China - US trade war
The United States of America and the People’s Republic of China are the two main economies in the World, accounting together for almost 40% of the global GDP.
US and China are also strong trade partners and the mutual exchanges of goods and services have increased year by year.
Fig. 1: US trade with China from 2002 to 2017
(source: RSA based on data from International Trade Administration of US Department of Commerce)
In 2017, the total amount of goods exchanged between the two economies totalled USD 635 billion, an increase of 10% if compared to the amount recorded the previous year.
Despite the numbers, the direction of the goods is mainly from China to US, since the total amount of US imports from China reached USD 505 billion, against USD 130 billion of US exports to China.
Fig. 2: Main categories of goods imported to US from China in 2017
(source: RSA based on data from International Trade Administration of US Department of Commerce)
Fig. 3: Main categories of goods exported from US to China in 2017
(source: RSA based on data from International Trade Administration of US Department of Commerce)
The main categories of goods imported from China to US belong to HS chapter 85 (electric machinery etc., sound equipment etc., TV equipment etc. and parts), 84 (nuclear reactors, boilers, machinery etc. and parts) and 94 (furniture, bedding etc., lamps etc.), which account for more than 57% of the total imports.
Among the goods produced in United States and exported to China, the principal ones belong to HS chapter 88 (aircraft, spacecraft and parts thereof), 84 (nuclear reactors, boilers, machinery etc. and parts) and 12 (oil seeds etc., grain, seed, fruit, plant etc.).
In the first part of 2018 the US has started to implement tariff measures on a number of goods like solar panels, steel and aluminium products, aiming to hit especially the flow of goods from China.
China reacted to these measures by implementing duties on 128 goods originating from US, worth USD 3 billion.
On June 15, 2018 the US triggered the such called trade war with China by publishing a first list of 818 goods subject to 25% tariff. The duties, that took effect on July 6, 2018, are the first China – specific measures implemented by the US on goods imported from China worth USD 34 billion. According to the USTR, the measures are a part of the response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property.
The day after, China announced counter – measures by applying 25% tariff on 545 products imported from US.
On July 6, 2018 the first round of duties and counter – duties started to be implemented by both countries.
In the following weeks, US announced further duties on goods with Chinese origin, leading to similar counter – measures on the other side. In addition, China filed claim against US at the WTO.
Despite the attempts at dialogue, both countries implemented a second round of duties and tariffs on August 23, 2018:
US measures hit 279 goods from China worth USD 16 billion with a 25% tariff;
Chinese measures affected the import of 333 goods from US by the imposition of 25% tariff.
One month later, on September 24, the US implemented a 10% tariff on 5,745 additional China - origin goods (worth USD 200 billion), to be increased to 25% from January 2019. China responded with tariffs ranging from 5% to 25% on 5,207 goods imported from US.
Nowadays, the China – specific tariffs imposed by US hit USD 250 billion of goods imported from China, while the retaliatory tariffs implemented by China affect USD 110 billion of products originating from US. This means that 85% of goods imported from US to China and 50% of the goods imported by US from China in 2017 are affected by the trade war.
The tension between the two countries is expected to grow since US is reportedly ready to announce further tariffs on the remaining goods imported from China.
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