What protectionist measures were introduced by Washington and Beijing during the trade war, what exactly did the leaders of the two countries agree on and how does the world economy react to this.
How did the trade war begin?
The US President Donald Trump was unhappy with the state of trade relations between Washington and Beijing long before his inauguration. According to Trump, China uses dishonest methods in trade, closes its eyes to the theft of American technologies and supports much higher tariff levels than the United States. In addition, according to the White house, China due to the imbalance in bilateral trade causes serious damage to the US economy.
The attempts of the trump team to influence Beijing’s foreign trade policy were not successful, and on June 15, Washington went to extreme measures — the introduction of 25 percent trade duties on goods from China, whose supplies to the US are estimated at $50 billion a year.
Additional tariffs began to impose 1102 Chinese goods – from cars and electronics to semiconductors and plastic products. At the same time, part of these tariffs (for $34 billion) came into force in July, and the second part (for $16 billion) — in August.
How did Beijing respond?
Beijing’s reaction was symmetrical — the US goods worth $50 billion were subject to 25 percent duty. Moreover, China also divided the goods into two groups: tariffs for agricultural goods, vehicles and seafood at $34 billion and duties on energy, chemical industry and medical equipment at $16 billion. It came into force in July and August, respectively.
Washington reacted even more radically-from September 24, 10 percent duties on goods imported from China worth $200 billion were introduced.
China responded by imposing customs duties of 5% and 10% on goods from the US totaling $ 60 billion.
Washington warned that in the event of a response from Beijing, even more Chinese goods worth $267 billion would be threatened. However, the course of the trade war was influenced by the meeting of Donald Trump and XI Jinping on the sidelines of the G20 summit in Buenos Aires.
How did the leaders ‘ meeting in Buenos Aires end?
The parties agreed to suspend the process of escalating bilateral trade contradictions.
The two leaders discussed in detail the current situation in Sino-American relations. Now they have to solve such key issues that are considered to be stumbling blocks for the development of mutual contacts, as strengthening market access, protection of intellectual property, removal of restrictions on the export of new technologies, cybersecurity and the fight against network crimes.
At the same time, Washington warns that the existing tariffs of 10% for a wide range of Chinese products will be increased to 25% if the parties cannot reach a compromise in three months.
“President Trump agreed that he will not raise tariffs for products worth $200 billion from 10% to 25% from January 1. China agreed to purchase agricultural products, energy, industrial and other products of the United States for an undisclosed, but rather significant amount to reduce the trade imbalance,” the press service of the US administration said on December 1.
In addition, as the US leader said on Twitter, Beijing has agreed to reduce import duties on American cars.
This agreement between the US and China was responded by the stock markets — the US industrial index Dow Jones and S&P 500, which includes the 500
largest companies in the US market, showed strong growth, as well as the indices of the Russian and European stock markets.
What does trade between the US and China look like?
According to the General customs administration of China, the US trade deficit with China from January to October 2018 amounted to $258.7 billion, an increase compared to January — September by 14.3%.
In General, the turnover of the two countries in the first ten months of this year increased by 12%, amounting to $ 526.14 billion Chinese exports to the United States during this period showed an increase of 13.3% to $392.14 billion, imports of American products-by 8.5% to $133.99 billion.
2017, Chinese exports to the US amounted to $505.5 billion, and the US exports to China — almost $130 billion.