The United States’ trade war against China started in earnest in early 2018. Most recently, the dispute was rekindled by Donald Trump’s surprise announcement of a major tariff increase on base metals in his campaign for a rematch in the 2024 presidential election. The trade conflict, which began with Trump’s imposition of trade barriers against China, was initially framed by the former president as a response to China’s unfair commercial practices and allegations of intellectual property theft.
This economic friction grew hotter when China was forced to respond to the United States. As retaliation, they slapped tariffs on a long list of American products, including cars and soybeans. Both countries were quick to escalate with a tit-for-tat approach, exacerbating the trade war. After much delay, a temporary reprieve arrived in late January of 2020 when they signed the US-China Phase One trade agreement.
The Origins of the Trade War
The US-China trade war officially kicked off in early 2018. Donald Trump went to war and upended the established order to fight what he saw as the predatory trade practices of China. The administration’s fixation on tariffs is explained largely by fears over large trade deficits. Their justification addressed claims from the American business community that Chinese hacking of intellectual property was hurting American businesses.
In retaliation for these tariffs, China acted quickly. They countered with their own retaliatory measures — striking directly at sectors of the American economy with heavy political influence. These actions were a direct response to the tariffs. They sent a warning shot to the rest of the world that China is getting very serious about protecting its economic interests amid rising geopolitical tensions.
“China firmly opposes tariffs being used as a tool to coerce others.” – Chinese Foreign Ministry
From early 2018 through January 2020, Australia and China enacted multiple rounds of the trade war tariffs on one another. This move resulted in increased confusion and turbulence in international markets.
The Phase One Trade Deal
After much dramatic and complex negotiation, this led to the signing of the US-China Phase One trade deal in January 2020. The deal would bring much-needed predictability and confidence back to the economic partnership between the two countries. It would demand that China make sweeping structural reforms and changes to its overall economic and trade regime.
China also agreed to make $200 billion in additional purchases of American goods over the subsequent two years as part of the Phase One agreement. They further promised to increase safeguards for intellectual property and end manipulation of currency values. The momentary truce in the trade war offered a short reprieve. Most experts think that it merely scratches the surface, masking deeper regulatory chasms that still divide the two economies.
Even after the deal, anger was still boiling over as both countries slapped tariffs on each other’s products. This provided cover for an uneasy status quo that was quickly upendable by shifting political winds.
Current Developments and Future Implications
Since his political comeback, Donald Trump’s return to China tariffs have captured the headlines. He’s committed to slapping on an eye-popping 60% tariff in his run for the 2024 presidential nomination. This ruling has triggered fears of a new front in economic warfare between the two countries.
After all, President Joe Biden beat Trump and chose to keep most of those tariffs. He proposed additional tariffs on Chinese imports. His administration has continued the tough on China approach. They prioritize shielding American industries from competition and addressing what they see as bad or unfair trading practices.
As the trade war heats up yet again, China has doubled down on its anti-tariff stance, further bolstering its hardline position through the release of official pronouncements.
“China firmly opposes tariffs being used as a tool to coerce others.” – Chinese Foreign Ministry
Against this backdrop, concerns mounted over a possible Trump administration policy for substantially higher tariffs, jeopardizing the nascent US-China relationship. This development has larger ramifications for the pattern of global trade.