Despite the ongoing conflict, potential avenues for resolution exist through diplomatic efforts and multilateral cooperation. Stakeholders must actively explore dialogue and collaboration to mitigate adverse effects on global trade and economic growth. A willingness to address security concerns, protect intellectual property, and foster trust among nations is essential for building a sustainable path forward that benefits the global digital economy. Striking a balance between national interests and international cooperation will be pivotal in shaping a resolution that can accommodate the interests of all parties involved.
The Future of 5G Trade Relations:
The implications of the 5G trade war on the future of 5G trade relations between the US and China are profound, with lasting repercussions for the global digital economy. The trajectory of the conflict can either lead to intensified competition, further protectionist measures, or diplomatic breakthroughs that foster more cooperative approaches to 5G technology and international trade. As the global 5G services market is projected to reach a staggering value of over US$3.8 trillion in 2035, with China generating over US$1.5 trillion in 5G-related spending, the trade war assumes critical significance in shaping the future of international trade, technology, and emerging economies (Statista, 2023). Sustaining technological innovation, respecting data privacy, and promoting fair competition will be crucial in shaping the future of 5G trade relations and ensuring a prosperous and secure digital future. The winners of the 5G trade war stand to gain substantial advantages in establishing technological standards and capturing markets, dictating global innovation trends and influencing the competitive landscape of industries (IMF, 2021). Thus, it becomes imperative for policymakers, businesses, and international institutions to actively explore dialogue and collaboration to mitigate adverse effects on global trade and economic growth. A willingness to address security concerns, protect intellectual property, and foster trust among nations is essential for building a sustainable path forward that benefits the global digital economy.
To summarise, the 5G trade war between the United States and China is a complex interplay of historical tensions, economic ambitions, and technological advancements. As the global 5G services market continues to surge, the trade war has significant implications for international trade, technology, and emerging economies. Geopolitical motivations and security concerns add to the stakes, impacting global data security and sovereignty. Resolving this conflict will determine the future trajectory of emerging technologies, making it crucial to foster fair trade, innovation, and cooperation among nations.
How the distribution of machinery created a trade conflict between the US and the EU
The Banana Wars were a famous trade conflict between the US and the EU that lasted for 20 years. In banana production and export, the war was caused by machinery distribution around Latin America, the Caribbean, African, and Pacific Ocean countries.
What were the Banana Trade Wars?
The Banana Trade Wars started in 1993, when the EU changed its rules on banana import, taxing all countries that were not their former colonies. Before 1993, import of bananas to many countries in the EU was tax-free, so the new policy was harmful to EU banana exporters, especially Chiquita, the main banana exporter in the EU. Chiquita is a US-based banana producer, with over 50% of its plantations in Latin America. In the 1980 and into the 1990s, Chiquita was controlling around 40% percent of the banana market in the EU, and being assured of its dominance, sold their subsidiary Fyffes – the only one with plantations in ACP countries – in 1986. Therefore, when the EU introduced its new policy, all the Chiquita bananas imported to the EU were taxed, which made it less profitable for the US and Chiquita.
In the graph above, you can see how after the introduction of the new banana trade laws, the profit of the US’s export of bananas started declining. Then, in 2000, it started rising again since the WTO ( World Trade Organisation) introduced regulations to suppress the EU’s policy.
But why did the EU introduce the new tax system at all? Were they aiming to earn more money this way?
As the EU stated, they tried to assist their former colonies’ economies by introducing their new policy. The banana producers in ACP nations are often small-scale and rely on traditional methods when growing bananas. They could not stand against extensive, mechanised plantations in Latin America run by US-based corporations, such as Chiquita. Thus, instead of providing plantations in ACP nations with resources (such as machinery) in order to improve their competitiveness, the EU decided to provide them with a market where ACP nations would have exclusive importing rights. However, it cannot be denied that the actual goal of the EU was to earn money through the new tax system. As the EU was one of Chiquita’s main markets, they had no opportunity to stop exporting bananas there because that would damage both Chiquita’s profits and market share instantly. Therefore, the EU benefited from taxes that Chiquita now had to pay for a long time. Consequently, the idea worked perfectly. Soon after introducing the policy, Chiquita started an aggressive campaign to change the EU’s new tariff system.
