Trump triggers China-US trade war: All you need to know

By: | Published: June 15, 2018 10:41 PM

US President Donald Trump today announced stiff tariffs of 25 per cent targeting USD 50 billion in Chinese imports, as he accused Beijing of intellectual property theft, triggering a trade war between the world's two largest economies.

Donald Trump, China US trade war, Chinese imports, Chinese goods, Made in China 2025, US, United States, beijingIn a statement, Trump said 25 per cent tariffs will be applied to Chinese goods that “contain industrially significant technologies.” (Reuters)

US President Donald Trump today announced stiff tariffs of 25 per cent targeting USD 50 billion in Chinese imports, as he accused Beijing of intellectual property theft, triggering a trade war between the world’s two largest economies. In a statement, Trump said 25 per cent tariffs will be applied to Chinese goods that “contain industrially significant technologies.” Trade between the two countries “has been very unfair, for a very long time,” Trump said, adding that “this situation is no longer sustainable.” Asserting that this is essential to prevent further unfair transfer of American technologies, Trump warned China of more tariffs if Beijing retaliated on today’s announcement.

“In light of China’s theft of intellectual property and technology and its other unfair trade practices, the United States will implement a 25 per cent tariff on USD 50 billion of goods from China that contain industrially significant technologies,” he said. This includes goods related to China’s ‘Made in China 2025’ strategic plan to dominate the emerging high-technology industries that will drive future economic growth for China, but hurt economic growth for the US and many other countries, he said.

“America can no longer tolerate losing its technology and intellectual property through unfair economic practices,” he said. “These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs,” Trump said. In addition, they will serve as an initial step toward bringing balance to the trade relationship between the US and China, he asserted.

Currently, the US has a trade deficit of more than USD 370 billion per annum with China. Trump warned that “the United States will pursue additional tariffs if China engages in retaliatory measures such as imposing new tariffs on US goods, services, or agricultural products, raising non-tariff barriers, or taking punitive actions against American exporters or American companies operating in China”.

He reiterated that his friendship with President Xi Jinping and America’s relationship with China are both very important to him. The US says its tariffs on Chinese goods are in response to what it categorises as theft of intellectual property. Trump’s approval to impose tariffs on Chinese exports followed a 90-minute meeting he had with Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer yesterday.

Reacting to Trump’s latest announcement, China said it has imposed “equal” tariffs on US products. “We will immediately launch tax measures of equal scale and equal strength,” the Chinese ministry of commerce said in a statement on its website. It also called on other countries to “take collective action” against the US move, calling it “outdated and backwards behaviour”.

Earlier, the Chinese foreign ministry spokesman Geng Shuang had warned that “If the US side adopts unilateral protectionist measures and damages China’s interests, we will immediately react and take necessary measures to firmly safeguard our legitimate rights and interests”.

China had previously said it would respond to American tariffs on USD 50 billion worth of Chinese exports with retaliatory tariffs on USD 50 billion of US products such as cars, aircraft and soybeans.

Trump first announced that the US would impose trade penalties on about USD 50 billion worth of Chinese goods in March. After China warned it would retaliate, Trump threatened tariffs on a further USD 100 billion worth of Chinese products. In mid-May, both sides announced a ceasefire after two rounds of trade negotiations.

The two sides had said in a joint statement that China would “significantly increase” purchases of US agricultural and energy products to reduce the trade imbalance, a top Trump demand. Ten days later, the White House abruptly said it would proceed with the tariffs. A further round of trade talks in Beijing earlier this month failed to yield any breakthroughs.

Trump’s decision to impose fresh tariffs on China follows his recent imposition of steep tariffs on steel and aluminum imports from Canada, Mexico and the European Union on national security grounds. Those penalties have been met with consternation by world leaders, and led to a fraught G7 meeting with Canada, France, Germany, Italy, Japan and the UK, last weekend.

The EU and Canada have said they will enact retaliatory tariffs starting in July. Mexico has already retaliated with its own tariffs on US goods. International Monetary Fund chief Christine Lagarde yesterday warned that the Trump administration’s trade policies were likely to hurt the US economy and undermine the world’s trade system. She said a trade war would lead to “losers on both sides” and could have a “serious” impact.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition