The ongoing US-China Tariff war began last year in June 2018 when the US imposed China-specific tariffs. This triggered the current tariff war. This was followed up in September 2018 by the US imposing tariffs (import duties) of 10% on a range of Chinese goods worth $250 billion. China retaliated, announcing duties on American products, including on agriculture products and automobiles. The list included soybeans, electric vehicles, a range of hybrid electric vehicles, a variety of seafood and pork; the two countries forged a temporary truce in December 2018. However, in May 2019, the US once again increased the tariff to 25% from the previous 10% on Chinese imports, leading to another round of retaliation by China. Beijing announced levies on $60 billion (€53 billion) worth of US goods, starting 1st June.
This tariff war has affected not just trade between US and China, but international trade as a whole. The conflicts between specific U.S-led companies and competitors centred in China, Russia and Europe are significant because they involving a wide range of competing private interests throughout the world. Disputes are underway in agriculture, vehicle production, oil and natural gas, steel, aluminum, commercial airplanes and armaments.
The contention between the US and China has become particularly intense in the technology sector as U.S.-based dominance is being challenged. The U.S. has banned the Chinese multinational IT company, Huawei and its products from the U.S. on the grounds that Huawei poses a threat to its national security. The US has further banned Huawei from any cooperation with U.S. companies and threatens all those who continue to do business with Huawei with severe penalties. This is being opposed by several companies and countries throughout the world as Huawei products and advanced technology are already widely used in Europe and elsewhere, including in Britain, Canada and in US tech companies.
The US-China tariff war is threatening to intensify and cause huge disruptions in world trade. In such conditions, the two countries were compelled to negotiate on 29th June, on the sidelines of the G20 meeting in Osaka. However, at the end of that meeting, all that the two countries could agree on was a truce to maintain the status quo and to further talks. Even that position is at risk within just a week of the “truce” with China declaring that it will not hold any talks with the US till all tariffs are withdrawn.
National security was the official justification given by the US Government for the tariff hikes. By June last year, the official justification developed into a tirade against China and its alleged theft of technology and unfair trade practices. President Trump has declared that the WTO has failed to check China’s unfair trade practices and hence the US is justified in taking unilateral action in the form of a tariff offensive.
President Trump also claims that these actions are aimed reducing the US trade deficit and at bringing back jobs to America. These are all false claims, meant to deceive the American working class and people. The real aim of the tariff war against China is to prevent it from gaining technological supremacy and challenging the dominant position of the United States in world affairs.
The US imperialists are blaming China for the huge and growing US trade deficit. In reality, the ever growing massive trade deficit of the United States is an inevitable result of the agenda of trade liberalisation, which the US itself has been championing for the past 25 years or so.
Since the middle of the 1990s, the leading imperialist powers of the world led by the US have been forcing all member states of the World Trade Organisation (WTO) to lower import duties. Lowering national barriers to the free flow of commodities and capital was promoted as being “free trade”, allegedly for the benefit of all. The establishment of the World Trade Organisation in 1995 was an important landmark in the efforts of imperialism to open up the markets of all countries for its domination and plunder.
The growth of world trade over the past two decades has not delivered benefits for all. On the contrary, it has led to the intensification of exploitation of the working class in all countries. It has led to widespread destruction of livelihood and jobs in the majority of nations of the world. It has widened economic disparity and inequality both within and between countries. It has dragged the world economy repeatedly into one crisis after another.
For more than two decades now, capital and production have been shifting to wherever labour and raw materials are cheaper or environmental safeguards are easier to violate. One of the results of this outward flow of capital has been the loss of manufacturing jobs within the United States and other advanced capitalist countries. Another result is the rise of China as a global power and more rapid capitalist growth in India. Yet another result is the huge trade deficit of the US, whose imports far exceed its exports and the gap keeps widening year after year.
In the name of addressing the problem of the widening trade deficit, the US imperialists are using import tariffs as a weapon to bully their major trading partners. In particular, they are using it as a weapon to weaken China, whose growing influence is viewed as the greatest threat to the continuation of US hegemony over world affairs.