Was the EU allowed to implement the new tariff system?
According to the General Agreement on Tariffs and Trade (GATT), the system of tariffs that the EU introduced was unlawful. GATT is an agreement between many countries to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. However, only some of the countries in the EU have signed GATT 1993, but most of them. The US argued that the EU’s scheme in giving banana producers from former colonies in the Caribbean special access to European markets broke free trade rules.
Ending the conflict:
In contrast, while benefiting from the EU’s preferential access to their markets, the Caribbean banana farmers needed help to compete with the economies of scale and cost advantages of mechanized production in Latin America. Adopting modern machinery and technology played a crucial role in determining the competitiveness and sustainability of banana farming. Currently, the EU has weakened its rules for the import of bananas but did not remove them completely. In December 2009 the EU lowered its tariffs, which put an abrupt end to the banana trade war, which lasted for almost 20 years.
US-Mexico trade on corn
The updated trade accord, the US-Mexico-Canada Agreement (USMCA), replaced the North American Free Trade Agreement (NAFTA) on 1st July 2020, presenting expanded opportunities and new tensions. The USMCA aims to improve labour conditions and strengthen environmental standards; however, Mexico’s President issued a decree in 2020 that would ban the import of genetically modified (GM) corn from the US for human consumption by 2024, creating friction between the countries. A 10-year forecast period predicts that the ban would wipe out US$13 billion in the US corn industry and shed 30,000 jobs annually in the US and 60,000 jobs annually in Mexico (World Perspectives, 2022). Although current tensions surrounding the corn market policy are the subject of recent news and economic debate, the goal of this report is not to make predictions but rather to provide a background to inform discussions about the sensitivity of the two countries’ corn trade.
Corn is an important staple crop in both Mexico and the US. In Mexico, corn is used to make various dishes, including tortillas, tamales, and pozole. Consumption of corn in Mexico has been growing steadily, from 29.5 to 44.2 million metric tons from 2010 to 2021 (Statistica, 2023).
According to the US Department of Agriculture (USDA), under NAFTA, US exports to Mexico of corn and corn-based products increased annually by US$1.8 billion from 2007 to 2017 (USDA, 2018).
Corn for human food use, which is what a GM ban would affect, is estimated to be 21% of Mexico’s corn imports from the US (US Grains Council, 2022). Most yellow corn from the US has already been genetically modified and is used for livestock feed, but about 16% of yellow corn exported to Mexico is consumed by humans, rather than livestock (US Grains Council, 2022). As US exports of corn to Mexico have increased, the demand for corn in Mexico has also increased, with US corn exports to Mexico in 2022 having a worth of about US$5 billion.
Mexico is also a significant corn exporter and ranks among the largest corn exporters in the world. In 2021, Mexico exported US$4.62 billion worth of corn, mainly to the US. Between April and May 2023 alone, exports increased by over $500 million (Mexico Exports of Corn, 2023). Corn production in Mexico employs about 2 million people, contributing nearly US$10 billion annually to the Mexican economy. Beyond food and livestock feed, corn can be used for industrial products, cooking oil, and ethanol. As a result, there is a high demand for corn in Mexico for domestic consumption and export. Although Mexico needs corn from the US to meet the balance of its growing demand, an interesting point to monitor is that their production of corn is also increasing without the use of GM corn. The demand is growing, the supply is growing, and Mexican production of non-GM corn is also growing.
What are important factors that affect an agricultural sector with added GM imports?
Post-NAFTA, Mexican consumption of corn has increased due, in part and as expected, to the increase in US exports of corn to Mexico. However, Mexico’s production of corn without the use of GM technology has also increased, although the government has been experimenting with GM corn crops in northern Mexico for several years. Mexico’s ability to yield more corn without GM corn gives it a real leverage in the proposed GM corn ban. Like other seed technology debates, Mexico questions whether to permit experimentation and use GMOs. This issue is controversial in Mexico because of its historic role as the source of domesticated corn and its biodiversity. When GM corn is imported, there is a risk that the genes from the GM corn will cross-pollinate with native corn varieties. This could have several negative consequences, including the loss of biodiversity, the development of herbicide-resistant weeds, and the contamination of food products. While the planting of GM corn has been prohibited since 1998, one scientific assessment concluded that “unintended transgene flow into Mexican landraces has been confirmed” (Fox, 2010). Even though experts have found transgene contamination in Mexico’s corn crops, and the government’s National Biodiversity Commission strongly recommends continuing the moratorium on the human consumption of GM corn, Mexico’s Agriculture and Environment Ministries “…permitted experimental planting of GM corn on 22 farms in four northern states” (Fox, 2010).
