US-China Trade War: Timeline, Impact, Summary

The US-China Trade War began in 2018 with President Donald Trump imposing tariffs and other trade obstacles on China. The trade war has reduced trade between the two countries, causing a shift to imports from other regions. This turned into a “cold war” stimulated by ideological disagreements. The United States and China have a long history of economic rivalries. In 2021, 8.6% of US exports and 17.9% of US imports came from China. Mechanical appliances, sound recorders, and televisions are the most commonly traded commodities.

In this article, we will look into the timeline, impact, mitigation strategies, and summary of the US-China Trade War.

US-China Trade War

The US-China Trade War is an ongoing economic conflict characterized by trade restrictions, tariffs, and tensions between the two countries. It initially started in 2018, when the United States put tariffs on Chinese goods, accusing unfair trade practices and intellectual property theft.

In return, China put taxes on US imports, raising tensions between the two countries. The trade war has had a major effect on global trade, supply chains, and financial markets. Both sides have engaged in negotiations to resolve the conflict, but major challenges persist, impacting sectors and economies around the world.

US-China Trade War Timeline

The below table summarises the timeline of the US-China trade war:

March 2018	US announces tariffs on steel and aluminum imports, including from China.
April 2018	China retaliates with tariffs on US goods.
June 2018	US imposes tariffs on $34 billion worth of Chinese goods.
July 2018	China responds with tariffs on US products.
August 2018	US announces tariffs on additional $16 billion of Chinese goods.
September 2018	China retaliates with tariffs on more US goods.
December 2018	US and China agree to a temporary ceasefire, delaying further tariffs.
May 2019	Trade talks between the US and China break down.
August 2019	US labels China a currency manipulator.
September 2019	Both sides announce tariff hikes on each other’s goods.
January 2020	Phase One trade deal signed between the US and China.
February 2020	US reduces tariffs on some Chinese imports as part of the deal.
May 2020	US threatens new tariffs on China over COVID-19 pandemic.
January 2021	President Biden takes office, indicating potential changes in approach to China.
June 2021	Biden administration expands blacklist of Chinese companies.
October 2021	US-China talks resume, aiming to address trade disputes and economic issues.
December 2021	Reports emerge of potential US-China trade deal.
February 2022	Talks continue as both sides try to resolve ongoing trade issues.
March, 2022	The US has restored tariff exemptions for over 350 products from China.
April, 2022	US Treasury Secretary Janet Yellen says lifting tariffs on certain Chinese goods could help reduce the high inflation.
May, 2022	US begins statutory process that could ultimately end up removing tariffs on Chinese goods.
June, 2022	Joe Biden said he’ll be talking to counterpart Xi Jinping ‘soon’ and is weighing possible action on US tariffs on Chinese goods that were imposed by the Trump administration.
July, 2022	Vice-Premier Liu of China He has a straightforward discussion about immediate issues with US Treasury Secretary Janet Yellen.
November, 2022	President Xi Jinping meets US counterpart Joe Biden at the G20 summit in Indonesia.
December, 2022	WTO rules against US tariffs imposed on steel and aluminium imports in case brought by China and other countries.
January, 2023	US appeals against WTO verdicts on steel tariffs on China and other countries.
July, 2023	China orders export restrictions on gallium and germanium metals and several of their compounds, which are key materials for making semiconductors and other electronics.
August, 2023	US President Joe Biden announces plans for new restrictions on investments that American companies can make overseas.
27 August, 2023	US Commerce Secretary Gina Raimondo arrives in China for a four-day visit.

US-China Trade War 2023

On January 27 2023, European Commissioner for Internal Market Thierry Breton declared that the European Union would join the United States in prohibiting the sale of technology to China that would allow it to develop advanced semiconductor chips.

On February 17 2023, China added Raytheon and Lockheed Martin to its list of Unreliable Entities. US Secretary of State Antony Blinken visits China from June 18 to 19, being the first secretary of state to do so since 2018. Blinken met with Chinese Foreign Minister Qin Gang, Foreign Affairs Commission Office Director Wang Yi, and President Xi Jinping. Blinken tried to clarify the US economic stance toward China, saying, “We are for de-risking and diversifying,” and emphasizing that the US is not trying to economically control China.

US China Trade War Impact on Global Economy

The US-China Trade War has had a major impact on the global economy, affecting various aspects such as trade flows, supply chains, investment patterns, and market sentiment. Some major impacts include:

1. Disrupted Supply Chains– The trade war has disrupted global supply chains, particularly in industries heavily reliant on Chinese manufacturing. Companies faced increased costs due to tariffs and tried to diversify their supply chains, leading to restructuring and relocation of production facilities.

2. Economic Slowdown– Uncertainty surrounding trade relations between the world’s two largest economies has decreased global economic growth. Reduced trade volumes and increased costs have contributed to a slowdown in economic activity, impacting businesses and consumers worldwide.

