Just the Facts

Five Facts on Trade Relations Between the U.S. and China

By Emma Petasis
June 18, 2018 | Blog

Last week, President Trump announced $50 billion in new tariffs against a wide range of Chinese exports to the United States.  It is his latest move in a series of maneuvers that the president says will improve foreign trade deals for America.  China almost immediately announced a proportional amount of retaliatory tariffs against U.S. exports. Here are five facts on the current state of U.S. trade relations with China.

On Friday, the White House announced it would impose a 25% tariff on $50 billion worth of Chinese exports

The tariffs will roll out in two waves.  Beginning July 6, U.S. customs agents will begin collecting taxes on more than 800 different Chinese products worth approximately $34 billion. An additional 280 items, worth about $16 billion, will start to be taxed following a public comment period.  The tariffs will primarily target industrial sectors that are integral to China’s “Made in China 2025” plan—a state-sponsored initiative to dominate high-tech industries such as automobiles, aerospace, and robotics.  Specifically, the tariffs will target goods that include nuclear reactors, aircraft engine parts, and motorcycles.

In response to U.S. tariffs, China has imposed a 25% tariff on $34 billion worth of U.S. exports and has indicated that more tariffs will be announced shortly

In a calculated response, China responded proportionately to U.S. levies.  The first round of Chinse tariffs will also go into effect on July 6 and will target 545 different U.S. products, including soybeans, electric cars, orange juice, whiskey, salmon, and cigars.  The second round of tariffs will focus on 114 types of goods and will include chemical products, medical equipment, and energy.  In addition, the Chinese government announced that it will scrap a deal to buy $70 billion worth of American agricultural and energy products, which had been struck in early June in an attempt to avoid future tariffs.

The primary purpose of the tariffs is to punish China for stealing American intellectual property, technology, and trade secrets

In March 2018 the Office of the United States Trade Representative released the findings of a seven-month investigation into Chinese intellectual property theft, which found that it currently costs the United States between $225 and $600 billion annually.  Restrictive Chinese government policies and corporate espionage have caused much of the trouble.  Chinese licensing and administration rules have forced foreign firms to share their cutting-edge technology and trade secrets with Chinese firms if they wish to enter the lucrative Chinese market.  Additionally, outright theft has become an increasingly troublesome problem.  This past January, a Beijing-based wind turbine company was found guilty of stealing trade secrets by secretly downloading source code from a Massachusetts company.

There is bipartisan support for President Trump’s decision to impose tariffs on Chinese exports

In a radio interview, Senate Minority Leader Chuck Schumer (D-NY) stated, “I thought what he [President Trump] did on China is right.” Sen. Schumer pointed to China’s intellectual and cyber theft, while also highlighting how China has barred certain U.S. companies from the country.  The minority leader acknowledged that “China will bark back” but stated that “they need us more than we need them” and that it was time for the U.S. to “be strong.”

In  2017 the U.S. had a $375 billion trade deficit with China

Last year, the U.S. exported approximately $130 billion worth of goods to China while importing about $505 billion worth of Chinese goods.  Overall, 18% of U.S. imports come from China, while 8% of U.S. exports are sent there.  This trade deficit has frustrated both Republicans and Democrats alike and was another important factor in President Trump’s decision to impose tariffs.

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