2018 China–United States trade war

China and the United States are locked in an ongoing trade war as each country has introduced tariffs on goods traded with the other. US President Donald Trump had promised in his campaign to fix China's "longtime abuse of the broken international system and unfair practices". Starting in January 2018 the U.S imposed a tariff on solar panel imports, most of which are manufactured in China.[1] On July 6, the U.S. specifically targeted China by imposing 25% tariffs on $34 billion of imported Chinese goods[2] as part of Trump's tariffs policy, which then led China to respond with similarly sized tariffs on U.S. products. A tariff on an additional $16 billion of Chinese imports was added in mid August,[3] with China responding proportionately.[4] A further tariff on $200 billion of Chinese goods is to go into effect on September 24,[5] to which China plans to respond to with tariffs on $60 billion of US goods.[6] The Trump administration said the tariffs were necessary to protect intellectual property of U.S. businesses, and to help reduce the U.S. trade deficit with China.[7][8]

The U.S. administration is relying partly on Section 301 of the Trade Act of 1974 to prevent what it claims are unfair trade practices and theft of intellectual property. [9][10] This gives the president the authority to unilaterally impose fines or other penalties on a trading partner if it is deemed to be unfairly harming U.S. business interests.[11] Trump had already, in August 2017, opened a formal investigation into attacks on the intellectual property of the U.S. and its allies, the theft of which cost the U.S. alone an estimated $225–600 billion a year.[12][13]

United States tariffs

The United States International Trade Commission publishes all tariffs in the document "Harmonized Tariff Schedule of the United States"[14]

Generally, tariffs depends on exporting countries which are treated in one of three different groups:

  • 1. Privileged countries such as most developing countries and countries with trade agreements such as NAFTA. Tariffs here are zero for most products.
  • 2. "Rate of duty column 2" is enhanced tariffs for legal trade with Cuba and North Korea
  • 3. All other countries.

The tariffs are typically given as a percentage of value, but it can also be given per Kg weight or per unit.

Tariff announcements

President Trump placed a 30% tariff on foreign solar panels on January 23, 2018, to be reduced to 15% after four years.[15][16] China, the world leader in solar panel manufacture, decried the tariffs.[17] That same day, tariffs of 20% were placed on washing machines for the first 1.2 million units imported during the year. In 2016, China exported $425 million worth of washers to the United States.[18][19]

President Trump asked the United States Trade Representative (USTR) investigate applying tariffs on US$50-60 billion worth of Chinese goods, on March 22.[8][20][21] He relied on Section 301 of the Trade Act of 1974 for doing so, stating that the proposed tariffs were "a response to the unfair trade practices of China over the years", including theft of U.S. intellectual property.[7][8] Over 1,300 categories of Chinese imports were listed for tariffs, including aircraft parts, batteries, flat-panel televisions, medical devices, satellites, and various weapons.[22][23]

China responded on April 2 by imposing tariffs on 128 products it imports from America, including aluminum, airplanes, cars, pork, and soybeans (which have a 25% tariff), as well as fruit, nuts, and steel piping (15%).[9][10][24][25] On April 5, Trump responded saying that he was considering another round of tariffs on an additional $100 billion of Chinese imports as Beijing retaliates.[26] The next day the World Trade Organization received request from China for consultations on new U.S. tariffs.[27]

Vice Premier Liu He, top economic adviser to Communist Party general secretary Xi Jinping, visited Washington from May 15 to 19 for further trade talks[28][21]. It was reported on May 20 that Chinese officials had agreed to "substantially reduce" America's trade deficit with China[28] by committing to "significantly increase" its purchases of American goods. As a result, Treasury Secretary Steven Mnuchin announced that "We are putting the trade war on hold".[29] White House National Trade Council Director Peter Navarro, however, said that there was no "trade war," but that it was a "trade dispute, fair and simple. We lost the trade war long ago."[30]