To put the contribution of GM corn in context, according to the Food and Agriculture Organization of the United Nations (FAO), the average corn yield in Mexico without GM corn has increased by 25% since 1980 (FAO, 2023). In 1980, the average corn yield in Mexico was 1.63 metric tons per hectare (mt/ha). By 2020, the average corn yield had increased to 2.2 mt/ha. Mexican corn producers have demonstrated substantially increased productivity based on non-GMO improved seeds. Much of this improvement involves irrigated corn due, in part, because the large-scale producers benefit from government subsidies for pumping water (Fox, 2010).
While the use of GM corn has been banned in Mexico since 1998, the country has still been able to achieve significant increases in corn yields. This suggests that it is possible to increase corn yields without using GM corn, which gives real bite to the proposed corn ban of 2020 and can be used as leverage during negotiations against the US and Canada. However, the factors that have contributed to the increase in corn yields in Mexico are also relatively expensive, which increases the cost of producing corn, ultimately creating trade friction that is testing the very core of the USMCA.
The impact of US trade initiatives on various sectors of the machinery industry, including agriculture, automobile, and technology, has been significant and, in some cases, irreversible. The 5G trade war between the US and China represents a multifaceted interplay of historical tensions, economic ambitions, and technological advancements, with far-reaching implications for international trade, technology, and emerging economies. Geopolitical motivations and security concerns add complexity and impact global data security and sovereignty. As the global 5G services market continues to surge, the trade conflict holds profound consequences for the trajectory of emerging technologies such as artificial intelligence, autonomous vehicles, and the Internet of Things. It is imperative to find resolutions that foster fair trade, innovation, and long-term cooperation between the US, China, and other trading partners to ensure positive outcomes in this rapidly growing sector. One of the most notable outcomes of the trade war has been the shift towards electric vehicles (EVs) in both the US and China. This shift has led to increased investments in the EV sector, providing new opportunities while also creating challenges and conflicts. However, it has also played a role in mitigating some detrimental effects of the trade war. Looking ahead, two critical factors will shape the future of the EV industry: higher demand for EVs among US citizens and China’s access to essential raw materials. These factors will drive the race in the coming years, influencing the dynamics of international trade, technology development, and environmental sustainability. Moreover, the unavailability of machinery in African, Pacific, and Caribbean countries has hindered their banana producers’ ability to compete with those in Latin America, leading to long-standing trade conflicts. The European Union’s efforts to assist these countries by providing exclusive trade rights have attempted to address the imbalance but underscore the complexities of global trade and development disparities. In addition to the 5G trade war, tensions have further escalated between Mexico, the US, and Canada over Mexico’s proposed ban on GM corn for human consumption. This move is based on health concerns but the US disputes it, stating a lack of scientific basis and emphasizing potential economic losses and hindrances to food security and climate goals. This dispute reflects a challenging chess game between major corn suppliers, highlighting the need for effective dialogue and cooperation to find common ground. Despite the challenges and conflicts posed by trade initiatives, the US industrial sector has demonstrated resilience and success. However, it is essential to consider the broader implications and work towards fostering fair trade practices and cooperation to achieve sustainable growth and global prosperity. In conclusion, US trade initiatives have had profound and diverse impacts on the machinery industry, necessitating careful consideration and resolution of the 5G trade war with China and other trading partners. As the 5G and EV markets continue to grow, finding equitable solutions is crucial in shaping the future of emerging technologies and fostering global cooperation. Addressing trade imbalances and empowering developing economies will be vital in achieving fair and sustainable international trade in the years to come.
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