Just the Facts

Five Facts on U.S.-China Trade

By Emma Petasis
May 6, 2019 | Blog

President Trump threatened to increase tariffs on Chinese goods after the world’s two biggest economies were unable to come to an agreement. Here are five facts on US-China trade.

1. China is on track to overtake the United States as the world’s largest economy by 2030.

The Council on Foreign Relations reported that China became the world’s second largest economy in 2010 after surpassing Japan.[1]On track to become the world’s number one economy, China’s economic growth, population size, and defense spending will outstrip the U.S. at the regional level by 2030.[2]

2. China is the largest U.S. Foreign Creditor

As of 2008, China became the largest foreign holder of U.S. debt – holding $600 billion. As of 2018, this number shut up to $1.18 trillion.[3]This only comes to almost 6%, while over 70% is owned domestically.[4]

3. The Trans-Pacific Partnership was created as a multinational free trade agreement.

In November 2011, President Barack Obama announced that the United States along with Australia, Vietnam, Peru, Canada, Japan, Malaysia and Mexico would join the trade partnership and the pact was signed in early 2016. President Trump would later withdraw the United States from the deal in 2017.[5]


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4. President Trump began imposing new tariffs in July 2018.

The Trump Administration imposed tariffs on $34 billion of Chinese goods, with some facing a 25% import tax, although currently at 10%. The president argued that China takes advantage of the free trade rules, and China ultimately retaliates with tariffs of their own, on food like beef, seafood, and dairy.[6]

5. An escalation of the trade war could weaken global growth. 

CNN writes that If Trump’s threat of a 25% tariff on Chinese exports to the United States ends up playing out, Chinese growth would take a direct hit and need to impose tariffs in return. Even with positive changes made to influence on the U.S. economy, or simply negotiating tactics can weaken global growth through external shocks.[7]The threat alone caused markets to plunge on Monday but they recovered throughout the day.


[1]https://www.cfr.org/timeline/us-relations-china

[2]https://www.bloomberg.com/graphics/2018-china-superpower/

[3]https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21

[4]Ibid.

[5]https://www.cfr.org/backgrounder/what-trans-pacific-partnership-tpp

[6]https://www.cfr.org/timeline/us-relations-china

[7]https://www.cnn.com/2019/05/06/business/trade-war-us-china-tariffs/index.html

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