Economic Statecraft and Strategic Decoupling: Evaluating U.S. and Chinese Use of Tariffs as Foreign Policy Tools

Abstract

The present paper would explore tariffs employed by the United States and China to pursue their economic statecrafting as part of strategic decoupling. Based on realism, economic interdependence, and liberal institutionalism theories, the study examines how the two states have used trade policy as a weapon in achieving geopolitical aims especially in the Trump administration to the Biden period. The study will be devoted to Section 231 and 301 tariffs that are applied by the U.S., and counter measures of China that involve sensitive areas including agriculture, rare earth elements and high technology. The choice of case studies and empirical studies outlines how tariffs are used as an instrument of not only economic but also coercive policies, direction of resources back to the home country, and technological onshoring. The results indicate that tariffs have had a mixed level of success in meeting strategic objectives, but have contributed in great ways to breaking global supply chains, eroding the multilateral norms in the trade, and a drift toward bilateral and regional economic affiliations. It also examines the effects of having a strategic decoupling on the current global political economy since it enhances geoeconomic fragmentation and it undermines the usefulness of having the world trade organization. Finally, the paper demands that economic competition must be carried out in a fair and mutually supportive manner that will strengthen the stability of the global environment whilst protecting national interests.