| dc.description.abstract | Nowadays, as the two largest economies in the world, China and US economic relations have expanded substantially over the past decades. China is the US's second-largest merchandise trading partner, third-largest export market, and the most significant source of imports. (Li, He & Lin, 2018). During Trump’s presidency, he advocated tariffs to reduce the deficit of the US and promote domestic manufacturing. Our interest is to see whether the Trade War reduces the US’s trade deficit with China and whether it is indispensable. People might ask, hasn’t this topic been studied before? The answer is yes, and no. Our group cogitate and propose a fresh idea, which is the Treatment Effect analysis put forward by Hsiao, Ching, and Wan. This method is our most preferred option since it is considered as one of the ‘simplest’ and ‘accurate’ method in the treatment effects estimation literature. We run the related regression and predict the counterfactual trade deficit between the US and China as if the Trade War had not existed. Then we calculate the average difference between the actual value and the predicted ones. Finally, we conclude that instead of reduces, the Trade War increases 1.5 million of the US’s trade deficit with China. We hope that this freshly new method with the latest data will give out new cognitions of the Trade War for people interested in this area and inspire future research in this field. | en |
