US-China Trade War Escalated Last Week

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US-China Trade War Escalated Last Week

Tensions stemming from the US-China trade war escalated sharply over the last few days. Here's what happened: Friday evening, Aug. 23, Beijing time Before US stock markets open, China's Ministry of Finance announces on its website that it will apply new tariffs of between 5% and 10% on US$ 75 billion worth of goods from the United States. The move is a response to the US government's announcement on August 1 that it is adding a 10% tariff to US$ 300 billion worth of Chinese goods. Washington eventually delays some of those tariffs, saying they will be implemented in two tranches: on Sept. 1 and Dec. 15.

The bulk of the Chinese tariffs will take effect on Sept. 1, while the rest of the duties will be implemented Dec. 15.
The tariff increases cover US goods such as peanut butter, raisins, skateboards, life jackets, old clothes and treadmills.
At least some of the items were previously mentioned in tariff lists released in May.

Also on Friday, the Chinese Ministry of Finance announces that a 25% tariff on US automobiles and auto parts will be reinstated Dec. 15. The tariffs were suspended this year in the wake of the meeting between Chinese President Xi Jinping and US President Donald Trump in Argentina at the end of 2018. Trump tweets that US companies are "ordered" to immediately start looking for an alternative to China. Saturday, Aug. 24, Beijing time US stocks close lower, with the Dow Jones industrial average losing more than 600 points and the S&P 500 down 2.6%. Trump tweets that duties on goods imported from China will be increased:

On Oct. 1, tariffs on US$ 250 billion such products will rise from 25% to 30%.
Tariffs planned for Sept. 1 on US$ 300 billion worth of Chinese goods will now be 15%, instead of 10%.
China's Ministry of Commerce responds to Trump's new tariff increases, and urges the US to reverse course.

Sunday, Aug. 25, Beijing time Trump says at the Group of 7 leaders meeting that he could declare the escalating US-China trade war as a national emergency, although he added he has no plans at the moment to do so. Thursday, Aug. 29 Gao Feng, spokesman for China's Ministry of Commerce, said China is willing to calmly resolve the trade dispute with the United States and is against any further escalation in tensions. He noted that the Chinese and U.S. trade delegations have maintained "effective" communication. "China has plenty of means for counter measures, but under current situation, the question that should be discussed right now is about removing the US? new tariffs on US$ 550 billion Chinese goods to prevent escalation of the trade war," Gao said. Gao indicated the Chinese are more interested in negotiations than they are on retaliating, highlighting the need to prevent further escalation. The last publicly known high-level call between both delegations was on August 13. The Ministry of Commerce said at the time in a statement that a similar call was planned within two weeks. The two sides were also expected to meet face-to-face in September. However, after the latest escalation it is still not clear how close the US and China are to taking another step forward in negotiations.