2018 China–United States trade war

On July 6, 2018 U.S. President Donald Trump imposed tariffs on $34 billion worth of Chinese goods, which then led China to respond with similar sized tariffs on U.S. products. The Trump administration said the tariffs were necessary to protect national security and the intellectual property of U.S. businesses, and to help reduce the U.S. trade deficit with China.[1][2] Trump had already, in August 2017, opened a formal investigation into attacks on American and its allies' intellectual property, the theft of which had been costing America alone an estimated $600 billion a year.[3]

The U.S. 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.[4][5] It gives the president the authority to unilaterally impose fines or other penalties on a trading partner if it is deemed to be unfairly harming US business interests.[6] In April 2018, Trump had imposed tariffs on steel and aluminum imports from China, Canada, and countries in the European Union.[7]

Tariff announcements

On January 23, 2018, President Trump placed a 30% tariff on foreign solar panels, to be reduced to 15% after four years.[8][9] China, the world leader in solar panel manufacture, decried the tariffs.[10] 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.[11][12]

On March 22, 2018, President Trump had the United States Trade Representative (USTR) apply tariffs of US$50 billion on Chinese goods. 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.[1][2] Over 1,300 categories of Chinese imports were listed for the tariffs, including aircraft parts, batteries, flat-panel televisions, medical devices, satellites, and various weapons.[13][14]

On April 2, China responded 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%).[4][5][5][15][16]

On May 20, it was reported that Chinese officials had agreed to "substantially reduce" America's trade deficit with China 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".[17] 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."[18]

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. 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.[19] China said it would discontinue trade talks with Washington if it imposed trade sanctions."[20]

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.[21][22] 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.[23] 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 the U.S. tariffs. The list of products included in this round of tariffs was released on July 11 and was set to be implemented within 60 days.[24]

China retaliated almost immediately with 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."[25]

American tariffs on $34 billion of China goods came into effect on July 6, 2018. China imposed retaliatory tariffs for the same amount. The tariffs accounted for 0.1% of the global gross domestic product.[26]