How China deals with the trade war

The trade war escalation is one of the most important events of 2019. The situation was brewing long before that, with the US hitting China with tariffs semi-regularly since the beginning of last year. And though China did reciprocate with tariffs of their own, the difference is evident Рcurrently, the total of US tariffs on Chinese goods comes at US$550 billion, while China’s tariffs on the US goods are only US$185 billion.

But tariffs on the import are not the only weapon used in this war affecting the entire world. Back in March 2018, US President Donald Trump signed a memorandum directing to file a WTO case against China for their discriminatory practices, along with restricting any investments in the technology sector and imposing tariffs on tech and aerospace products.

China retaliated with its own claim to WTO against the US, and so the vicious cycle began and continued to this day. Initially, China refused to start trade talks, postponing negotiations further. The US also canceled the talks at the beginning of the year. Then, China banned the production of all types of fentanyl in April, putting an even bigger strain on the negotiations amid the opioid crisis in the US. The biggest rift between the two countries followed in May when the US put Chinese tech giant Huawei on the blacklist banning the US companies to buy from or be associated with it in any other way.

Trade talks seemed hopeful during the G20 Summit in Osaka, where both US President Donald Trump and his Chinese counterpart Xi Jinping agreed that reaching a deal on the matter would be in the best interest of both sides. Soon after Trump himself proposed a more relaxed approach to Huawei.

Now that a new set of US tariffs went into action on September 1, the negotiations seem less likely to continue. Though the talks about the two presidents meeting in Washington sometimes in October are going strong, the US is still adamant to impose another set of tariffs on Chinese goods on October 1.

Lately, more than ever, the Chinese manufacturers are turning to themselves, building their businesses locally to decrease the damage of the trade war consequences. Countless Chinese equipment manufacturers are supplying Western firms, which are now hesitant about the way their businesses will continue to develop. The situation is also creating a strain between them – many companies that were once partners are becoming rivals.

 

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