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President Trump and Chinese President Xi Jinping outside the Great Hall of the People in Beijing. (Artyom Ivanov / Tbad through Getty Images)
With all the recent hostilities, it is easy to forget that China and the United States have been the main trading partners for years. , with nearly $ 500 billion in total imports and exports, or about 15% of total US trade. The United States, on the other hand, has been China's largest trading partner since the 1990s, surpbading Hong Kong as the largest importer of Chinese goods in 1998.
Trade relations between the two economic powers have not been the main source of trade. have not always been fluids are set to change drastically on Friday when the proposed tariffs of Washington and Beijing are expected to come into effect. The United States will levy $ 34 billion worth of Chinese goods from Friday, and Beijing is committed to retaliating with tariffs equal to US exports, which could mark the beginning of a new era. a growing trade war. If President Trump's May and June Threats Should Be Taken Seriously, Nearly One-Third of Chinese Imports into the United States Could Be Affected by Tariffs in the Months to Come
. "Said Mary Lovely, a non-resident senior fellow at the Peterson Institute for International Economics and Professor of Economics at Syracuse University. What will happen on Friday" will represent a retreat fundamental to the leader of the world trading system, "she said, adding," This will be considered a turning point. "
Even as a candidate, Trump made it clear that he foresaw significant renegotiation of relations In a speech 2015 announcing his candidacy, Trump mentioned China 21 times, saying that they were taking American jobs and "tearing up" the US economy. campaign, he committed himself to correcting the growing trade deficit between the two countries by imposing high taxes, even if, for a period, it looked more like hard speeches than to the action. Both countries have become well "fun bluff," said Mr. Lovely. Friday, the endless threat of tariffs will become a reality. When they come into effect, badysts will say that they will start inflicting significant economic damage not only in the United States and China, but also in global markets.
For anyone who wants to know how this has become a "red code" situation, Lovely describes, here's an overview of the major events:
Jan. 22 – Trump imposes new tax on solar panels – a key export to China
In its first major commercial move of the year, Trump introduces tariffs on solar panels and washing machines . For solar panels, the tax will start at 30% the first year before falling to half that over four years. The decision was not well received by China, which produces 65% of the world's solar modules.
[The first layoffs from Trump’s tariffs are here]
March 1 – Trump raises tariffs on imports of steel and aluminum
After months of threats, Trump increases imports steel taxes and l & rsquo; 25% aluminum and 10%, respectively. While only 6% of these imports come from China, the country reacts with a stern warning: A Chinese spokeswoman said at a press conference that Beijing "will take appropriate measures to safeguard its rights and legitimate interests . "
6 – China proposes tariffs against the United States, sparking titans forcing a week that increases tensions considerably
On April 2, China issues tariffs on 2.4 billion US export dollars. This list of 128 goods rivals the $ 2.7 billion of Chinese steel and aluminum imports that the Trump administration decided to impose in March. The list also targets agricultural products such as pork, which would disproportionately affect US farmers.
The Trump administration counterattacks on April 3 by unveiling a list of 1,300 Chinese products that may be subject to 25% tariffs. The list, which has a value of about $ 50 billion, includes products such as semiconductors, medical devices and flat-screen TVs. These are almost all examples of the type of sophisticated technology that China is aiming for through its "Made in China 2025" plan.
On April 4, China responds to US tariffs by producing its own list of 106 US products, including soybeans. A day later, Trump orders his chief trade negotiator, Robert E. Lighthizer, to go out of business. consider raising tariffs to an additional $ 100 billion in Chinese imports, but it does not just confirm the tariffs. new tasks. The Chinese Ministry of Commerce said the next morning that China will fight Trump's proposed tariffs "at all costs".
April 16 – US Commerce Department Bans Exports to Chinese Telecommunications Company ZTE
United States Applies Seven-Year Export Ban to Chinese Telecommunications Company ZTE after to have learned that she did not abide by the rules of a previous settlement agreement. had been sanctioned for the first time in May 2017 for illegally exporting US goods to North Korea and Iran, in violation of trade sanctions. He agreed to a settlement with the United States, which required them to pay $ 1.19 billion in fines and to punish employees involved in the violation of sanctions. After learning that ZTE had not actually punished the people involved, the Commerce Department said it would prohibit all US companies from selling key parts such as chips to the company.
A ZTE research and development center in Beijing on June 13, 2018. (Jason Lee / Reuters)
In response, Trump tweeted on May 13 that he was working with Chinese President Xi Jinping to put ZTE back into business. "Too many jobs have been lost in China, the Commerce Department has been instructed to do it!" He writes:
Reports at this time state that the Trump administration was seeking commercial concessions from China in exchange for ZTE's help, but the abrupt change of Trump still surprises the sales consultants. Some national security officials also fear that the sale of US technology to ZTE threatens cybersecurity.
"US national security should not be used as a bargaining chip in trade negotiations," wrote Trump in a letter. "Offering to negotiate the enforcement of US sanctions to promote jobs in China is clearly a bad deal for American workers and for the safety of all Americans."
[A trade war with China could hit these communities hardest]
June 7 – The Trump administration eases the ZTE ban
month after its entry into force, the ban on selling US goods to ZTE for a period of seven years ends. Commerce Secretary Wilbur Ross tells CNBC that the company will pay a $ 1 billion fine and host a new compliance team made up of US experts.
June 15 – Trump announces a 25% tariff on $ 50 billion Chinese products. China reacts with targeted retaliation
Three weeks after saying that the proposed tariffs were "pending", the Trump administration releases an updated list of 1,100 Chinese products that will be subject to a 25% tax. The government's threats, announced for the first time in April, will be updated as of Friday, July 6th.
More than 90% of the items on this list are intermediate inputs or equipment goods, which means that they are items imported by US companies to bademble finished products. In other words, the tariffs that will come into effect will negatively affect US companies and increase prices for US consumers, warn experts at the Peterson Institute.
Trump says in a statement that the United States is compiling a list of Chinese goods that will face tariffs of 10% concessions established by his administration. If it was implemented, it would add an additional $ 200 billion in import taxes for the country, which means that almost all of the $ 505 billion worth of Chinese products imported into the United States would be subject to customs duties. As David Lynch and Heather Long point out, "[s] a step would be virtually unprecedented in the history of the United States."
The Chinese Ministry of Commerce responds by calling the "blackmail" of Trump. decision, voting 85 to 10 votes to reinstate the ban on selling US components to the company.
and Chinese flags are in place in anticipation of a press conference by US Secretary of State Mike Pompeo and Chinese Foreign Minister Wang Yi at the Great Hall of the People in Beijing on June 14, 2018 (Jason Lee / Reuters)
June 27 – Trump calls on Congress to "improve" the review process of Chinese investment in US technology
At the end of June, the Trump administration was planning to prevent Chinese companies from investing in American technology. The government has stopped doing exactly that, announcing instead that it would work with Congress to tighten the regulation on foreign investment.
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