What Have We Learned from China’s Past Trade Retaliation Strategies?

Minghao Li, Wendong Zhang () and Chad Hart

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: Trade conflicts 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; China responded by initiating an anti-dumping investigation into U.S. sorghum. In early March, President Trump announced steel and aluminum tariffs, with China one of the primary targets. Within 2 weeks, China had responded by announcing a list of 128 U.S. products as the targets of retaliatory tariffs, effective April 2, 2018. The list included pork products and ethanol, which are of critical importance to the U.S. Midwest. As those tariffs went into effect, the U.S. Trade Representative (USTR) announced 25% tariffs on $50 billion in Chinese imports, investment restrictions, and the submission of a case to the World Trade Organization (WTO) over China’s trade practices (Trump, 2018; USTR, 2018). The Chinese government responded immediately with its own tariff package, targeting roughly $50 billion in U.S. imports, including the largest agricultural import, soybeans. For both the United States and China, tariffs on $50 billion worth of goods are scheduled to take effect in several months. The volleying may continue, as President Trump has mentioned the possibility of another round of proposed tariffs on a list of Chinese imports valued at $100 billion (Davis, 2018).

Date: 2018-01-01
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