The trade dispute between China and the US was taken to the next level – and it only took a few tweets for it. Last week, US President Donald Trump announced via Twitter to increase custom duties on imports from China up to 25%. Consequently, on Friday, May 10th 2019, the United States began raising tariffs on Chinese products with an annual trade value of approximately $200 billion from 10% to 25%. 1

The trade conflict between China and the US started in March 2018. Since then the dispute between the world’s two largest economies has not come to an end, despite signs in recent weeks that both sides were nearing an agreement. But, according to US officials, China withdrew key commitments and changed crucial points in the draft of the 150-page trade agreement. Vice-Premier Liu of the Chinese government joined the latest round of trade talks in Washington last Friday. According to him, China respects commitments with the US and supports the need to cooperate for the benefit of China and the whole world. Liu highlighted the extent of differences remaining within the marathon China-US trade talks. Even though both sides have reached consensus on many things, “if both sides want to reach an agreement, then all (additional) tariffs must be eliminated,” Liu told reporters before flying back to Beijing. 2

Negotiations in Washington broke off on Friday without a deal on trade. Escalating the conflict even further, US Trade Representative Robert Lighthizer threatened with additional tariffs on the remaining $300 billion worth of Chinese imports that haven’t already been targeted. At the same time, China seemed upset about the current developments of the trade war and is likely to answer with retaliations on US-products.

On May 13th 2019, the Chinese Finance Ministry announced additional taxes on imported US goods in retaliation for the Trump administration’s latest decision to increase duties on Chinese products. In total more than 5000 US products are being targeted by the Chinese government, adding up to goods with an annual trade value of approximately $60 billion in US goods. Effective by June 1st different types of products, such as food products, building materials, consumer goods, transport, electronics, natural resources and chemicals will face raising tariffs up to 25%.

In total, China classified the US levies into 4 different tariff categories:

  • Additional 25% tariff on certain commodity goods 3
  • Additional 20% tariff on certain commodity goods 4
  • Additional 10% tariff on certain commodity goods 5
  • Additional 5% tariff on certain commodity goods 6

Summarizing the latest developments in the China-US trade-war, China has been reserved with retaliations towards imported American products. In contrary to the United States, which are still threatening further increases over the next few months. The trade dispute between China and the United States will remain a news-worthy topic in the coming weeks and possibly months. As both parties have agreed on continuing talks in Beijing, the China-US comprehensive economic dialogue will continue for an even longer period of time. How long is uncertain.

ECOVIS Beijing

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