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Trade War
Trade War
&
Root Causes of Trade War
From U.S.
manufacturers that send raw materials to China for low-cost
assembly.
Once shipped back to the United States, they are considered
imports.
Root Causes of Trade War
China's biggest imports from America are
Annual Trade Deficit
• Since 2012, the U.S. trade deficit with China has increased.
• It was $315 billion in 2012, rose to $367.3 billion in 2015,
then fell to $346.9 billion in 2015.
• In just two years, it's increased to $419.2 billion.
Causes
• China can produce many consumer goods at lower costs than other countries can.
• Americans, of course, want these goods for the lowest prices.
How does China keep prices so low?
Most economists agree that China's competitive pricing is a result of two factors:
• A lower standard of living, which allows companies in China to pay lower wages to
workers.
On March 1, 2018, he announced he would impose a 25% tariff on steel imports and
a 10% tariff on aluminum.
On July 6, 2018, Trump's tariffs went into effect for $34 billion of Chinese imports.
Trump's move comes a month after he imposed tariffs and quotas on imported
Causes
The tariffs depressed the stock market when they were announced
Tension between US and China
Evolution of trade in the US and China
(Change of tariffs)
Over 1,300 categories of Chinese imports were listed for tariffs, including aircraft parts, batteries, flat-
panel televisions, medical devices, satellites, and various weapons.
March 22, 2018. Trump asked the United States trade representative (USTR) to investigate
applying tariffs on US$50–60 billion worth of Chinese goods.
April 2, 2018. Ministry of Commerce of 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%).
On April 5, 2018, Trump responded saying that he was considering another round of tariffs on an
additional $100 billion of Chinese imports as Beijing retaliates.
The next day the World Trade Organization received request from China for consultations on new
U.S. tariffs.
April 4, 2018. Trump denied the existence of a trade war, saying "that war was lost many years ago
by the foolish, or incompetent, people who represented the U.S." He added: "Now we have a trade
deficit of $500 billion a year, with intellectual property (IP) theft of another $300 billion. We
cannot let this continue."
May 15, 2018. Vice Premier and Politburo member Liu He, top economic adviser
to president of China and General Secretary Xi Jinping, visited Washington for further
trade talks.[
May 20, 2018. Chinese officials agreed to "substantially reduce" America's trade deficit with China by
committing to "significantly increase" its purchases of Americangoods
May 29, 2018. The White House announced 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, 2018.
June 15, 2018. Trump declared that the United States would impose a 25% tariff on $50 billion of
Chinese exports. $34 billion would start July 6, 2018, with a further $16 billion to begin at a later date.
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, 2018.
Current Circumstance of Trade War
US accused China
Stealing intellectual property
Current Circumstance of Trade War