US – China Trade War

US – China Trade War

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China and the US have embarked upon a full-scale trade war as both sides lob threats of new trade tariffs. On Tuesday July 10, President Donald Trump’s administration released a list of proposed tariffs on $200bn worth of goods, ranging from auto parts to food ingredients to construction material. On August 1, he asked his trade tsar to consider increasing the tariff on these goods to 25 per cent. China has responded by wooing European businesses and politicians with improved market access and investment terms.

That follows the imposition by the White House on July 6 of a 25 per cent tariff on $34bn of imports from China, especially manufacturing components, which Beijing promptly matched with tariffs of its own, including on U.S. soybeans. China and the US have both already imposed tariffs on steel, aluminium and some agricultural goods. Below is a timeline of the tariffs imposed by the US and China already, and the measures they have threatened for the future. This timeline is from March to August in 2018.

  • Wednesday, August 1, 2018

Senior US trade administration officials indicated that President Donald Trump had asked his trade tsar, Robert Lighthizer, to look into raising proposed tariffs on $200bn in Chinese goods from 10 per cent to 25 per cent. China reacted by saying it would “introduce counter-measures to defend the country’s dignity”, should the US go ahead with the proposed increase. The spat sent world-wide markets lower over fears of an escalation in the trade dispute, and the Chinese currency fell to its lowest level since May 2017.

  • Tuesday, July 10, 2018

President Donald Trump released a new list of $200bn in goods that could receive a 10 per cent tariff. The new list directly takes aim at Fortune 500 companies outsourcing components or material to China, in sectors ranging from auto parts, to processed food and ingredients, to construction materials. The latest round of tariffs is subject to a period of consultation that runs until the end of August, meaning the trade friction will continue well into the autumn campaign season for the U.S. midterm elections.

  • Monday, June 18, 2018

President Donald Trump has ordered US trade officials to identify a further $200bn in goods from China to be subject to a 10 per cent tariff, if Beijing follows through on the retaliation measures it announced on June 16. Mr Trump added that he was also prepared to impose tariffs on an additional $200bn beyond that. US officials said the process of assembling the list would follow the same public consultation process used for a previous list, meaning it could take at least three months to finalise.

  • Saturday, June 16, 2018

Beijing announced it would retaliate against new US tariffs, with the commerce ministry saying that it would “immediately introduce countermeasures of the same scale and strength”. China’s finance ministry said it would begin imposing its own 25 per cent tariffs on 545 categories of US products worth $34bn including soybeans, beef, whiskey and off-road vehicles on July 6. It also threatened to add a further $16bn later, targeting US energy exports such as coal and crude oil.

  • Friday, June 15, 2018

President Donald Trump decides to impose tariffs on about $50bn worth of imports from China. The White House claimed the new restrictions were justified by Beijing’s longstanding theft of US companies’ intellectual property. The first of the new US tariffs on a $34bn tranche of 818 product lines, which mainly affect agricultural products, will take effect from July 6. Duties on a separate list of 284 products worth $16bn will be subject to a public consultation period and take effect later.

  • Thursday, April 5, 2018

President Donald Trump issues a statement saying that “in light of China’s unfair retaliation,” he has instructed the US trade representative to “consider whether $100bn of additional tariffs would be appropriate”, and to identify which products should be affected.

  • Wednesday, April 4, 2018

China sets out its list of targets for possible retaliation, including key exports from the US such as soybeans and cars.

  • Tuesday, April 3, 2018

The US administration announces a new list of 1,333 Chinese product categories that could face 25 per cent tariffs.

  • Monday, April 2, 2018

China retaliates with new tariffs on 128 categories of products, including pork, fruit and nuts, steel pipe for the oil industry, and ethanol. This list is not ranked by the dollar value of trades.

  • Friday, March 23, 2018

The US imposes new tariffs on steel and aluminium. Most of the largest steel exporters to the US are exempted at least until May 1, but China is among the countries that are hit. This list is not ranked by the dollar value of trades.

This is a brief graph about that what happened at the above-mentioned timeline. And this was retrieved by the BBC.

But during this first phase of the trade war period there were some up and downs. Some times both parties decided to take off the dispute between them. According to the article “US, China agree to abandon trade war” (May 21st 2018 – Daily news) Washington and Beijing have agreed to abandon any trade war and back off from imposing tariffs on each other. He announcement came after high-level talks in the US capital and followed months of tensions over what President Donald Trump has blasted as an unfair commercial relationship between the two economic giants. Vice-Premier Liu He, who led Chinese negotiators in Washington said: “The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other,” state-run news agency Xinhua reported on 18th. But those discussions go vain as US levies on $50 billion of Chinese imports in the very next week. And since then this dispute only gets complicated and complicated.

This Sino USA trade war went new ways as “China-US surplus hits record, adding fuel to trade war” (13th September 2018 – Daily News) BEIJING (AFP) – China’s trade surplus with the United States ballooned to a record US$ 34.1 billion in September, despite a raft of US tariffs, official data showed yesterday, adding fuel to the fire of a worsening trade war.

In September 2018 China and US imposes more and new tariffs for the goods. “United States and China impose new tit-for-tat tariffs” (September 25th 2018 – Daily News) article said that China issued a 36,000-word white paper accusing the US of “economic hegemony” that threatens the global multilateral trading system as well as Sino-US ties. Economists have warned that a protracted dispute will eventually stunt growth not just in the US and China but across the broader global economy. Worries about the confrontation have already rattled financial markets. Chinese products hit with new duties include a range of consumer goods from vacuum cleaners and seafood to internet-connected devices. Previous tariffs targeted industrial goods and components. US goods targeted by Beijing include liquefied natural gas and certain types of aircraft. The trade tensions have cast a pall over broader relations between Beijing and Washington, with the two sides butting heads on a growing number of issues. Even though this effects a whole world neither Trump nor the Xi Jinping looked like come for a solution.

The ongoing trade spat between the U.S. and China is the biggest threat to the market right now, not the Federal Reserve’s monetary policy, strategist Art Hogan said 23rd September. “I’m much more concerned about China and what that means in the long run than I am about what Fed Chairman Jay Powell’s doing with monetary policy,” Hogan, the chief market strategist at B. Riley FBR, told CNBC. “The market is trying to get their minds wrapped around what kind of guidance we’re going to get from companies like 3M, where they can’t figure out what their input costs are going to be for 2019,” he said. “Does this long, drawn out, mutually destructive trade war continue through all of 2019? Or is there a way to get to the negotiating table?” Hogan’s comments come after a steep sell-off on Wall Street. The Dow Jones Industrial Average dropped 608.01 points on Wednesday, while the S&P 500 and Nasdaq Composite plunged 3.1 percent and 4.4 percent, respectively. “The US-China trade war worrying investors” (October 25th 2018 – Daily News) article actually pointed out well how this trade war dispute is affecting to the investing sector in the world and how much worry they are right now about this conflict. And because of China and the U.S. have slapped tariffs on billions of dollars’ worth of each other’s goods, these protectionist stances on trade have kept investors on edge for most of the year as they fear tighter trade conditions could slow down the global economy.

 

~Charuka Madusanka

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