This archive report was first published on 1 September 2019.
September 1, 2019, marked a significant escalation in the ongoing trade war between the United States and China. The Trump administration has introduced new export controls, restricting American firms from selling sensitive technology, such as artificial intelligence and quantum computing, to Chinese companies.
As part of these efforts, several Chinese technology firms, including Huawei, have been blacklisted from purchasing sensitive American technology.
According to Chad P. Bown, a senior fellow at the Peterson Institute for International Economics, the trade war is entering a period of rapid escalation. 'We've never seen anyone do what President Trump has done,' Bown said. 'It looks more and more like this is the new normal.'
Research by Bown shows that tariffs between the U.S. and China remained relatively constant from October 2018 to mid-2019. However, following the collapse of talks between the two sides in May, President Trump initiated a series of increases that will raise American tariffs on China by approximately 12 percentage points in six months.
China has responded by raising tariffs on $75 billion worth of American products and halting purchases of farm products. The trade war has led to a significant shift in global trade patterns, with American imports from China falling by 12 percent in the first half of 2019, while exports to China dropped 19 percent.
Major multinational companies, such as Hasbro and clothing retailers like Express and Abercrombie & Fitch, have announced plans to quickly reduce their reliance on China, shifting their supply chains to emerging manufacturing hubs in Vietnam, India, and elsewhere.
