THE US-CHINA TRADE WAR

WHAT IS
TRADE-WAR ?
WHAT IS US-CHINA TRADE WAR ?
• The Trump administration imposed sweeping tariffs on $34 billion worth of Chinese
goods, including flat-screen televisions, aircraft parts, and medical devices.

• China immediately accused the US of starting “the largest trade war in economic
history to date” and responded by imposing 25 percent tariffs on $34 billion worth
of US goods, including soybeans, automobiles, and lobsters.

• US President Donald Trump has long accused China of unfair trading practices and
intellectual property theft.

• In China, there is a perception that America is trying to curb its rise as a global
economic power.
WHEN DID THE US-CHINA TRADE WAR

STARTED ?
• The US-China trade war started on 6 July 2018, when the US imposed a 25
per cent tariff on US$34 billion of Chinese imports.

• It continued to rise, with the US and China imposing various import tariffs
on each other’s products until an agreement in principle on a phase one
trade deal was reached in mid-December 2019.

• The phase one trade deal was formally signed on 15 January 2020, with its
provisions taking effect on 15 February 2020.
WHAT IS PHASE ONE TRADE DEAL ?
• US President Trump and China’s chief negotiator, Vice-Premier Liu He, signed
the phase one trade deal at the White House on 15 January 2020.

• As part of the deal, China agreed to buy an additional US$200 billion of American goods and
services over the following two years.

• Those additional purchases would be made up of around US$77 billion in manufacturing,

US$52 billion in energy, US$32 billion in agricultural goods and US$38 billion in services.

• China also pledged to remove barriers to a long list of US exports, including beef, pork, poultry,
seafood, dairy, rice, infant formula, animal feed and biotechnology.
 THE ORIGIN OF TRADE WAR
Trump Accuses China for three things
• China is stealing intellectual property
• China is manipulating its currency
• China has trade barriers that are two
high on imports or restrictions on
foreign investments
For Trump Trade Deficit is a loss for America
Thus for Trump trade deficit mechanically
destroys jobs (2 millions jobs) and decreases
the GDP of the US.
Trump said last march 2018 the deficit with
China was 275 billions
 WHAT IS TRADE-DEFICIT ?
A trade deficit is an amount by which the cost of a country's imports exceeds its exports.

• A trade deficit is what started the war. America imports more products from China than
China imports from America. That means a lot of their money is flowing to manufacturers
and others outside America’s borders.

• Trade deficits aren’t always bad. Sometimes an increase in foreign goods can increase
competition and lower the price of domestic products for consumers. This can help curb
inflation and increase the number of goods and services available to consumers.

• Trade deficits often resolve themselves, but the trade deficit with China has become severe
enough to be of real concern for America, sufficient cause to start the China US trade war.
 OUTCOME OF TRADE WAR
• US tariffs caused a 25% export loss, inflicting a US$35 billion blow to Chinese exports in the US
market for tariffed goods in the first half of 2019.

• The office machinery and communication equipment sectors were hit the hardest, suffering a $15
billion reduction of US imports from China as trade in tariffed goods in those sectors fell by an average
of 55%.

• Trade of tariffed goods in sectors such as chemicals, furniture, and electrical machinery also dropped
substantially.

• US tariffs on China have made other players more competitive in the US market and led to a trade
diversion effect.
 IMPACT TO OTHER COUNTRIES
While China looses other Economies gain

• Of the $35 billion Chinese export losses in the US market, about $21 billion (or 63%) was diverted to
other countries, while the remainder of $14 billion was either lost or captured by US producers.
• Mexico increased its exports to the US by $3.5 billion, mostly in the agri-food, transport equipment
and electrical machinery sectors.
• The European Union gained about $2.7 billion due to increased exports, largely in the machineries
sectors.
• Viet Nam’s exports to the US swelled by $2.6 billion, driven by trade in communication equipment
and furniture.
• Trade diversion benefits to Korea, Canada and India were smaller but still substantial, ranging from
$0.9 billion to $1.5 billion.
• The remainder of the benefits were largely to the advantage of other South East Asian countries.
 SOME FACTS & FIGURES
• Broadcasting equipment is China’s main export to the US. Broadcasting equipment includes TV,
radio, Bluetooth, microwave, antenna, digital, FM, and AM equipment.
• Trade war statistics show that America’s deficit with China was about $420 billion in 2018.
• America imported $540 billion worth of products from China, but China imported only $120 billion
of American products.
• America’s trade deficit with China was just $91 billion in 2001.
• China is America’s largest trading partner and one of America’s biggest suppliers of advanced
technology.
• The US currently has a 2% average tariff rate on industrial goods. About 50% of all goods entering
America are not subject to tariffs at all.
• Trump tariffs on China, they range from 10% to 25% on most Chinese goods.
 Continued..
• America has the third-largest export economy in the world.
• America exported $1.25 trillion worth of products in 2017.
The main US exports: refined petroleum ($74.5 billion); cars ($56 billion); planes, helicopters, and
spacecraft ($54 billion); gas turbines ($31.6 billion); and packaged medication ($29.5 billion).
• America imported $2.16 trillion worth of products in 2017.
America likes to import the most: cars ($178 billion), crude petroleum ($129 billion), broadcasting
equipment ($105 billion), computers ($73.5 billion), and vehicle parts ($67.1 billion).
• China exported $2.41 trillion worth of products in 2017.
China’s main exports are: broadcasting equipment ($231 billion), computers ($146 billion), office
machine parts ($90.8 billion), integrated circuits ($80.1 billion), and telephones ($62 billion).
• China imported $1.54 trillion worth of products in 2017.
China’s main imports are integrated circuits ($207 billion), crude petroleum ($144 billion), iron ore
($59 billion), cars ($46.8 billion), and gold ($40.3 billion).
CONCLUSION