According to Reuters, the Chinese embassy stated on Friday that the United States and China are not currently engaged in discussions regarding tariffs.
“There are no ongoing consultations or negotiations between China and the US concerning tariffs. The US should cease its misleading actions,” stated a foreign ministry announcement released by the Chinese Embassy in the US.
Market reaction
Following this news, US equity index futures edged downward. At the time of this report, the S&P 500 Futures had decreased by 0.2% for the session.
Concurrently, the US Dollar Index (USD) pulled back from its intraday peak in immediate response, recently trading at 99.62, still up 0.33% compared to yesterday’s close.
US-China Trade War FAQs
In general terms, a trade war signifies an economic dispute between nations stemming from extreme protectionist policies. This involves the implementation of trade barriers, such as tariffs, which then provoke retaliatory measures. This cycle increases import expenses, ultimately raising the cost of living.
The economic friction between the United States and China commenced in early 2018, when then-President Donald Trump established trade restrictions on China, citing unjust business practices and the misappropriation of intellectual property by the Chinese. China responded by levying tariffs on various US products, including vehicles and soybeans. These tensions grew until the US and China finalized the Phase One trade agreement in January 2020. The accord mandated structural and other adjustments to China’s economic and trade system and aimed to restore stability and confidence between the two countries. However, the Coronavirus pandemic shifted attention away from the conflict. Nevertheless, it’s important to note that President Joe Biden, who succeeded Trump, maintained the existing tariffs and even introduced some additional ones.
The return of Donald Trump to the White House as the 47th US President has reignited tensions between the two nations. During his 2024 campaign, Trump pledged to impose tariffs of 60% on Chinese goods upon his return to office, which occurred on January 20, 2025. With Trump back in power, the US-China trade war is expected to resume where it left off, with reciprocal policies impacting the global economy through disruptions in international supply chains. This leads to decreased spending, particularly in investment, and contributes directly to Consumer Price Index inflation.
