U.S.-China Trade War Escalates

Over the past month, the Trump Administration has placed hefty tariffs on Chinese exports.

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Tanzila Haque

The Chinese community makes up an influential part of the Bronx Science student body. Each year, Bronx Science puts on a grand production for the Lunar New Year.

What happens when the two biggest kids on the block fight? That’s what is going on with the trade dispute between Washington and Beijing. Americans from Midwestern farmers to retail consumers could feel the consequences.

The United States has the largest economy in the world, producing $20 trillion in goods and services each year while China has the second largest with $13 trillion, according to the International Monetary Fund. The two countries are also each other’s largest trading partners, says the U.S. government’s International Trade Administration. However, it is not all even, as China sells much more to the U.S. than it buys, leaving America with a very big trade deficit.

While the American economy is fairly open, the Chinese, under its Communist government, is not. The market is restricted, with state subsidies. And intellectual property rights, such as patents and copyrighted material are not respected, with large-scale theft of intellectual property.

The FBI defines intellectual property theft as stealing “ideas, inventions, and creative expressions,” which includes “trade secrets, proprietary products and parts, and movies, music and software.”

The Trump administration’s objective is to get China back to the bargaining table to reduce tariffs, open markets and protect intellectual property, hoping that any short-time economic pain to Americans will be worth it to get to a fair trading position with China.

The two sides had been negotiating a new trade deal to reduce tariffs (so each side can sell more) as well as to open up the Chinese market to American companies. The agreement also was meant to bolster intellectual property protections.

When the talks stalled, the Trump administration on May 9th, 2019 increased tariffs to 25% on $200 billion in Chinese products, almost a third of what the U.S. buys. The Chinese answered with higher tariffs on $60 billion in U.S. products.

The tariffs mean that Chinese goods sold in the United States will climb in price, from seafood to electronics to clothes. The counter-tariffs will make it harder to sell American items in China. Hit hard are U.S. farmers, who will lose sales, which is why Washington has announced $16 billion in agricultural assistance funding to growers.

The Trump administration’s objective is to get China back to the bargaining table to reduce tariffs, open markets and protect intellectual property, hoping that any short-time economic pain to Americans will be worth it to get to a fair trading position with China.

Last year, Census Bureau statistics show that the U.S. imported $540 billion from China, the highest amount ever. Chinese companies are everywhere, like Huawei, which sells more smartphones worldwide than Apple (and Apple makes its smartphone in China). That same year, much less was sold by Americans to China, $120 billion, as reported by the Census Bureau. The resulting 2018 China trade deficit of $420 billion, was up 12% from $375 billion in 2017 and $347 billion in 2016. As the U.S.’s worldwide trade deficit in 2018 was $878 billion, so China comprised about half of the total.

If Trump’s hard line on tariffs pushes the Chinese to agree to a trade agreement that reduces the deficit, he could claim a victory. If it does not work, the tariffs will raise prices for American consumers, which would be hard to say is a victory for anyone.

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