China-US Trade War: No end in sight?

China and the United States are the world’s two largest economies and major trading partners, yet trade relations have not always been smooth. The rising trade deficit with China has been a matter of concern and debate in the United States for decades. US President Donald Trump is accusing China of stealing American jobs. The fight against the influx of products “Made in China” has been a key theme of his presidency.

US-China trade relations have taken many twists and turns this year. The Trump administration fired the first shot in January by imposing 30 percent tariffs on imports of Chinese-made solar panels and washing machines. The US decision to raise import tariffs on steel and aluminum products triggered the first round of trade retaliation from China, leading to a tit-for-tat throughout the summer. By early September, the conflict had escalated to a point where Trump threatened to impose new tariffs on basically all Chinese imports to the United States. But despite the heated rhetoric the Trump administration announced on September 12, that it is seeking further high level negotiations before considering to impose tariffs on further $200 billion imports from China. If, and when the talks will be happening is still unclear.

The China-US-trade war comes at a time when leaders in many western countries are becoming nervous about what they perceive as China’s unfair trade practices. EU leaders complain that China still shields its own market from foreign competition in many sectors. At the same time, the United States and Europe share a growing unease over China’s state-led global investment spree, which is driven by the aim of technological upgrading of its domestic industry.

Despite these shared concerns, transatlantic cooperation on China is hardly a possibility since Trump has also singled out European countries, including Germany, as trade enemies. Business leaders and economists warn that Trump’s unilateral and confrontational trade policies can have damaging consequences for global trade and financial markets. They also say that the trade war with China could lead to higher prices for American consumers, hitting the US economy like a boomerang.