Trade Tensions between China and the US

Shelly Liu ‘20

Over the last few months, trade tensions have escalated between two global economic powers, China and the United States, as they continue to battle for the upper hand in the tariff war.

Since the start of this year, the US has imposed three rounds of tariffs on Chinese imported goods. The first and the second, combined, took effect on 25% of goods which totalled around $50 billion in additional expenses for China. The Chinese government has responded dollar for dollar in counter-tariffs. The third round of tariffs from the US, which took effect on September 24th, were fixed on $250 billion worth of Chinese products at a 10% rate. The combination of the three tariffs currently include virtually all importations from China, and President Trump has warned that there is more to come if China retaliates. China, and many other countries that the US have also attacked with tariffs, have filed a lawsuit against the Trump administration with the World Trade Organization (WTO).

The tariff war is the result of Trump’s fulfillment of his campaign trail promises, where  he vowed to “get even” with the way that China has treated intellectual property in the United States. In the past decade, Trump argues, China has risen to the top of the economic ladder by taking advantage of the technological innovations of the US and stealing the forerunners in high tech products.

Known colloquially as “arranged marriages”, some foreign businesses partner with Chinese companies to bring ventures to the Chinese consumers, often resulting in the foreign companies complaining about exploitation. These foreign companies claim that their technology has been used to strengthen competitors, and that these joint projects have simply trained the Chinese companies to become giants in the field.

The Trump administration has also accused the Chinese government of having a policy to encourage IP theft. For example, the Chinese government requires that companies using cloud computing must hand over control to local businesses, therefore allowing said businesses to gain knowledge of the technology.

The effects of the trade tensions between the US and China are tremendous, driving up the costs of both imported and local goods. The tariffs have mostly hit the construction and technology industry, with taxes on goods such as steel and aluminium. For example, hot-rolled coil steel price, which is the benchmark for US steel prices, have risen 36% since the tariffs were imposed. Polls from articles on the Washington Post show that popular opinion in the US is against Trump’s new trade tactics, and the effects have resulted in economic decline in both the US and international territories.