United States Trade Representative Jamieson Greer announced late Monday that China has committed to dismantling existing countermeasures. However, Greer cautioned that the imposition of tariffs on Chinese goods could be reinstated should the agreed-upon terms not be fulfilled. This statement introduces a degree of uncertainty into the trade relationship between the two economic powerhouses, leaving open the possibility of renewed trade tensions.
Key quotes
China has agreed to remove countermeasures.
Outcome of China tariff talks ‘pragmatic’.
If things don’t work out, China tariffs can go back up.
Market reaction
As of the latest observation, the AUD/USD currency pair is exhibiting a modest gain, trading 0.03% higher on the day at a level of 0.6375. This marginal increase suggests a limited immediate impact from the trade representative’s comments on the Australian dollar relative to the US dollar. However, broader market sentiment and risk appetite will likely be influenced by further developments and clarifications regarding the US-China trade relationship. Investors are closely monitoring economic indicators and policy announcements from both countries to gauge the potential impact on global growth and currency valuations.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries arising from pronounced protectionist policies implemented by one or more parties. This typically involves the imposition of trade barriers, most notably tariffs, which in turn provoke retaliatory measures. The ensuing escalation of import costs invariably leads to an increase in the overall cost of living for consumers.
The economic conflict between the United States (US) and China commenced in early 2018, characterized by the imposition of trade barriers on Chinese goods by then-President Donald Trump, citing unfair commercial practices and allegations of intellectual property theft. China responded with retaliatory tariffs on a range of US products, including automobiles and soybeans. These tensions de-escalated somewhat with the signing of the US-China Phase One trade deal in January 2020. This agreement aimed to address structural reforms within China’s economic and trade framework and to foster renewed stability and trust between the two nations. However, the onset of the Coronavirus pandemic shifted global priorities. Despite this, President Joe Biden, upon assuming office, maintained the existing tariffs and introduced additional levies.
The return of Donald Trump to the White House as the 47th US President has reignited concerns about renewed trade tensions between the US and China. During his 2024 election campaign, Trump pledged to impose tariffs of 60% on Chinese goods upon his return to office, which materialized on January 20, 2025. With Trump’s reinstatement, the US-China trade war is poised to resume, potentially leading to a cycle of retaliatory policies that could disrupt global supply chains, reduce investment spending, and contribute to inflationary pressures, as reflected in the Consumer Price Index.
