Will trade protectionism reduce a persistent trade deficit and save manufacturing jobs? – An empirical case study of the US-China trade imbalance

Statement of the problem/issue: This dissertation strives to investigate if US President Donald Trump is right in imposing tariffs in order to reduce the US large and persistent trade deficit and thereby bring back manufacturing jobs. Beneficiaries of this research: This dissertation contributes to academic literature on the current topic of US protectionism and its outcomes. Methodology: The research methods used in this dissertation include the collection of secondary qualitative data for literature review and a mixed methods approach for the empirical case study. A mixed methods approach is also used to analyse interpretative and statistical data of the US-China trade imbalance (case study). Results/Findings: Government intervention through protectionist measures in any form, hurts producers, consumers and the economy. In the contrary, globalisation and trade create wealth and jobs, but also have their disadvantages, such as technological change. The overall US trade deficit cannot be reduced by tariffs as companies’ source from other low-wage economies. Yet, manufacturing jobs decline around the world and therefore will not come back but are replaced through service jobs. Future research and recommendations: Future research is recommended to consider the total US balance of payments rather than just the US trade deficit. In addition, further research should investigate the WTO’s role in the US-China trade war and how the WTO justifies Trump’s protectionism