United States-China Trade War
China and the United States, two of the world’s largest national economies, have been in an economic conflict since 2018 when US President Donald Trump started applying tariffs and various other trade barriers on China. The US called China’s trade practices “unfair” and in order to force the latter to change such practices, Trump began the trade barriers. China’s “unfair” practices caused growth in the trade deficit, the stealing of intellectual property and forced the move of American technology to China.
Trump had been recommending tariffs for the reduction of the US trade deficit since the 1980s. He wanted to encourage domestic manufacturing because he believed that the United States was being “ripped off” by trading partners. Therefore, when he started campaigning for the role of President, this was a major point that he addressed. However, there are very few economists who believe that tariffs are a solution.
This ongoing trade war has not been good for the citizens of the US. Farmers and manufacturers have been struggling and consumers are suffering due to high prices. This has also affected other countries economically, even though some of them have managed to fill the gap with more amount of manufacturing. The stock market has become unstable. Steps have been taken by the governments of many countries, along with China and the United States to improve the damage caused by the decline in China-US relations.
Scenario Since the Trade War Began
On July 6, 2018, both China and the US imposed tariffs on goods worth $34 billion.
These tariffs were further increased on August 23, 2018.
In September, it got worse when the United States levied $200 billion at the rate of 10%. However, China displayed caution by applying $60 billion at the same rate.
This constantly increasing tariffs were paused in December 2018, when the two countries agreed to negotiate. They went through many discussions but were unable to reach an agreement. Then the US stated that the tariff would be raised further on $200 billion of Chinese goods at 25%.
Later, in May 2019, China said that it would raise the tariff on $46 billion of US exports and this led the stock markets to fall.
Trump played another card. He announced a national emergency because of threats against American technology, leading to a ban on Huawei, a China-based firm.
On May 15, an executive order was signed by the US President in order to stop the usage of foreign telecoms in US companies, saying that it was a security threat.
These tariffs were further increased on August 23, 2018.
In September, it got worse when the United States levied $200 billion at the rate of 10%. However, China displayed caution by applying $60 billion at the same rate.
This constantly increasing tariffs were paused in December 2018, when the two countries agreed to negotiate. They went through many discussions but were unable to reach an agreement. Then the US stated that the tariff would be raised further on $200 billion of Chinese goods at 25%.
Later, in May 2019, China said that it would raise the tariff on $46 billion of US exports and this led the stock markets to fall.
Trump played another card. He announced a national emergency because of threats against American technology, leading to a ban on Huawei, a China-based firm.
On May 15, an executive order was signed by the US President in order to stop the usage of foreign telecoms in US companies, saying that it was a security threat.
There have been threats from both the countries regarding the application of new tariffs and raises in the current duties, in the months to come. However, there seemed a possibility of a partial agreement in October, when the plans to increase tariffs on goods from China were delayed by the Trump government.
New tariffs are going to be imposed on Chinese goods by Washington. These goods range from footwear to smartphones. And if this comes into implementation, all the goods imported to the United States from China will have tariffs applicable to them. But the Chinese government isn’t far behind. They have also planned to apply tariffs on 3000 products from America by the end of the year.
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