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The Ongoing Trade War Between US-China Amidst The Phase One Trade Deal

The United States (US) and China continue its trade war, even amidst their phase 1 trade deal. At the beginning of his presidency, former president, Donald Trump called for an inquiry into the unfair trade practices in China. He then burdened the communist state with 25% tariffs. With the Phase One trade deal signed between the two countries in 2020, it was expected that the countries would move towards harmony. However, that doesn’t seem to be the case, because the tariff continues to be imposed under the Biden Administration as well.

The foreign minister of China, Wang Yi, recently proposed to restart talks with President Joe Biden, to remove trade restrictions and barriers. The Minister noted that the US had significantly reduced bilateral discussions at all levels.

The talks to discuss the conflict between the two countries is yet to happen. However, Biden has recently signed an executive order to examine the international supply network in four sectors intensely impacted by the pandemic. When factories in China went in lockdown, the semiconductor business encountered grave blockages at the onset of the global pandemic. These sectors were also affected by the trade war between the US and China.

The continuous trade war is disadvantageous to both sides and should be resolved sooner than later.  The disputes that need to be addressed are not just limited to supply chains. The material in the Phase 1 agreement is also covered, which includes technology transfer, intellectual property rights, and growth of trade purchases. The countries need to sit together and give time to resolve these issues.

The US administration has shown an interest to talk about U.S.-China trade issues with its confederates first. It is crucial that any step to repair the relationship between the two superpowers should be taken without any further delay.

The US wants to review the supply chain mainly because it wants to reduce its dependence on China. It wants to be at par with China in producing goods such as semiconductors. Whatever the case maybe it is better for US to revive its relationship with China. China and the US need to cooperate so that the worst impact of the trade war can be prevented. In the past they have shared a relationship that has been mutually beneficial for both the countries.

The US and China need to realize that both being the top economies need each other’s support. With China constructing a massive supply chain network by 2035 to boost economic growth, it will become the focal international trading partner. China is going to become very important for most of the countries and US should realize this sooner than later. It is in the interest of both countries to reach an amicable solution.

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