How is the situation in China-US trade tensions with Trump 2.0?

Donald Trump is back in the White House, promising to use the United States’ immense economic weight to hit back at China for alleged unfair trade practices and role in the deadly US fentanyl crisis.

This week, the businessman said a 10 percent tariff could be imposed on all Chinese imports from February 1 — and during the campaign he talked about a levy of up to 60 percent.

China has warned that there are “no winners” in a trade war and vowed to protect its economic interests.

Here’s where China-US trade relations stand:

How much business is at stake?

Trade between China and the United States – the world’s two largest economies – is huge, totaling more than $530 billion in the first eleven months of 2024, according to Washington.

Over the same period, sales of Chinese goods to the United States exceeded $400 billion, second only to Mexico.

According to the Peterson Institute of International Economics (PIIE), China is a major supplier of goods ranging from electronics and electrical machinery to textiles and clothing.

But the trade imbalance – $270.4 billion from January to November last year – has long raised concerns in Washington.

As such, China has faced allegations of dumping due to its extensive government support for its industry, as well as alleged mistreatment of American companies operating in its territory.

But despite official efforts to boost domestic consumption, China’s economy remains heavily dependent on exports to drive growth – making its leaders reluctant to change the status quo.

What happened in Trump’s first term?

Trump stormed into the White House in 2016 vowing to go even with China and launched a trade war that imposed significant tariffs on hundreds of billions of dollars of Chinese goods.

China retaliated by imposing tariffs on American products–particularly affecting American farmers.

The main US demands were greater access to China’s markets, comprehensive reforms in the trade sector that heavily favored Chinese companies, and a loosening of heavy state control by Beijing.

After long, difficult negotiations the two sides agreed to what is known as a “phase one” trade agreement – ​​a ceasefire in the nearly two-year-old trade war.

Under that agreement, Beijing agreed to import $200 billion worth of American goods, including $32 billion worth of agricultural products and seafood.

But analysts say that in the face of the pandemic and the US recession, Beijing has fallen far short of that commitment.

“In the end, China bought only 58 percent of the U.S. exports it committed to buy under the agreement, not enough to even reach its import levels before the trade war,” PIIE’s Chad P. Brown wrote.

“In other words, China did not buy any of the $200 billion of additional exports promised in the Trump deal.”

How did things change under Biden?

Trump’s successor Joe Biden did not roll back the increases imposed by his predecessor, but he took a more targeted approach when it came to tariff hikes.

Under Biden, Washington expanded efforts to curb exports of cutting-edge chips to China — part of a broader effort to prevent the use of sensitive American technologies in Beijing’s military arsenal.

His administration has also used tariffs to target China’s “industrial overcapacity” — fears that the country’s industrial subsidies for green energy, cars and batteries could flood global markets with cheap goods.

Last May, Biden ordered tariffs on $18 billion of imports from China, accusing Beijing of “cheating” rather than competing.

Under the hike, the tariff on EVs will increase four times to 100 percent, while the tariff for semiconductors will increase from 25 percent to 50 percent.

The measures also targeted strategic sectors such as batteries, critical minerals and medical products.

Both sides have also initiated investigations into dumping and state subsidies, as well as alleged unfair trade practices of the other.

what happens next?

With Biden gone, all eyes will be on whether Trump will follow through on these threats – or whether the rhetoric was an early gambit in the negotiations.

Trump has long viewed tariffs as a bargaining tool – an “all-purpose weapon,” according to a Wall Street Journal editorial.

He has also linked the tariffs to the fate of Chinese-owned social media app TikTok – warning of retaliation if a deal could not be struck to sell it.

Many breathed a sigh of relief when the “surprise and awe” of executive orders signed on Trump’s first day in office did not include tariffs on Chinese goods.

But Trump ordered a sweeping review by top officials into several Chinese trade practices — with a report due by April 1.

“While no immediate tariff hikes are likely to be a surprise, extended uncertainty could still weigh on confidence,” HSBC economists wrote in a note on Wednesday.

“The lack of concrete tariffs at this time may signal that Trump is open to further negotiations with China,” he said.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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