The constant China-US trade war has been at the forefront of contention since January 2018, when China's Chinese commodities were hit by tariffs from the US, announced by former President Donald Trump. The administration in the US explained that the tariffs were introduced in order to stop long-existing unequal trade and theft of intellectual properties. In reaction, the country, led by CCP General Secretary Xi Jinping, accused nationalist protectionism and levied counter-measures.
Key Issues Driving the Trade War
Unfair Trade Practices: The US has long been complaining about China's trade practices, such as intellectual property theft and forced technology transfer.
Trade Deficit: The US has a huge trade deficit with China, which Trump blames on China's unfair practices.
Protectionism: Trump believes in protectionist policies to encourage domestic manufacturing and minimize dependence on foreign products.
Escalation of the Trade War
The trade war has witnessed various escalations, including:
Tariff Hikes: The US placed tariffs on Chinese products, which China has retaliated with.
Phase-One Deal: There was a temporary deal in January 2020, but the trade war did not end.
Biden Presidency: The Biden administration maintained Trump's tariffs and added new export restrictions and investment prohibitions.
Effects of the Trade War
The trade war has had far-reaching consequences on both economies:
US Economy: Increased cost for manufacturers, higher prices for consumers, and financial challenges for farmers.
Chinese Economy: Deterioration in economic growth, lower industrial production, and higher unemployment.
Consequences and Future Prospects
The trade war has resulted in:
Global Economic Instability: Fluctuations in stock markets and economic losses to other nations.
Shift in Supply Chains: Businesses diversifying supply chains to evade tariffs.
Escalating Tensions: The trade war has been a major contributor to escalating tensions between the US and China.
As events continue to unfold, it's evident that the trade war will have long-term effects on international trade and economic stability. Recent events, including the US imposing a 145% tariff on Chinese products and China imposing a 125% tariff on American products, show that the war is far from over ¹.