Are We On The Brink Of A US-China Trade War?

- Jul 16, 2018 -

Perhaps it has already started. Both sides have struck initial blows.

The US has imposed tariffs on imports of steel and aluminium. Countries accounting for the bulk of those imports have been exempted (possibly temporarily), but China is not among them.

For its part, China has struck back with tariffs on US goods including pork, wine, fruit and nuts.

So, when does a series of commercial skirmishes become a trade war? There's no real quantitative definition, but the US and China have taken steps and engaged in rhetoric - with the potential for the war of words to escalate into an economically serious conflict.

Despite this, the amount of trade affected by these measures so far is fairly modest.

Last year, the US imported something in the region of $3bn (£2.12bn) worth of steel and aluminium from China. That's less than 1% of total US imports of Chinese goods.

China's retaliation is aimed at about the same amount of trade, but it is a larger share of total imports from the US (about 2%).

It's also arguable that the steel and aluminium tariffs are not really trade war measures, as they are not specifically directed at China.

The US has justified the action on national security grounds, suggesting that the country's military should not be so dependent on imports of the metals. And China is not the only country on the receiving end of the new measures, even after all the exemptions.

But there are more measures in the pipeline. The scope is larger and it is very much directed at China.


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