Beijing/Washington DC21 minutes ago
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1 December 2018
Vancouver Airport, Canada
Canada arrested a Chinese woman going to Mexico at the behest of the US. She was accused of doing business with Iran by giving false information to an American bank.
The woman was not a common Chinese citizen but the daughter of Chinese’s largest mobile company Huawei’s owner Rain Zhengfei’s daughter Meng Vanjhou. China’s arrest was very angry with Meng’s arrest and threatened to suffer the consequences.
An attempt was being made to send Meng to the US, on December 10, China arrested two Canadian citizens Michael Kovarig and Michael Sparov on charges of espionage.
The real reason behind Meng’s arrest was the ongoing trade war between the US and China. Trudeau was trapped in this war.
In the story, we will know how the first tariff war between China and America started and what was the result?
Chinese companies mimic American companies
Donald Trump became the President of the US for the first time in 2017. Trump promised in the election that he would reduce trade deficit with China.
America’s trade deficit with China was $ 355 billion when Trump became President. In August the same year, Trump accused China of stealing intellectual property, ie the products of American companies and started investigating it.
Trump started the trade war in January 2018 with a 30% tariff on a hundreds of panels and 20 to 50% on washing machine. After this, Trump applied 25% tariff on steel and 10% on aluminum.
All these were implemented on all countries, but they had the most impact on China. China was his big supplier. In 2018, America’s trade deficit with China increased to $ 419 billion.
On 22 March 2018, reports of cheating investigations of American companies also arrived. It was found that China’s policies were harming American companies.
The growth of the world decreased from 3.6% to 2.9%
Trump’s trade war had a direct impact on China’s tech sector. The US blacklisted tech companies like Huawei and ZTE. This led to difficulty in getting American software and hardware. Due to this, the crisis of the supply of chip i.e. semiconductor deepened.
China also reduced the purchase of American soybeans. This caused heavy losses to American farmers. This had the most impact on the states of Central America.
The Trump government had to pay compensation to the farmers.
On the other hand, Raw Materials became expensive with the trade war. This led to increasing the cost of production of companies. Due to this, prices of mobile, electronics and everyday things started increasing.
Trade fight between the US and China was not limited to just two countries. This affected the economy of the whole world. The International Monetary Fund (IMF) reported that the global growth of 2019 fell from 3.6% to 2.9% with this trade war.
Phase One Agreement in America-China stopped tariff war
Donald Trump had planned to impose a 15% tariff on sugar goods worth $ 160 billion from December 2019. He had earlier imposed tariffs on $ 112 billion goods in September.
Meanwhile, in December, both countries tried to reduce stress. In view of this effort, Trump canceled the plan to put tariffs on goods worth $ 160 billion. Apart from this, the tariff on 120 billion goods was reduced from 15% to 7.5%.
On 15 January 2020, the US and China signed the Phase Forest Trade Agreement. China promised that it would buy more agricultural products from the US. Also, the theft of intellectual property of American companies and prevent manipulation in currency.
The US reduced several tariffs, but retained 7.5 to 25% tariff on goods worth $ 350 billion.
In 2020, the Kovid epidemic spread in the world. Due to this, the trade war slowed down. However, its effect remained.
Start of trade war again after 4 years
US President Donald Trump has started a trade war with China in the first three months of his second term. Trump has increased 145% tariffs on China so far.
In response to this, China has also increased 125% tariff on American goods. On the other hand, Trump has banned the reciperook tariff imposed on other countries of the world.
On April 2, Trump imposed a recipe crocal tariff on 60 countries including India, China, which postponed 90 days on 9 April. But American has not given any concession to China in its decision. Due to this, business tension between the US and China has once again started deepening.
India missed a chance in trade war last time, this time better hope
When the Trump administration waged a tariff war against China in 2018, India hoped that companies would go out of China and turn to it. But this did not happen on a large scale. Now in 2024-25, the situation is seen again.
According to a 2019 report by the Economics Times, Japan, the US and European companies wanted to leave China in 2018, but due to India’s policy lethargy, the complexity of labor law and weak logistics, these companies moved to Vietnam and Bangladesh.
However this time this situation may change. According to a 2024 report by Bloomberg, India has implemented reforms like PLI scheme, better infrastructure, single window clearance. This may make companies from American or other countries a little ease to come to India than before.
In 2018, China imposed tariffs on the imports of soybean, wheat and cotton from the US. But India could not get into the contest in terms of quality and volume. According to the Economic Survey, India has adopted quality standards like Global GAP this time. Food processing is being emphasized to increase exports.