Just the Facts

Five Facts on Escalating Tensions Between the United States and China

By No Labels
August 2, 2018 | Blog

On July 10 the Trump administration announced its plan to impose a 10% tariff on $200 billion worth of Chinese goods.  The plan did not take effect immediately as the administration wanted to provide the public several months to give its input on the plan. Yesterday, before the plan was finalized, the president asked his administration to consider raising the levy to 25%, another escalation in a trade dispute that has been going on for months.  Here are five facts on escalating tensions between the United States and China.

The current trade dispute between the United States and China began in January when the U.S. imposed tariffs on foreign solar panels

Since then, Beijing and Washington have exchanged a series of tit-for-tat tariffs. The first major round of tariffs were imposed by President Trump in June. Chinese president Xi Jinping responded by matching the levies in what China’s Ministry of Commerce called “the biggest trade war in economic history so far.” Beijing aimed tariffs squarely at the United States farming industry, putting trade restrictions on US goods such as soybeans, sorghum, tobacco, seafood, and meat. The United States Senate responded with a resolution, which passed 88-11, urging the president to get congressional consent before passing tariffs imposed for reasons of national security.

President Trump is considering a 25% tariff on an additional $200 billion worth of Chinese goods – a 15-point increase from his original plan of 10% tariffs

Following the collapse of formal talks between the U.S. and China in May, President Trump threated to tax the entirety of Chinese imports. Although the administration did not specify a reason for raising the tariff, reports indicate that the increase may be due to Chinese currency manipulation and the refusal to approve the merger of U.S. company, Qualcomm Inc., and Dutch company, NXP Semiconductors. President Trump previously considered enacting a 25% tariff on $100 billion worth of Chinese goods in July, but decided to lower the levy to 10% to reduce the economic burden on American consumers.

The Trump Administration has imposed these tariffs to punish China for what it identifies as unfair trade practices and intellectual property theft

The Trump administration stated that over the past decade China has engaged in unfair industrial policies and trade practices. The White House cited the fact that China has consistently imposed higher tariffs on U.S. products than those the U.S. has imposed on China. For example, in the car market, the United States imposes 2.5% tariffs on Chinese cars, while China charges a 25% tariff on American-made cars. The Trump administration has also described these tariffs as a reaction to Chinese intellectual property theft.  An investigation by the United States Trade Representative determined that Chinese technological practices, including state-directed acquisition of U.S. technology, cyber theft, and forced technology transfer, have put 44 million American jobs at risk.

The 2019 National Defense Authorization Act is tough on China, as the bipartisan consensus on the need to confront China grows

This year’s National Defense Strategy accused China of “leveraging military modernization, influence operations, and predatory economics to coerce neighboring countries to reorder the Indo-Pacific region to their advantage.”  It was approved by an 87-10 vote in the Senate on Wednesday and included provisions that tighten national security reviews of Chinese-American corporate deals and restricts which US technologies can be sent abroad. President Trump is expected to sign the act within the week.

While both countries claim to be working towards a solution, no real progress has been made

American and Chinese officials have carried out back-channel discussions over possible resolutions, but they have yet to embrace the idea of more formal negotiations. Furthermore, the Trump administration has made little progress in encouraging other countries to join the United States in pressuring China— a necessary step, as the US alone is unlikely to push China into making concessions.  Meanwhile, Chinese spokesman Geng Shuang continues to assert that “China’s position is firm and clear: Pressure and blackmail from the US won’t work… [they] will only lead in the opposite direction from what we wished.”

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