Opinion

Will a US-China trade deal remove or just restructure the massive 2018 tariffs?

USA-TRADE/CHINA

By Chad P. Bown and Eva (Yiwen) Zhang For the Peterson Institute for International Economics (PIIE)

After spending 2018 imposing tariffs on over $360 billion of each other’s trade, the United States and China are now negotiating how to resolve President Donald Trump’s trade war. The talks reportedly cover subsidies, intellectual property protection, and new methods of enforcement. They may also result in China directing its state-owned enterprises to buy more American goods and services.

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But what about all those 2018 tariffs? Recent media reports suggest the duties may not be removed—a matter of concern in the business world—even if there is a US-China deal. Given the historical magnitude of the trade protection, as well as the types of goods that each side deliberately targeted, their economic implications would remain important.

Here are five things you need to know about the US-China tariffs of 2018.

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1. US SPECIAL PROTECTION TOWARD CHINA IS NOT NEW, BUT IT NOW COVERS MORE IMPORTS THAN AT ANY POINT SINCE THE 1980S.

Trump’s tariffs on $250 billion of imports from China grabbed headlines in 2018, but China’s exports were already affected by four other sets of US special tariffs imposed over the year, including on steel, aluminum, solar panels, and washing machines. Combined, over 50 percent of US imports from China became subject to special US trade protection by the end of 2018.

The Trump administration’s actions were noteworthy not only because they were imposed unilaterally but also because they were so sizeable. While the United States has imposed special protection on imports from China for decades, the long, historical view shows the enormous scope of the 2018 tariffs (figure 1).

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