The White House announced on May 29 that it would impose a 25% tariff on $50 billion of Chinese goods with "industrially significant technology;" the full list of products affected to be announced by June 15.[31] It also planned to impose investment restrictions and enhanced export controls on certain Chinese individuals and organizations to prevent them from acquiring U.S. technology.[32] China said it would discontinue trade talks with Washington if it imposed trade sanctions."[33]

On June 15, Trump declared in a short White House statement that the United States would impose a 25% tariff on $50 billion of Chinese exports. $34 billion would start July 6, with a further $16 billion to begin at a later date.[34][35][36] China's Commerce Ministry accused the United States of launching a trade war and said China would respond in kind with similar tariffs for US imports, starting on July 6.[37] Three days later, the White House declared that the United States would impose additional 10% tariffs on another $200 billion worth of Chinese imports if China retaliated against these U.S. tariffs.[21] The list of products included in this round of tariffs was released on July 11 and was set to be implemented within 60 days.[38]

China retaliated almost immediately, threatening its own tariffs on $50 billion of U.S. goods, and claimed the United States had "launched a trade war." Import and export markets in a number of nations feared the tariffs would disrupt supply chains which could "ripple around the globe."[39]

American tariffs on $34 billion of Chinese goods came into effect on July 6, 2018. China imposed retaliatory tariffs on US goods of a similar value. The tariffs accounted for 0.1% of the global gross domestic product.[40][41] On July 10, U.S. released an initial list of the additional $200 billion of Chinese goods that would be subject to a 10% tariff.[42] China vowed to retaliate with additional tariffs on American goods worth $60 billion annually two days later.[43]

On August 8 the Office of the United States Trade Representative published it's finalized list of 279 Chinese goods, worth $16 Billion, to be subject to a 25% tariff from August 23.[3] [44][21] China responded with its own tariffs of equal value when the American tariffs were implemented on August 23.[4]

On August 14 China filed a complaint with the World Trade Organisation (WTO), claiming that US tariffs on foreign solar panels clash with WTO ruling and have destabilised the international market for solar PV products. China claimed the resulting impact directly harmed China’s legitimate trade interests.

US Treasury Under Secretary David Malpass and Chinese Commerce Vice Minister Wang Shouwen met on August 22 in Washington DC in a bid to open up dialogue in response to the intensifying trade war, yet discussions ended with no resolution. By August 23, US implemented a further 25% of tariffs on $16 billion of goods as promised, which was reciprocated by China. China filed a new WTO complaint against the US as a result of this tariff escalation.[45]

On September 17 the US announced its 10% tariff on $200 billion worth of Chinese goods would begin on September 24, increasing to 25% by the end of the year. They also threatened tariffs on an additional $267 billion worth of imports if China retaliates,[5] which China promptly did on September 18 with 10% tariffs on $60 billion of US imports[46].[6] So far, China has either imposed or proposed tariffs on $110 billion of U.S. goods, representing most of its imports of American products.[5]

Rationales given for the tariffs

During a campaign speech in June 2016, President Trump vowed to cancel international trade deals and go on an offensive against Chinese economic practices, describing his promise as a reaction against "a leadership class that worships globalism."[47] In April 2018, Trump denied that the dispute was actually a trade war, saying "that war was lost many years ago by the foolish, or incompetent, people who represented the U.S." He added: "Now we have a trade deficit of $500 billion a year, with intellectual property (IP) theft of another $300 billion. We cannot let this continue."[48][49]

In January 2018, Trump said he wanted the United States to have a good relationship with China, but insisted that it treat the United States fairly.[50] In his State of the Union Address a few weeks later, he stated:

America has also finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our Nation’s wealth. The era of economic surrender is over. From now on, we expect trading relationships to be fair and to be reciprocal. We will work to fix bad trade deals and negotiate new ones. And we will protect American workers and American intellectual property, through strong enforcement of our trade rules.[51][52]

A number of government and industry experts have offered their own rationales about why the tariffs are, or are not, appropriate:

John Ferriola, the CEO and President of Nucor, America's largest steel producer and its largest metal recycler, claimed that tariffs were not unfair, but were "simply leveling the playing field." He explained to TV host Jim Cramer, that not only the "European Union, but most countries in the world, have a 25 percent or greater VAT, value-added tax, on products going into their countries from the United States. So if we impose a 25 percent tariff, all we are doing is treating them exactly as they treat us."[53] VAT (value added tax) is a sales tax which is charged regardless of origin.

