Partner Center Find a Broker

Unless you’ve been busy waiting for (and playing?) Spider-Man on PS4, then you’ll know that the U.S. and China have initiated a trade war that officially started with increasing tariffs on each other’s products.

What’s next for their trade relations? More importantly, how are tariffs affecting their economies so far? Let’s answer a couple of common questions:

What has been implemented so far?

July 6: 25% on $34 billion worth of goods

The U.S. implemented 25% tariffs on $34 billion worth of Chinese products like motor vehicles, computer disk drives, parts of pumps, valves and printers and many other industrial components.

China retaliated by applying 25% tariff on $34 billion worth of U.S. goods that includes top exports like soybeans, sorghum and cotton.

August 23: 25% on $16 billion worth of goods

Round 2 saw the U.S. imposing 25% duties on 279 Chinese product lines that includes motorcycles, steam turbines, railway cars, and semiconductors.

Not to be left out, China has immediately rolled out its plans to apply 25% tariffs on U.S. goods such as coal, copper scrap, fuel, buses and medical equipment.

Have the tariffs affected their economies yet?

Yes, but not in a way that you would think.

Remember that the earliest tariffs became live in July 6 and it takes a while before we see patterns. Heck, the U.S. hasn’t even released its August trade numbers!

Despite that, we’ve already spotted some interesting points to chew on:

1. Uncle Sam’s trade deficit with China has consistently gone wider in the last four months.


Meanwhile, China’s trade surplus with the U.S. has inched higher in five of the last six months.

2. China’s U.S. imports have steadily gone higher since Trump signed a presidential memorandum imposing tariffs on China’s goods.


China’s businesses took the other route, however, and started decreasing their imports of U.S. goods in five of the last six months.

3. China’s trade surplus with the U.S. just hit a new record high in August.


Whether it’s the U.S. companies “front-loading” their inventory, a strong U.S. economy leading to more demand for Chinese goods, or the U.S. tariffs not working as well as Trump had anticipated, China’s trade surplus with the U.S. is now up to $31.05B from June’s $28.09B figure.

Somebody call the Donald!

What’s next for the U.S.-China trade war?

Trump recently shared that “it’s just not the right time to talk” with China as his team gets busy with NAFTA negotiations.

But that was two weeks ago. Just last Friday, the POTUS threatened that higher tariffs on an additional $200 billion of Chinese goods “could take place very soon.”

In addition to that, Trump also revealed that there’s “another $267 billion ready to go on short notice if I want.

If both the $200B and $267B plans get implemented on top of the $50B already in the works, then China is looking at $517B of its goods getting additional duties! For reference, the U.S. had only imported $505 billion from China in 2017.

China won’t be taking the new tariffs sitting down, however. The economic giant might not import as many goods from the U.S. to combat its tariffs like-for-like, but it has warned in the past that it will fight back with “qualitative and quantitative” measures if the U.S. pulls the trigger on additional tariffs.

In fact, a meeting agenda printed earlier today revealed that China is planning to ask permission from the World Trade Organization (WTO) to impose sanctions on the U.S. for not complying with a ruling in a dispute over U.S. dumping duties.

WTO’s Dispute Settlement Body will meet on September 21. Will Trump finally find the “right time” between now and then to talk about China?