Sino-US trade war




Since Trump took office, Sino-US trade relations have been tense. In August 2017, the U.S. Trade Representative Office announced that it initiated a “301 investigation” on China. Article 301 of the U.S. Trade Act 1974. This provision authorizes U.S. trade representatives to initiate investigations of “unreasonable or unfair trade practices” in other countries, and may recommend U.S. presidents to implement unilateral sanctions after completion of the investigation, including the withdrawal of trade preferences and the imposition of retaliatory tariffs. This investigation was initiated, investigated, adjudicated, and enforced by the United States itself. It has a strong unilateralism.




On March 22, US time, US President Trump signed the president’s memorandum based on the results of the “301 investigation.” It will impose large-scale tariffs on goods imported from China. The scale of China’s merchandise related to taxation may reach US$60 billion. It also restricts Chinese companies from investing in the United States in mergers and acquisitions.


Contradiction upgrade


On April 2, 2018, China suspended duty on seven categories of 128 imported products originating in the United States from the tariff reduction obligation, and the existing policy on bonded taxation, tax relief, and exemption was unchanged. On April 4, China issued tariff countermeasures against the United States. China imposes tariffs on 106 products originating in the United States. On April 5th, China initiated a dispute resolution procedure on the US import of steel and aluminum products 232 measures.




On March 23, 2018, affected by the increase in taxes in the United States, China’s A shares and the two cities suffered heavy losses. The three major stock indexes fell sharply by more than 3%, and more than 3,000 stocks fell. At the opening in the afternoon, the stock index extended its decline.

Afterwards, due to the impact of Sino-US trade friction escalation, global stock markets generally fell recently. On April 3, most stock indexes in Asia-Pacific stocks closed lower, the three major stock indexes in Europe fell collectively, and US stocks also appeared on “Black Monday”, which was continuously criticized by Trump. Amazon fell 5.2%, causing technology stocks to fall across the board. The Dow fell 758 points, its lowest point this year. As of April 22, Beijing time, at 22:18, the Dow Jones Average fell more than 300 points, fell 1.31%, the S & P 500 index fell 0.82%. As for A shares, due to concerns about trade frictions between China and the United States, the Shanghai Composite Index fell 1.19%, the Shenzhen Index fell 1.69%, and the GEM fell 3.35%.




The nature of Sino-U.S. economic and trade relations is mutually beneficial and win-win. The United States will benefit greatly from both the micro and macro levels. By importing a large amount of low-cost and labor-intensive products from China, the United States has greatly reduced the cost of consumer spending for the United States, increased consumer surplus, and actually improved the welfare of American consumers. Macroeconomically, it also helps the United States to curb inflation. The war between the two sides is unreasonable, and it is more harm than good.

Our industry has also been affected in this war. Many of the tax increases on both sides involve the industry, which increases the cost of our products and reduces our export competitiveness. But these are based on increasing the cost of the American people’s consumption. This is a bad result for both countries.

It is hoped that the two sides can ease relations as soon as possible, eliminate frictions and carry out further cooperation to create a win-win situation.

Post time: Jun-29-2018