Analyst Zachary Karabell claimed that the administration's desire to reject long-standing trade consensus in favor of a more nationalist approach will not succeed: "A set of very public and punitive tariffs will not reverse what has already been transferred and will not do much to address the challenge of China today, which is no longer a manufacturing neophyte."[54]

Peter Navarro, White House Office of Trade and Manufacturing Policy Director, gave a number of the administration's explanations for the tariffs, among them are that they are "purely defensive measures."[55] He claims that the cumulative trillions of dollars Americans transfer overseas as a result of yearly deficits, are then used by those countries to buy America's assets, as opposed to investing that money in the U.S. "If we do as we're doing . . . those trillions of dollars are in the hands of foreigners that they can then use to buy up America."[56]

Richard Trumka, president of the AFL-CIO, which represents over 12 million active and retired workers, said that China has stolen U.S. intellectual property and "bullied its way into acquiring critical U.S. advances in technology." He stated in March 2018 that "Tariffs aren’t an end goal, but an important tool to end trade practices that kill American jobs and drive down American pay."[57]

A number of experts have focused on what they consider China's "theft" of intellectual property, and that it forces U.S. firms that want to do business there into transferring its confidential technology and trade secrets before having access to their market. Although that kind of transfer is disallowed by the WTO, the negotiations are usually conducted in secret to avoid penalties.[58] In 2018 the American Chamber of Commerce in China learned that over half its members thought that "leakage of intellectual property" was an important concern when doing business there.[58] Similarly, the EU Chamber of Commerce has also complained that European companies wanting access to the Chinese market often had to agree to transfer vital technology.[59]

U.S. Trade Representative Robert Lighthizer, after a seven-month investigation into China and intellectual property, explained that the value of the tariffs imposed was based on U.S. estimates of the actual economic damage caused by China’s alleged IP theft and the forced transfer of technology to Chinese companies.[60] In response, Chinese Premier Li Keqiang promised in March 2018 to henceforth protect the rights of foreigners investing in its economy,[60] followed in April by an announcement by China that it would eliminate laws that required global automakers and shipbuilders to work through state-owned partners.[61]

Chinese paramount leader Xi Jinping reiterated those pledges, affirming a desire to increase imports, lower foreign-ownership limits on manufacturing and expand protection to intellectual property, all central issues in Trump’s complaints about their trade imbalance.[62] Trump thanked Xi for his "kind words on tariffs and automobile barriers" and "his enlightenment" on intellectual property and technology transfers. "We will make great progress together!" the president added.[62]

National security experts say Chinese hackers have consistently stolen trade secrets from U.S. defense contractors. This prompted former National Security Agency head Keith Alexander to describe Beijing’s practices as "the greatest transfer of wealth in history." He states:[12]

Chinese spies have gone after private defense contractors and subcontractors, national laboratories, public research universities, think tanks and the American government itself. Chinese agents have gone after the United States’ most significant weapons, such as the F-35 Lightning, the Aegis Combat System and the Patriot missile system; illegally exported unmanned underwater vehicles and thermal-imaging cameras; and stolen documents related to the B-52 bomber, the Delta IV rocket, the F-15 fighter and even the Space Shuttle. President Trump’s action on Monday acknowledges the broad scope of the challenge.[12]

In August 2018, U.S. Secretary of Commerce Wilbur Ross said that "at the end of the day, we have many more bullets than they do. They know it."[63]

Reactions

U.S. commerce secretary Wilbur Ross said that the planned Chinese tariffs only reflected 0.3% of U.S. gross domestic product, and press secretary Sarah Huckabee Sanders stated that the moves would have "short-term pain" but bring "long-term success".[64][49][65][48] Nucor's John Ferriola said that even with the tariffs on steel, the cost of an average $36,000 car would go up about $160, less than 1/2 of 1%, while a can of beer would only cost an extra penny more.[53]

