Lessons from Previous U.S.-China Trade Disputes

Trade issues have recently erupted between the United States and China and the battle over newly announced tariffs has escalated quickly. At the beginning of 2018, the United States imposed tariffs on imported solar panels and washing machines, and China responded by initiating an anti-dumping investigation into US sorghum. In early March, President Trump announced steel and aluminum tariffs with China being one of the primary targets. Within two weeks, China responded by announcing a list of 128 US products that are the targets of retaliatory tariffs effective on April 2, 2018. The list included pork products and ethanol, which are of critical importance to the US Midwest. As those tariffs went into effect, the US Trade Representative announced 25 percent tariffs on $50 billion worth of Chinese imports, along with investment restrictions, and the submission of a case to the World Trade Organization over China's trade practices. The Chinese government responded immediately with its own tariff package, targeting roughly $50 billion of US imports, including the largest agricultural import, soybeans. For both the United States and China, the $50 billion tariffs are scheduled to take effect in a couple of months. The volleying may continue as President Trump has mentioned the possibility of another round of proposed tariffs on a list of Chinese imports with $100 billion in value.