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Is there still a US-China Trade War under Biden's Presidency?

The ultimate results of the phase one trade deal between China and the United States - and the war that preceded it- have significantly hurt the American Economy without solving the underlying economic concerns that the trade war was meant to resolve. The trade war between the US led by Donald Trump and China and it’s president Xi Jinping started in July 2018, but how did it start? More on this by Perspectoverse’s Hiba Riaz.


In January 2018, U.S President Donald Trump began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S says are “unfair trade practices” and intellectual property theft. The Trump administration stated that these practices may contribute to the U.S-China trade deficit, and that the Chinese government requires transfer of American technology to China. In response to the U.S trade deficit, the Chinese government accused the Trump administration of engaging in nationalist protectionism and took retaliatory action. After the trade war escalated through 2019, on January 15 2020, the two sides reached a phase one agreement, however tensions continued to persist.

Trump and China’s chief negotiator, Vice-Premier Liu He, signed the agreement at the White House. As part of the deal, China agreed to buy an additional US$200 billion worth of American goods and services over the following two years, compared with 2017 levels. Those additional purchases would be made up of around US$77 billion in manufacturing, US$52 billion in energy, US$32 billion in agricultural goods and US$38 billion in services. The latter include tourism, financial services and cloud services. China also pledged to remove barriers to a long list of US exports, including beef, pork, poultry, seafood, infant formula, animal feed and biotechnology, according to Trump.

According to a report by the Peterson Institute for International Economics in February 2021, US exports of phase-one goods in 2020 fell more than 40 percent short of the target. The report stated that China’s import of goods covered by the Phase-one deal were 13 percent higher in 2020 than in 2019, although this was partly the result of the low base from one year earlier, due to China’s retaliatory trade war tariffs on US goods.

The trade war negatively impacted the economies of both countries. In the United States, it has led to higher costs for manufacturers, higher prices for consumers and financial difficulties for farmers. In China, the trade war contributed to a slowdown in the rate of economic and industrial output growth, which had already been declining. Many American companies have shifted supply chains elsewhere in Asia, bringing fears that the trade war would lead to US-China economic ‘decoupling’.

The trade war has also caused economic damage in other countries, though some benefited from increased manufacturing as production was shifted to them. It also led to stock market instability. Governments around the world would have taken steps to address some of the damage caused by the economic conflict.

While there has been broad support for the Trump administration’s objective of making China change its trade policies, the use of tariffs and the trade war’s negative economic impact have been widely criticized. Among American industries, U.S businesses and agricultural industries have opposed the trade war, though most farmers continued to support Trump, who provided them with substantial financial support.

As the Biden administration began, Joe Biden confirmed that he would not make any “immediate moves” to lift tariffs the Trump administration had imposed on imports of Chinese goods before a full review of the existing phase- one trade deal and consultations with US allies. In an interview with the New York Times published at the start of December 2020, Biden said the “best China strategy” was to get all traditional US allies in Asia and Europe “on the same page” which will be his major priority “ in the opening books” of his presidency. Biden said his trade policies would focus on “China’s abusive practices”, including “stealing intellectual property, dumping products, illegal subsidies to corporations” and forced technology transfers.

By early July 2018, there were negative and positive results already showing up in the American economy as a result of the tariffs, as a number of industries showed employment growth while others were planning on layoffs. American commentators noted that consumer products were the most likely to be affected by the tariffs.

An analysis published by the Wall Street Journal in October 2020, found the trade war did not achieve the primary objective of reviving American manufacturing, nor did it result in the reshoring of factory production. Though the trade war led to a higher employment in certain industries, tariffs led to a net loss of U.S manufacturing jobs. The trade war reduced the United States trade deficit with China in 2019, but this trend reversed itself in 2020, with the trade deficit increasing back to its pre-trade war level, while the United States’ overall trade deficit has increased.

Written by Hiba Riaz

Illustrated by Anannya Pincha

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