After president Trump imposed tariffs against a number of allies, including Mexico, Canada and countries in the EU, G7 finance leaders strongly condemned the tariffs and planned retaliating with tariffs of their own.[66]

By early July 2018, there were negative and positive results already showing up in the economy as a result of the tariffs, with a number of industries showing employment growth while others were planning on layoffs.[67]

Markets

In anticipation of tariffs going into effect, stock prices in the U.S. and China sustained significant losses for four to six weeks prior. Trade war fears had led to a bear market in China where by late June the total value of the country's stock markets was 20% lower than it had been at the beginning of 2018 when it reached record levels.[68] The Japanese Nikkei also suffered a "three-week pullback".[69] On July 6, when the tariffs went into effect, markets rebounded and rallied due to positive jobs report in the U.S.[70] Asian markets similarly rebounded, ending the day in a high note. According to the Associated Press, the positive reaction to the tariffs in U.S. and Asian markets was because of an end to uncertainty[70] and, according to Investor's Business Daily, because "markets had largely priced in the impact".[69]

Industry associations

Following announcements of escalation of tariffs by the U.S. and China, representatives of several major U.S. industries expressed their fears of the effects on their businesses. Organizations critical of the intensifying trade war included National Pork Producers Council, American Soybean Association, and Retail Industry Leaders Association. Several mayors representing towns with a heavy reliance on the manufacturing sector also expressed their concerns.[71] In September, a business coalition announced a lobbying campaign called "Tariffs Hurt the Heartland" to protest the proposed tariffs.[72]

Proponents of the increased U.S. tariffs included Scott Paul, president of the Alliance for American Manufacturing.[71]