3. Market Volatility– Fluctuations in trade negotiations and imposition of tariffs have led to increased market volatility. Stock markets react to developments in the trade war, affecting investor sentiment and confidence.

4. Impact on Business Investment– Businesses have hesitated to invest in long-term projects due to uncertainty surrounding trade policies and tariffs. This has led to reduced business investment, hindering economic expansion and job creation.

5. Shifts in Trade Patterns– As a result of tariffs and trade tensions, countries have tried alternative trading partners and markets. Some countries have increased trade with other countries to mitigate the impact of the US-China Trade War, leading to shifts in global trade patterns.

6. Inflationary Pressures– Tariffs on imported goods have led to higher prices for consumers in the importing countries. Inflationary pressures have emerged as businesses pass on the increased costs to consumers, impacting household budgets and purchasing power.

7. Technology Sector Impact– The trade war has also focused around technology and intellectual property rights. Restrictions on technology transfers and investment have affected the global technology sector, with implications for innovation, competitiveness, and market access.

8. Geopolitical Tensions– The trade war has worsened geopolitical tensions between the US and China, impacting diplomatic relations and cooperation on various global issues beyond trade.

US China Trade War Impact on India

The US-China Trade War has had both positive and negative impacts on India:

Positive Impact

• Indian industries such as textiles, electronics, and machinery have seen increased export opportunities to both the US and China as companies look to diversify their supply chains away from China.
• With uncertainty surrounding Chinese manufacturing, India has become an attractive destination for foreign investment, particularly in sectors like manufacturing, technology, and infrastructure.
• India has strengthened its bilateral trade relations with both the US and China, capitalizing on the trade tensions between the two countries to negotiate favorable trade deals and agreements.

Negative Impact

• The global economic slowdown resulting from the trade war has affected India’s export-oriented industries and overall economic growth.
• Chinese goods have become a greater threat to Indian companies in international markets as China is redirecting shipments meant for the US to other countries, including India.
• While India has seen an increase in foreign investment, the overall investment climate remains uncertain due to global economic uncertainties and trade tensions.

US China Trade War Mitigation Strategies

By combining the following strategies, companies can stay competitive in the global market and overcome the difficulties caused by trade wars:

• Companies can reduce reliance on a single country, such as China, by diversifying their supply chains across multiple countries or regions.
• Businesses may restructure their supply chains or alter product specifications to minimize the impact of tariffs on imported goods.
• Companies can engage in negotiations with government officials for policy changes to mitigate the effects of tariffs and trade barriers.
• Investing in domestic production capabilities can reduce dependence on imported goods subject to tariffs and strengthen resilience against trade disruptions.
• Businesses can apply for exemptions from tariffs or seek tariff relief through government programs or trade associations.
• Exploring new markets and diversifying customer bases can help mitigate the impact of reduced demand from countries involved in the trade war.

US China Trade War Summary

The US-China Trade War is a long-running economic conflict characterized by trade barriers, tariffs, and difficult diplomatic ties between the two biggest economies in the world. The war began in 2018 when the US imposed tariffs on Chinese imports, and China responded with retaliatory measures. Since then, the fight has spread throughout the world, disturbing supply chains, creating market uncertainty, and limiting economic growth.

In 2020, a phase-one trade agreement was signed, but tensions still exist, hanging large over sectors, financial markets, and international diplomacy. The current negotiations to break this trade conflict will have a major effect on how the world economy develops.

FAQs on US China Trade War

What initiated the US China Trade War?

The trade war began with the imposition of tariffs by the US on Chinese imports, causing unfair trade practices and intellectual property theft.

What are the main objectives of the US in the trade war?

The US aims to address trade imbalances, protect intellectual property rights, and promote fairer trade practices with China.

How has China responded to US tariffs?

China has retaliated with tariffs on US goods, targeting sectors such as agriculture, manufacturing, and technology.

What sectors have been most impacted by the trade war?

Industries heavily reliant on international trade, including agriculture, technology, and manufacturing, have been significantly affected.

How has the trade war affected consumers?

Consumers may experience higher prices on imported goods subject to tariffs, potentially leading to increased costs of living.

What efforts have been made to resolve the trade war?

Both countries have engaged in negotiations to reach a trade agreement, resulting in the signing of a phase-one trade deal in 2020.

How has the trade war impacted global supply chains?

The trade war has disrupted global supply chains as companies seek to diversify away from China and navigate tariffs and trade barriers.

What are the geopolitical implications of the trade war?

The trade war has strained diplomatic relations between the US and China and impacted cooperation on various global issues.

What is the economic outlook amid ongoing trade tensions?

Ongoing trade tensions contribute to market uncertainty and can potentially hamper global economic growth.

How are other countries affected by the US-China trade conflict?

Other countries may experience indirect effects through disrupted trade flows, market volatility, and shifts in global trade patterns.