Trade War Tensions Escalate: US and China Lock Horns Over Tariffs

Trade War Tensions Escalate: US and China Lock Horns Over Tariffs

Global Economy Feels the Heat as Trump's Tariffs Double, UK Gets Special Treatment

Story: Global Economy Impacted by US-China Trade War and Increased Tariffs

Story Summary

The ongoing US-China trade war has taken a new turn with the US doubling tariffs on steel and aluminum from 25% to 50%, significantly impacting the global economy. The tariff hike, which is part of President Trump's strategy to revive domestic manufacturing, has led to a surge in US steel and aluminum prices. However, the UK has been exempted from these increased tariffs following a trade deal with the US. Amid these developments, China has accused the US of violating the Geneva trade deal and intellectual property theft. Despite the escalating trade tensions, the US maintains that it cannot completely decouple from China, emphasizing the need to protect American innovation while maintaining trade relations.

Full Story

US-China Trade Tensions Escalate with Increased Tariffs Amid Intellectual Property Concerns

In a significant escalation of the ongoing trade war, the Trump administration has doubled tariffs on steel and aluminium imports, raising duties from 25% to 50%. The move, which has been met with widespread criticism and fear of economic implications, comes amidst accusations against China of rampant intellectual property theft from American institutions.

Background

President Trump’s decision to increase tariffs was made in an attempt to reduce or eliminate the threat posed by imports and ensure self-sufficiency in strategic industries. This move builds on a February 10 executive action that imposed a flat 25% tariff on all steel and aluminium imports. Notably, the UK has been spared from this tariff hike after a deal was struck between Washington and London last month.

A Strained Truce

This latest development follows a fragile truce agreed upon by the US and China on May 12 to pause the trade war for 90 days. However, tensions have been renewed with the US accusing China of “seriously violating” the agreement, a claim that Beijing strongly denies. China has instead accused the US of “coercion” and “harmful” restrictions, calling into question the validity of Washington’s claims.

Economic Impact

The increased tariffs have already begun to impact the global economy. The Organisation for Economic Co-operation and Development (OECD) predicts a modest 2.9% growth in 2025 and 2026, down from 3.3% last year. US manufacturers have also reported a third consecutive monthly decline in output, as uncertainty over tariffs continues to impact production.

Legal Challenges and Future Implications

The tariffs face legal challenges, and White House Economic Council Director Kevin Hassett remains very, very confident that courts will support President Trump's tariff agenda. Meanwhile, Republican South Dakota Sen. Mike Rounds has called for a nuanced approach to the US-China relationship, advocating for maintaining China as a key trade partner without giving them access to America's technology.

Conclusion

As the US doubles down on its tariffs, the global economic landscape faces a period of uncertainty and volatility. The impacts of these measures are already beginning to be felt, with declines in manufacturing output and lowered growth projections. As legal challenges mount and negotiations continue, the future of this trade war and its global impact remains uncertain.

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