See also

References

  1. ↑ "President Trump Slaps Tariffs on Solar Panels in Major Blow to Renewable Energy". Time. Retrieved 19 September 2018.
  2. ↑ "Update: U.S. Names Products Targeted by $200 Billion in New Tariffs - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  3. 1 2 Swanson, Ian (August 7, 2018). "Trump to hit China with $16B in tariffs on Aug. 23". The Hill. Retrieved August 8, 2018.
  4. 1 2 Martina, Michael. "U.S., China impose further tariffs, escalating trade war". Reuters. Retrieved August 23, 2018.
  5. 1 2 3 Chen, Yawen; Lawder, David (September 18, 2018). "China says Trump forces its hand, will retaliate against new U.S. tariffs". Reuters. Retrieved September 23, 2018.
  6. 1 2 "China hits back: It will impose tariffs on $60 billion worth of US goods effective Sept. 24". CNBC. September 18, 2018.
  7. 1 2 "Statement from President Donald J. Trump on Additional Proposed Section 301 Remedies". White House. Retrieved April 7, 2018.
  8. 1 2 3 Diamond, Jeremy. "Trump hits China with tariffs, heightening concerns of global trade war". CNN. Retrieved March 22, 2018.
  9. 1 2 "These Are the 128 U.S. Products China Is Enacting Tariffs On". Fortune. Retrieved May 28, 2018.
  10. 1 2 Biesheuvel, Thomas (April 4, 2018). "As China Fires Back in Trade War, Here Are the Winners and Losers". Bloomberg. Retrieved April 4, 2018.
  11. ↑ "Intellectual property theft, not metal, is the real trade war in US sights and it's a much bigger worry", ABC, March 9, 2018
  12. 1 2 3 Blair, Dennis; Alexander, Keith. "China’s Intellectual Property Theft Must Stop", The New York Times, August 15, 2017
  13. ↑ Pham, Sherisse (March 23, 2018). "How much has the US lost from China's intellectual property theft?". CNNMoney.
  14. ↑ USITC, U.S. International Trade Commission -. "Harmonized Tariff Schedule PDFs". hts.usitc.gov. Retrieved August 8, 2018.
  15. ↑ "President Trump Slaps Tariffs on Solar Panels in Major Blow to Renewable Energy". Time Magazine. January 23, 2018. Retrieved January 23, 2018.
  16. ↑ "Trump's solar tariffs could put the brakes on rapid job growth in renewable energy". CNBC. January 23, 2018. Retrieved January 23, 2018.
  17. ↑ "China blasts Trump's new trade tariffs". CNNMoney. January 23, 2018. Retrieved January 23, 2018.
  18. ↑ "Large Residential Washers: Investigation No. TA-201-076" (PDF). usitc.gov. Retrieved March 2, 2018.
  19. ↑ "President Trump Approves Relief for U.S. Washing Machine and Solar Cell Manufacturers" (Press release). Office of the United States Trade Representative. January 2018.
  20. ↑ "Trump's Rumored Tariff Plan Sparks Fears of Sino-U.S. Trade War - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  21. 1 2 3 4 "China Strikes Back With Second Tranche of Tariffs - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  22. ↑ Office of the United States Trade Representative, April 2018, Under Section 301 Action, USTR Releases Proposed Tariff List on Chinese Products
  23. ↑ Swanson, Ana (April 3, 2018). "White House Unveils Tariffs on 1,300 Chinese Products". The New York Times. ISSN 0362-4331. Retrieved April 4, 2018.
  24. ↑ Rauhala, Emily (April 4, 2018). "China fires back at Trump with the threat of tariffs on 106 U.S. products, including soybeans". The Washington Post. ISSN 0190-8286. Retrieved April 4, 2018.
  25. ↑ Chang, Eunyoo (July 6, 2018). "Global Soybean Trade Suffers from the US-China Trade War". Tridge. Retrieved July 6, 2018.
  26. ↑ "Beijing to 'Fight Back at All Costs' Against New Trump Tariffs - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  27. ↑ "WTO Says It Has Received China Complaint Over Proposed U.S. Tariffs". k.caixinglobal.com. Retrieved August 9, 2018.
  28. 1 2 "U.S., China Strike Trade Deal, Ending Threat of Protective Tariffs - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  29. ↑ "US, China putting trade war on hold after progress in talks". AP News. Retrieved May 21, 2018.
  30. ↑ Elis, Niv (May 30, 2018). "Navarro contradicts Mnuchin's assertion that trade war with China is on hold". The Hill.
  31. ↑ "Update: Beijing Lashes Out at U.S. for Backtracking on Tariff Cancellation - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  32. ↑ "White House Announces Tariffs, Trade Restrictions To Be Placed On China". NPR. Retrieved May 30, 2018.
  33. ↑ "Stark China warning to US over trade". BBC News. June 3, 2018. Retrieved June 3, 2018.
  34. ↑ "Trump announces tariffs on $50 billion worth of Chinese goods". CNN. June 15, 2018. Retrieved June 15, 2018.
