A New US-China Trade War?

Recently, a classmate from Hong Kong shared a video featuring an economist discussing the potential repercussions of a renewed US-China trade war. With the looming possibility of new tariffs on Chinese goods, it’s essential to reflect on the first trade war during the Trump administration and draw lessons for the future.

The US-China Trade War: A Recap
The trade war, which escalated in 2018, was driven by issues such as the US trade deficit with China, intellectual property theft, and China’s industrial policies. The Trump administration initiated a series of tariff impositions and retaliatory measures that resulted in higher consumer prices in the US, disrupted global supply chains, and inflicted economic losses on both nations. Analyzing the outcomes of this conflict provides critical insights into the potential repercussions of imposing new tariffs on Chinese imports.

Asymmetric Impact on the US and China
Both countries suffered during the trade war, but the United States faced more severe consequences. The tariffs imposed on Chinese goods were often passed on to consumers, leading to increased prices for essential items, including electronics, clothing, and household goods. Estimates from the Federal Reserve Bank of New York suggested that these tariffs cost the average American household around $600 annually.