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US-China trade row: What has happened so far? US-China trade row: What has happened so far?
(3 days later)
Donald Trump campaigned for election on a promise to make trade fairer for the US, and his push to do so has him fighting with some of America's oldest trading partners.Donald Trump campaigned for election on a promise to make trade fairer for the US, and his push to do so has him fighting with some of America's oldest trading partners.
The US has been embroiled in a tit-for-tat trade battle on several fronts over the past few months.The US has been embroiled in a tit-for-tat trade battle on several fronts over the past few months.
The one that's creating the most interest is the one with China, as the world's two largest economies wrangle for global influence.The one that's creating the most interest is the one with China, as the world's two largest economies wrangle for global influence.
China has accused the US of launching the "largest trade war in economic history."China has accused the US of launching the "largest trade war in economic history."
Mr Trump has imposed taxes on imports from China, Mexico, Canada and the EU, to encourage consumers to buy American products. All of these countries have retaliated.Mr Trump has imposed taxes on imports from China, Mexico, Canada and the EU, to encourage consumers to buy American products. All of these countries have retaliated.
The US president's hard line on trade, which also saw him withdraw from the Trans-Pacific Partnership trade pact (TPP) last year, marks a striking change from the free trade policies that have governed the exchange of goods for decades.The US president's hard line on trade, which also saw him withdraw from the Trans-Pacific Partnership trade pact (TPP) last year, marks a striking change from the free trade policies that have governed the exchange of goods for decades.
Here's what's gone on so far. What's happened in the trade war so far?
Trump takes on China The US this week slapped a second round of tariffs on Chinese goods and China retaliated in kind. This means the US and China have now placed 25% tariffs on a total of $50 billion of one another's goods.
The US slapped a 25% levy on $34bn worth of Chinese goods on 6 July. The latest tariffs that took effect on 23 Aug apply to a vast range of goods in 279 product categories, including semiconductors, plastics, chemicals and railway equipment, and fridges. China's list of 333 US product categories includes coal, copper scrap, fuel, buses and medical equipment.
Mr Trump says he wants to stop the "unfair transfers of American technology and intellectual property to China" and protect jobs.Mr Trump says he wants to stop the "unfair transfers of American technology and intellectual property to China" and protect jobs.
Tariffs, in theory, will make US-made products cheaper than imported ones, so encourage consumers to buy American. That should boost local businesses and support the national economy. Tariffs, in theory, will make US-made products cheaper than imported ones, so encourage consumers to buy American. The idea is they would boost local businesses and support the national economy.
However, China did not take the move lying down, and retaliated in kind. This has opened the way for tit-for-tat tariffs and threats between the two economic powerhouses. But many US companies and industry groups have testified to the US Trade Representative's Office that their businesses are being harmed.
Since the opening salvo, the dispute has only escalated. A third round of tariffs on $200bn of Chinese goods could come as soon as next month and could have a tariff of 25% - more than twice the tax originally planned for that lot.
Mr Trump published a list of $200bn worth of products to be taxed, said the US would impose a much higher tariff than originally planned on those products and even threatened to tax all of China's imports into the US. At the height of tensions, US President Donald Trump threatened to tax all of China's $500bn imports into the US.
Chinese officials accused the US of "unilaterally" heightening tensions between the two economic giants, and have vowed to retaliate.
Lower level officials from the US and China are due to meet in Washington this week to discuss the trade fight as a second round of trade tariffs is due to come into effect on 23 August. Both the US and China are due to impose tariffs on $16bn of one another's products.
The dispute dates back to January, when the US slapped controversial tariffs on imported washing machines and solar panels. That was considered Mr Trump's most significant trade move since his decision to pull the US out of the TPP and renegotiate the North American Free Trade Agreement (Nafta).The dispute dates back to January, when the US slapped controversial tariffs on imported washing machines and solar panels. That was considered Mr Trump's most significant trade move since his decision to pull the US out of the TPP and renegotiate the North American Free Trade Agreement (Nafta).
Is the US only in a dispute with China?Is the US only in a dispute with China?
No.No.
Earlier this year, the US started charging levies on the imports of steel and aluminium from the European Union, Mexico and Canada.Earlier this year, the US started charging levies on the imports of steel and aluminium from the European Union, Mexico and Canada.
US businesses have to pay a 25% tax when they import steel from those places and a 10% levy to buy aluminium from them.US businesses have to pay a 25% tax when they import steel from those places and a 10% levy to buy aluminium from them.
But these tariffs led to retaliation.But these tariffs led to retaliation.
The European Union imposed tariffs on €2.8bn worth of US goods in June on products such as bourbon whiskey, motorcycles and orange juice.The European Union imposed tariffs on €2.8bn worth of US goods in June on products such as bourbon whiskey, motorcycles and orange juice.
In June, Mexico announced new tariffs on US products, including whiskey, cheese, steel, bourbon, and pork.In June, Mexico announced new tariffs on US products, including whiskey, cheese, steel, bourbon, and pork.
Canada imposed retaliatory tariffs on 16.6bn Canadian dollars-worth of US products on 1 July.Canada imposed retaliatory tariffs on 16.6bn Canadian dollars-worth of US products on 1 July.
Who has been worst affected so far?Who has been worst affected so far?
The International Monetary Fund says an escalation of the tit-for-tat tariffs could shave 0.5% off global growth by 2020.The International Monetary Fund says an escalation of the tit-for-tat tariffs could shave 0.5% off global growth by 2020.
Separate releases recently indicated growth in China's manufacturing sector slowed in July and one measure of US consumer sentiment falling due to tariff concerns.Separate releases recently indicated growth in China's manufacturing sector slowed in July and one measure of US consumer sentiment falling due to tariff concerns.
Morgan Stanley estimates that a full-blown escalation of the trade dispute could knock 0.81 percentage points off global gross domestic product. This scenario would involve the US slapping 25% tariffs on all goods from both China and the EU, and similar measures imposed in response.Morgan Stanley estimates that a full-blown escalation of the trade dispute could knock 0.81 percentage points off global gross domestic product. This scenario would involve the US slapping 25% tariffs on all goods from both China and the EU, and similar measures imposed in response.
Among companies, the car industry seems to have been the most affected so far. Major carmakers recently warned that changes to trade policies were hurting performance.Among companies, the car industry seems to have been the most affected so far. Major carmakers recently warned that changes to trade policies were hurting performance.
Ford and General Motors have lowered profit forecasts for 2018, citing higher steel and aluminium prices caused by new US tariffs.Ford and General Motors have lowered profit forecasts for 2018, citing higher steel and aluminium prices caused by new US tariffs.
There are also concerns that the trade war could hurt other aspects of US-China relations. Mr Trump recently accused China of manipulating its currency - a sign that the row could be spreading to foreign exchange markets.There are also concerns that the trade war could hurt other aspects of US-China relations. Mr Trump recently accused China of manipulating its currency - a sign that the row could be spreading to foreign exchange markets.
Smaller Asian countries further down the supply chain could also suffer. According to the Economist, 30% of the value of the goods China exports to America originates from third-party countries.Smaller Asian countries further down the supply chain could also suffer. According to the Economist, 30% of the value of the goods China exports to America originates from third-party countries.
Ultimately, China may not have as much firepower as the US to retaliate, given the US buys much more from China than it sells to them. This could mean it would find alternative ways to fight back such as making life difficult for American companies in China by increasing red-tape.