  35. ↑ "Trump imposes import taxes on Chinese goods, and warns of 'additional tariffs'". The Washington Post. June 15, 2018. Retrieved June 15, 2018.
  36. ↑ Wei, Han; Qi, Zhang (June 15, 2018). "Trade War Back on Stage With New U.S. Tariffs - Caixin Global". Caixin. Retrieved August 9, 2018.
  37. ↑ "China: 'The US has launched a trade war'". CNN. June 15, 2018. Retrieved June 16, 2018.
  38. ↑ "US releases $200bn list of Chinese products for possible new tariffs". RT International. Retrieved July 11, 2018.
  39. ↑ "Trump threatens China with new tariffs on another $200 billion of goods". CNN. June 19, 2018. Retrieved June 19, 2018.
  40. ↑ "China hits back after US imposes tariffs worth $34 bn". BBC. July 6, 2018. Retrieved July 6, 2018.
  41. ↑ "Update: Sino-U.S. Trade War Begins - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  42. ↑ "Update: U.S. Names Products Targeted by $200 Billion in New Tariffs - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  43. ↑ "China Vows Retaliatory Tariffs on $60 Billion in U.S. Goods - Caixin Global". www.caixinglobal.com. Retrieved August 9, 2018.
  44. ↑ Lawder, David. "U.S. finalizes next China tariff list targeting $16 billion in imports". Reuters. Retrieved August 8, 2018.
  45. ↑ "The US-China Trade War: A Timeline". China Briefing. August 31, 2018. Retrieved August 31, 2018.
  46. ↑ "China's Tariffs on the US – List 3". Asiapedia. Dezan Shira and Associates.
  47. ↑ "Donald Trump Vows to Rip Up Trade Deals and Confront China", New York Times, June 28, 2016
  48. 1 2 Smith, David (April 4, 2018). "Trump plays down US-China trade war concerns: 'When you're $500bn down you can't lose'". The Guardian. Retrieved May 28, 2018.
  49. 1 2 Jr., Berkeley Lovelace (April 4, 2018). "Commerce Secretary Wilbur Ross: China tariffs amount to only 0.3% of US GDP". CNBC. Retrieved May 28, 2018.
  50. ↑ "Trump considers big 'fine' over China intellectual property theft". CNBC. January 17, 2018.
  51. ↑ video: "President Donald Trump’s State Of The Union Address 2018", NBC News, Jan. 30, 2018
  52. ↑ "President Donald J. Trump's State of the Union Address". White House. January 30, 2018.
  53. 1 2 "Nucor CEO on Trump tariffs: 'We're treating other countries how they treat us'", CNBC, March 5, 2018
  54. ↑ "Why Trump's Misguided China Tariffs Won't Help the U.S.", Wired, March 31, 2018
  55. ↑ "Trump tariffs on Chinese goods fulfill campaign promise: Peter Navarro, Fox Business, June 19, 2018
  56. ↑ "Peter Navarro talks trade and tariffs", CNBC, March 15, 2018
  57. ↑ "Strategic Tariffs Against China Are Critical Part of Trade Reform to Create More Jobs and Better Pay", AFL-CIO press release, March 22, 2018
  58. 1 2 "Why is the U.S. accusing China of stealing intellectual property?", Marketwatch, April 6, 2018
  59. ↑ "EU firms in China: 'Frustration is growing'", DW, July 3, 2017
  60. 1 2 "What’s Intellectual Property and Does China Steal It?", Washington Post, March 22, 2018
  61. ↑ "China Loosens Foreign Auto Rules, in Potential Peace Offering to Trump", New York Times, April 17, 2018
  62. 1 2 "Facing trade war with U.S., China’s Xi renews vow to open markets, import more", Washington Post, April 10, 2018
  63. ↑ Michael Martina, David Lawder (August 23, 2018). "U.S.-China trade war escalates as new tariffs kick in". Reuters. Retrieved August 23, 2018.
  64. ↑ "White House sees 'short-term pain' as Trump stokes China trade war". Politico. Retrieved May 28, 2018.
  65. ↑ Sheetz, Michael (April 4, 2018). "Trump: 'We are not in a trade war with China, that war was lost many years ago'". CNBC. Retrieved May 28, 2018.
  66. ↑ "Peter Navarro on new tariffs, NAFTA talks and China trade", Fox News, June 3, 2018
  67. ↑ "Trade War With China Heats Up, But Tariff Effects Are Already Rippling Across U.S.", NPR, July 9, 2018
  68. ↑ Retuers Staff (June 27, 2018). "Bears prowl world markets, maul Chinese stocks as trade tensions simmer". Retuers. Retrieved July 7, 2018.
  69. 1 2 Elliott, Alan R. (July 6, 2018). "Stocks Open Mixed On Payrolls Data, Trade War; This Big Biotech Spikes". Investor's Business Daily. Retrieved July 7, 2018.
  70. 1 2 "Stocks rally despite U.S.-China trade war". Los Angeles Times. Associated Press. July 6, 2018. Retrieved July 7, 2018.
  71. 1 2 "Reaction to the Trade Battle Between China and the US". The New York Times. July 6, 2018. Retrieved July 7, 2018.
  72. ↑ Dhue, Stephanie (September 12, 2018). "Wide range of businesses step up campaign against Trump's tariffs". CNBC. Retrieved September 14, 2018.
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.