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How We Got To Today's US-China Trade War Negotiations

Jan 08, 2019

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The United States and China resumed trade negotiations today as US officials traveled to Beijing ahead of the approaching March 2nd, 2019 deadline for tariff rate hikes set by Chinese President Xi Jinping and US President Donald Trump at the G20 Summit on December 1st, 2018 in Buenos Aires, Argentina. Amid the week’s critical trade negotiations, we provide a brief history of the US-China trade war.

  • During his Presidential campaign in 2016, President Donald Trump made pushing back against alleged Chinese trade abuses a foundation of his campaign. 
     
  • A few months after the election of President Donald Trump, the US and China appeared to be moving in the opposite direction of a trade war after securing trade deals that covered products like beef and poultry on May 11th, 2017.
     
  • Despite the May 11th, 2017 deal, tensions between Washington and Beijing flared through 2017, eventually resulting in the first round of tariffs being announced by the Trump administration on January 22nd, 2018. These tariffs applied to solar cells and certain washing machine models imported from China, a move that Beijing heavily criticized.  
     
  • President Donald Trump continued his hard stance on China a little over a month later when he authorized a 25% tariff on steel imported from China and a 10% tariff on aluminum imported from China on March 8th, 2018. President Donald Trump defended this action by saying that, “a strong steel and aluminum industry are vital to our national security.” China promptly retaliated against US duties with tariffs of their own on USD$3bn worth of US goods on April 1st, 2018. 
     

 

 

  • On May 3rd, 2018, a round table between delegates from the US and China failed to yield any resolution. Later, on June 15th, 2018, President Donald Trump announced a 25% tariff on US$50bn worth of Chinese exports, "that contain industrially significant technologies," while citing that the action comes, "in light of China's theft of intellectual property and technology and its other unfair trade practices." China reacted swiftly, announcing tariffs on USD$50bn of US exports. 
     
  • All was quiet through most of the Summer until the Trump Administration announced a 10% tariff on USD$200bn of Chinese goods on September 17th, 2018, with plans to increase the rate to 25% at the beginning of 2019. President Donald Trump also threatened additional tariffs on USD$267bn of Chinese goods if Beijing retaliated. China paid no mind to the Trump Administration’s threats and fired back the next day with tariffs on USD$60bn of US goods.  
     
  • Negotiations resumed on November 1st, 2018 when a call between President Trump and President Xi occurred that put, “a heavy emphasis on trade.” Finally, on December 1st, 2018 at the G-20 Summit in Buenos Aires, Argentina, President Trump and President Xi struck a temporary truce as the US agreed to delay its tariff rate hike on USD$200bn in Chinese goods by 90 days. Since the temporary truce, China has made several concessions, including the resumption of soybean purchases from US markets, a draft law to prevent forced technology transfers, a temporary cut on US-made car tariffs, and a promise to open up its markets for more foreign investment.  
     

As previously stated, trade talks resumed this week with US officials flying to Beijing for negotiations. Talks are set to extend into Wednesday. President Donald Trump expressed his optimism in a tweet last night, saying, “Talks with China are going very well!” US Commerce Secretary Wilbur Ross also told CNBC last night that, "there’s a very good chance that we’ll get a reasonable settlement.” Additionally, Chinese Vice Premier Liu He made a surprise appearance at the talks yesterday, a sign that Beijing is committed to a resolution to the trade war.   

 

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