Simplifying the US-China Trade War

A breakdown of all of the events that have increased tensions with China

Since early 2018, tensions between the U.S. and China have been deteriorating as President Trump calls for constraints on Chinese trade. The trade-war between the U.S. and China is still ongoing, so below is a breakdown of what has happened.

On January 22, 2018, the Trump administration placed tariffs on appliances such as washing machines and solar panels. Three months later, Trump placed tariffs on aluminum imports from the rest of the world.

On April 2, 2019, the dispute officially became a trade war, with China responding by imposing a 25 percent and 15 percent tariff on various American goods, including nuts, soybeans and aluminum.

President Trump has repeatedly called attention to the growing trade deficit between the U.S. and China. In May of 2018, senior Chinese trade officials came to Washington to negotiate a new trade deal. Chinese officials pledged to ramp up purchases of American goods in order to reduce the trade deficit.

Following the Chinese trade officials’ visit to Washington, Trump tweeted that “China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural products,” but no formal agreement was made.

On May 29th, 2018, the Trump administration placed a 25% tariff on $50 billion worth of Chinese tech goods.

On June 19, 2018, China responded by pledging tariffs on $50 billion of American goods. China also stated that the tariffs would increase should the U.S. continue the creation of a trade-war. The U.S. responded with a tariff on another $34 billion of Chinese goods, and China imposed a retaliatory tariff of roughly $60 billion.

In August of 2018, the US issued another 25 percent tariff on a published list of 279 Chinese goods, equalling $16 billion. China than responded with a 25 percent tariff equalling $16 billion as well.

On August 14, 2018, China motioned a complaint to the World Trade Organization, arguing that the U.S. tariffs on solar panels is destabilizing the global solar market.

On May 10, 2019, some of the 10 percent U.S. tariffs were increased to 25 percent, with the U.S. claiming that China was defaulting on previously agreed upon deals.

On June 29th, 2019 during the G20 Osaka summit, President Xi Jinping and President Trump met and agreed to a truce, in which the current tariffs would remain, but no new ones would be imposed.

President Trump made tweets claiming that China would start buying agricultural products soon, but China denied such comments. On August 1st, Trump issued another 10 percent tariff on $300 billion worth of goods.

On August 5th, Chinese state-owned enterprises stopped purchasing U.S. agricultural goods. This equates to $20 billion per year and directly impacts farmers. In the coming weeks of August, various rounds of tariffs continued to be implemented by both nations. By September 1st, nearly two-thirds of all Chinese imports and one-third of U.S. exports were being subjected to tariffs.

What’s happening now?

Since then, not much has changed. The tariffs continue to be imposed, and the effects have been more readily seen than when they were first imposed.

American lumber mills have cut employment, markets have become volatile to changes in American-Chinese relations and the Trump administration had to provide $28 billion of relief aid to American farmers since China stopped purchasing agricultural goods.

On October 7, 2019, the U.S. sanctioned 28 Chinese companies, some of which are state-owned, from buying any American components. The Commerce department cites their cooperation and complicity in “human rights violations and abuses of Uighurs, Kazakhs, and other members of Muslim minority groups.”

What does this trade-war mean for the future?

With campaign season coming up, the trade-war is sure to be a central talking point of the election. American farmers felt the impacts of the trade-war the most, and this is concerning, as about 78 percent of farmers were Trump voters. They represent an important constituency group, as their support has remained fairly consistent throughout the administration’s tenure.

A drawn-out trade-war could shake this base’s support in the 2020 election. Trump advisors noted this, trying to downplay the severity of its effects. They have also begun trying to reach out to Chinese officials in recent weeks in order to quell the trade-war, although as of this article’s publication, it continues.

The trade war is also indicative of Trump’s economic views, seeing global economics as a zero-sum game. Trump takes the position that if one nation is doing relatively better, then the U.S. must be doing worse by default. China has won, and the United States has lost, so to change the course, China must face taxes and tariffs.

However, most economists agree that increased free trade is a net benefit for all involved. This zero-sum worldview speaks to Trump in a larger sense—one group winning at the expense of the other. With this in mind, it’s important to remember that the majority of his supporters are individuals who believe they have been forgotten in the face of a country with rapidly changing demographics.