The Consequence of the U.S.-China Trade War on the Global Economy and Multilateral Trade Strategy

Abstract

This paper examines the consequence of the US-China trade war on the world trade and the economic growth, corporate decision-making, and the possibility of multilateral mechanisms in alleviating its impact. The three major goals will be connected: to measure the macro and trade effects, to find out how multinational corporations (MNCs) have modified the way they do business, and to consider the extent to which multilateral and regional agreements helped stabilize trade flows. We employ methodology that combines secondary data analysis using IMF, World Bank and WTO data; event-style analysis of equity and commodity changes in response to tariffs; and sector specific case studies in electronics, automotive, and agriculture segments. The results show that there is a consistent and negative influence on global trade growth and the heightened volatility in the market that firm adopt a mix of cost absorption as well as selective price pass-through tactics. The non-tariff boundary expenses have risen in connection to the rising expenses of corporate diplomacy and compliance expenditures. At the policy level, WTO limitations have made the rapid settlement of disputes impossible, whereas regional arrangements (CPTPP and RCEP) have become practically important to harmonize rules and access markets. We find that the key to resilience is a diversified supply chain, inventory mass, and dual-market product placement and market placement alongside special-case government actions to mitigate policy uncertainty. Multilateral rules should be strengthened, the modernization of dispute settlement procedures should be enhanced and agreements to be become sector specific to combat fragmentation and ensure a more predictable environment of trading and investments