US-China Trade War Continues: Global Implications

The ongoing US-China trade war had its origin in 2012. It began then as a “cold war”, well before Donald Trump became the US President.

- Dr T. K. Jayaraman

The US began to experience growing imbalances from 2012 in its trade with the rest of the world, especially China. It was alleged that China was deliberately keeping its currency, the Yuan, low to encourage its exports by making them cheaper. The total US trade deficit in 2018 was $ 621 billion. The deficit with China was $323 billion. In 2018, the US imported a total of $ 3.1 trillion worth goods and services from the rest of the world and exported $ 2.5 trillion.

The deficit in 2018 was higher than what it was in 2017 and stood at $ 552 billion. The reason was the US dollar was stronger in 2018 than it was in 2017, making other currencies weaker, allowing their exports to increase and widening the US’s trade deficit.

The US imports from China comprise computers and accessories, cell phones, apparel and footwear, most of which are from American manufacturing companies’ which send raw materials to China for low-cost assembly. Once shipped back to the US, they are considered imports. China imports commercial aircrafts, soybeans, and autos from the US.