How Smart Power Influences Economic Power – A Brief Overview on the Sino-American Tariff War from 2018 to 2021

Maria Mirona Murea
Lenuţa Ella Nica
Aimée Andrada Theodora Georgescu
JEL codes: 
F10 - General, F19 - Other, F50 - General, F53 - International Agreements and Observance; International Organizations, F63 - Economic Development.
Today’s Transnational Companies (TNCs) have gained an increased role in the diplomatic realm, due to recent globalization developments. International relations focus around trade liberalization and creation of deep interdependencies limiting the use of hard power as a coercive method. The 1990’s, Joseph’s Nye concept of soft power has gained importance in the political and economic diplomatic negotiations, influencing also the TNCs internationalization decisions, leading to a deeper market globalization. The speed of globalization development and dynamics of international relations brought to the forefront a new type of power: smart power. Today’s world is dominated by two major economic actors: USA and China, and their sensitive bilateral relations has brought into light a modern Thucydides’ Trap. To avoid a potential war, each country used different smart power strategies: China had a long run-oriented strategy with smaller gains, while the USA aimed for a big impact in a short period of time, obtaining opposite results influencing the global business environment, and the TNCs performances worldwide. The research objective is to analyze the impact of the two opposite smart power strategies on the main TNCs by country, comparing their revenues, profits and changes in profit, of the first top 10 rankings presented in Forbes 500 during a time period starting 2018 (since the “tariff war” began) to 2021 (present). The main results emphasized that economic power is divided among TNCs from the USA and China, despite the existence of tense diplomatic and economic relations.
Full text PDF file: