For the past several months, the United States and China have been battling for economic control, imposing tariffs on goods worth hundreds of billions of dollars. As the 90 day truce reached in December at the G-20 summit continues, it is unclear if an agreement is in sight.
The trade war escalated on July 6, 2018, after Chinese officials formally accused the United States of instigating the war by imposing high tariffs on Chinese imports, to which China retaliated with its own tariffs. To date, the US has imposed tariffs on $250 billion worth of imports from China, and has threatened an additional $267 billion, while China has imposed tariffs on $110 billion worth of imports from the US. The discrepancy in tariffs is the result of the US importing approximately four times the amount of goods than are exported to China.
One goal of the US tariffs is to encourage citizens to buy domestic products and protect local jobs. In fact, Americans have seen the lowest unemployment rate in over a decade. However, the tariffs have negatively impacted both countries, slowing economic growth and threatening international businesses. Nike, Starbucks, Apple, and other popular American brands have already seen significant declines in sales at China locations, as Chinese customers opt for domestic businesses. Meanwhile, China’s economy has slowed, prompting them to seek an agreement.
Days ago, the two countries met in search of a resolution. One of the major US demands was for greater enforcement of intellectual property laws in China, a domain that has largely been lacking in previous years. As a result of the talks, Chinese officials have agreed to increase efforts to protect intellectual property. Moreover, the US Trade Representative’s office announced on Wednesday that China has agreed to buy “substantial” quantities of products in the agricultural and energy sectors from the US.
More talks were expected to follow at the World Economic Forum on January 22nd, in Davos, Switzerland, but Trump announced that he will no longer be attending due to the governmental gridlock and shutdown. It is critical to both countries that a deal is reached as pressure on international companies continues, threatening to negatively impact the global economy. While the talks do hold promise for a resolution, the trade war may take a turn for the worse, as both countries have threatened additional tariffs. China’s measures would raise prices on everyday American imports — such as food and household goods — which would cause further economic strain to the US.
Article by MoCo Student staff writer Kennedy Salamat of Montgomery Blair High School