China has initiated World Trade Organization (WTO) dispute consultations with the United States in response to new tariffs imposed by the US on Chinese goods. This move comes amid renewed tensions following Donald Trump's return to the White House as the 47th President of the United States. The economic conflict between the two global powers, which began in early 2018 under Trump's previous administration, appears poised to intensify further.
On January 20, 2025, President Trump assumed office and promptly enacted a series of tariffs targeting Chinese imports, escalating the trade war that had seen a temporary cooling period. Notably, his administration introduced a 10% tariff on all Chinese imports, effective immediately. In retaliation, China imposed 15% tariffs on US liquefied natural gas (LNG) and coal imports, signaling its intent to counter the US measures.
"China has requested WTO dispute consultations with the United States in regard to new tariff measures applied by the United States on goods originating in China," – WTO
The history of this trade dispute dates back to 2018 when President Trump first imposed trade barriers on China, citing unfair commercial practices and intellectual property theft. In response, China retaliated with tariffs on multiple US goods, including automobiles and soybeans. The trade war disrupted global supply chains and had far-reaching economic implications.
In January 2020, both nations signed the US-China Phase One trade deal, aimed at stabilizing relations and requiring China to implement structural reforms and changes to its economic and trade policies. This agreement brought temporary relief and was seen as a step toward restoring trust between the two nations. However, it did not eliminate the underlying tensions.
President Joe Biden, who succeeded Trump in office, maintained many of the tariffs and even introduced additional levies during his tenure. With Trump's return to power and his pledge to impose 60% tariffs on China, the trade war is set to resume with vigour. The tit-for-tat tariff measures are expected to impact global economic dynamics significantly.
Economists predict that the renewed trade war will lead to reduced spending, particularly in investment, which could in turn affect consumer prices and contribute to inflation. As investors seek safe havens amid uncertainty, gold has become increasingly attractive due to the weakness of the US Dollar and falling US Treasury bond yields.
The US-China trade conflict poses significant challenges for both nations and the world economy. As trade policies continue to evolve, businesses and governments worldwide are closely monitoring developments. The potential for further escalation remains, given the history of contentious negotiations and tit-for-tat responses.