US-China Trade War and the World Economy

The US and China are locked in an trade battle. US President Donald Trump has complained about China's trading practices since before he took office in 2016.

  Last year, the US imposed three rounds of tariffs on more than $250 billion worth of Chinese goods. The duties of up to 25% cover a wide range of industrial and consumer items from handbags to railway equipment. Beijing hit back with tariffs on $110 billion of US goods, accusing the US of starting "the largest trade war in economic history." China has targeted products including chemicals, coal and medical equipment with levies that range from 5% to 25%. China has also targeted products made in US districts with strong support for the Republicans, and goods that can be purchased elsewhere, such as soybeans.

  After agreeing a truce in December, both sides began to talk. But in May, the US raised tariffs on $200 billion of Chinese products to 25% from 10%. China retaliated but officials say the countries are still talking. The US also planned to hit an additional $300 billion of Chinese goods with tariffs.

  The US and China have been struggling for economic supremacy. The trade war is at heart a battle for tech supremacy and the huge commercial and national security advantages that come with it. China's plan to dominate in these areas helped galvanize the Trump administration after U.S. businesses operating in China complained for years about forced technology transfers and intellectual property theft. Their fight has moved on from charging new taxes on imports to attacking each others' tech industries. Many American tech companies such as Google were banned from selling their products to Huawei. With tensions rising after the U.S. blacklisted Huawei, the specter of a tech cold war is materializing.

  It is believed that US's attack on Huawei will speed up the process of opening a potential window to a day when Chinese people can use only Chinese phones and gadgets powered by homegrown chips and software. All this is happening with a speed that has shocked many in China.

  Consumers around the world could feel the impact. Both U.S. and international firms have said they are being harmed. Fears about a further escalation have rattled investors and hit stock markets.
  In June, on the sidelines of the G20 summit in Osaka, Japan, the two presidents held a highly anticipated meeting. The both leaders agreed on holding the tariffs and restarting trade consultations between their countries. Trump suggested he will be reversing his government's decision to ban American companies from selling products to Huawei. China consented to purchase American agricultural products. The result of talks between Trump and Xi appeared to align with what many experts predicted ahead of the event.

  The commentary ahead of the meeting from Chinese state media suggested the two countries would not have an easy time reaching an agreement. The Trump-Xi meeting had been deemed a globally significant event because the ongoing trade war has threatened to disrupt many countries' economies and has roiled businesses' international supply lines.

  According to OECD Secretary-General Jose Angel Gurria, if talks between Trump and Xi fell through, the consequence would be destructive and spill over to practically every single economy in the world because the U.S. and China have massive relationship with the rest of the world. Apart from that, the International Monetary Fund warned in June that the implemented and proposed tariffs between the two countries could potentially cut global economic output by 0.5% in 2020.

  IMF Managing Director Christine Lagarde commented on the latest trade war development. "While the resumption of trade talks between the United States and China is welcome, tariffs already implemented are holding back the global economy, and unresolved issues carry a great deal of uncertainty about the future," she said.
    【綜合改寫自BBC、維基百科、The economicist、CNBC】