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US, China Prepare To Ink Deal

Author: Vinod Jayakumar/Wednesday, March 6, 2019/Categories: Exclusive

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US, China Prepare To Ink Deal

“China is neither an ally nor a friend — they want to beat us and own our country,” tweeted US President Donald Trump early in September 2011 before running for presidency. This marked the inception of criticism of China’s trade practices.

Later in April 2017, the United States Trade Representative (USTR) began an investigation to identify whether the imports of steel/aluminium pose a threat to national security. Following a series of such investigation on acts, policies and practices by USTR, President Trump placed a 30 per cent tariff on all solar panel imports, except for those from Canada, (worth US$8.5 billion) and a 20 per cent tariff on washing machine imports (worth US$1.8 billion). However, on March 22, 2018 Trump signed a specific memorandum which directed to file a WTO case against China for their discriminatory licencing practices, and impose tariffs on Chinese products such as aerospace, information communication technology and machinery. Since March 23, 2018, the U.S and China imposed a series of tariffs on each country’s goods to protect their economy. Finally in December 2018, both the opponents reached a 90-day truce and refrained from increasing the tariffs from 10 per cent to 25 per cent, when they met at the G-20 Buenos Aires Leaders’ Summit.

After the deal, China’s ministry of finance announced to temporarily remove the additional 25 per cent tariff on US autos and five per cent tariff on certain US auto parts for three months beginning January 1, 2019. The 90-day truce gathered momentum when US President Trump met Chinese vice- premier Liu He on February 22. This was followed by a statement by Trump delaying the imposition of tariffs on $250 billion worth of Chinese goods, following which demand growth from the top metal consumers lent support to the commodity prices.

The author is a research analyst at Karvy Comtrade Limited.

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