This trade war began nearly a decade ago, just about before Trump ran for president he tweeted “China is neither an ally or a friend- they want to beat us and own our country”. This was not the main catalyst for the event; however, it was forecasting for what Trump’s objective was when he stepped into office. From there the trade war escalated in 2016 and 2017 when Trump and Xi went back and forth at each other trying to get the best deal for each of their countries. It has dragged on into mid 2019, and we do not need an immediate end. The only end we see in the near future is the negotiations for a trade deal.
The news and political banter have been a large influencer on the global stock markets and even US monetary policy as of late. Trump recently pressured the Fed to cut rates and continuously cut rate with threats of devaluing the US dollar to get the upper hand in the trade talks. While China has been devaluing their currency and has more weapons up their sleeves as they cannot slap tariffs on US goods. Unlike the US who’s been on the tariff train for a long time now.
In this article, we will revisit the main events of the timeline in the Trade war and look at how it influenced the markets and monetary policy recently.
The layout of the article will display the most recent event at the top, and the earliest event at the bottom with analysis beneath. All the information is from 2018 going forward.
To total current tariffs applied are as follows:
The excludes proposed tariffs that have not yet been implemented.
All about China and US trade war
-US tariffs applied to Chinese goods: USD $550 Bn
-Chinese tariffs applied to US goods: $USD 185 Bn
November 8th, 2019.
On November 8th, Trump managed to stir the pot. He said, “China would like to get somewhat of a rollback, not a complete rollback because they know I won’t do it”. Will there be a trade deal this year? Who knows based on what Trump said.
November 7-8th, 2019.
On November 7th to 8th China and the US went into discussions based on tariff rollbacks. They agreed to discuss rolling back tariffs on each other’s goods based on the phases they plan on signing. This is set to come into effect when the two nations sign Phase 1 of the trade deal. Larry Kudlow confirmed that “If there’s a Phase 1 trade deal, there are going to be tariff agreements and concessions”.
November 1st, 2019.
On November 1st, the negotiation between the two nations ended with strong optimism. Trade Rep Wright Heze and Treasury Secretary Mnuchin were on the phone with Vice Premier Liu He. The talks were constructive and very serious, as per usual. Process was made apparent, and discussion will continue, the vagueness of the talks never fails to hit with the two nations.
That same day, the decision from the WTO hit the world. China had recently filed a lawsuit claim with the WTO on the US for US $3.6 Bn worth of US imports. China won the WTO case, meaning China can impose compensatory sanctions on US imports worth US $3.6 Bn. Because the US failed to meet the requirements according to the anti-dumping rules on China products. The US was evidently not pleased with the decision.
October 18th, 2019.
The USTR announced that it is in the process of launching a tariff exclusion plan for US $300 Bn of Chinese imports start October 31st to January 21st, 2020.
October 11th, 2019.
The US announces the “Phase 1” deal and delays tariff increases for Chinese goods. The two nations met for two days before this was announced in Washington where the negotiators came up with the plan. The Phase 1 deal was set to take weeks to finalize. The basics of the deal include China purchasing US $40-50 Bn in US agricultural products annually, along with a tighter handle on intellectual property provisions, and issue new guidelines on how the nation manages the Yuan. More of less said an agricultural and currency pact. This is a move however not a grave one as China is very reluctant to agree to currency monitoring and the majority of the deal is agriculturally based.
September 20th, 2019.
The US exempts over 400 Chinese goods from tariffs, releasing a list. The items excluded are mainly types of equipment of materials.
September 19-20th, 2019.
Mid-level talks were held between both nations in Washington ahead of the high-level talks scheduled in October. This was a successful meeting based on what both nations reported, they agreed they will continue to communicate over the matter and revealed little detail about the progress made.
September 13th, 2019.
China continued to be lenient with US tariffs. The US lead by example by delaying tariff hikes to October 15th, 2019, so China responded with the exclusion of tariffs on agricultural products from the US. Including soybeans, pork, and more.
September 11th, 2019.
September 11th, as it is known for other reasons, there was more news out of the trade talks. China announces the exemption of 16 types of US imports from more tariffs. These will be effective for a whole year, from September 17th, 2019 to September 16th, 2020.
September 5th, 2019.
The news continues out of the trade talks. On September 5th, China and the US finally agreed to sit down for the 13th time to continue their trade talks. High-level talks are set to take place in early October. There will be consultation mid-September between the two nations before higher-level talks.
September 2nd, 2019.
China steps in and launches a WTO tariff case on the USD $300 Bn worth of Chinese exports. This is not the first case China has brought to the WTO, in fact, it is the third. WTO has 60 days to attempt to settle the claim.
September 1st, 2019.
Tariffs are put into effect! The scheduled tariffs that we’re supposed to be placed on China and the US are officially on! US placed tariffs on USD $125 Bn worth of Chinese imports as promised. The products affected include footwear, diapers, food products, smartwatches, and some appliances.
China, in turn, has placed tariffs on USD $75 Bn worth of US goods, including a 5% tariff on US crude oil.
August 26th, 2019.
The Administration and Trump dismissed the allegations to cut the business ties with China. As Trump did not have the authority to do so by himself. Trump went onto say that he received calls from China while he was at the G-7 summit to restart trade talks. China did not confirm this news…yet.
China’s Global Times editor said that the nation is getting ready for a “scenario in which China-US trade relations deteriorate further, even much worse than now”.
August 23rd, 2019.
The morning starts off with China announcing to levy tariffs 5-10% on $75B worth of US goods. This was the same day of the Jackson Hole, where Trump did not get the support he wanted from Powell. Which prompted him to come out with an aggressive statement, who is enemy number 1; Powell or Xi?
Trump then said that he officially cut China off, US companies should look for other companies to do business with. Indicating that he is not willing to do a deal! This was impulsive and the Administration did not know anything about this. Causing the US equity markets to sell off drastically. Will they meet in September.
Trump waited for the futures markets to close for the weekend before announcing an increased on the US $250 Bn worth of Chinese goods tariffs. From 25% to 30%.
August 15th, 2019.
Overnight on August 15th, China announced that they will have to take countermeasures on US moves, US actions violated consensus reach in Osaka at the G-20 meeting. From a more accommodating language throughout August between the two nations, this bomb increased risk language and fear in the trade deal which prompted US markets to decline sharply.
It seems that neither side is willing to cooperate for a cohesive deal. That same day, China Foreign Ministry Spokeswoman, Hua Chunying reiterated that China hopes that the US can meet them halfway on the trade deal. Which Trump responded to by saying that the US will only accept a deal on US terms.
August 13th, 2019.
Trump lead the rapid fire news by tweeting “Through massive devaluation of their currency and pumping vast sums of money into their system, the tens of billions of dollars that the U.S is receiving is a gift from China. Prices not up, no inflation. Farmers getting more than China would be spending”.
The news that helped the upside open up was the optimism of a potential deal. The US and China were on the phone and they agreed to continue talks in the next two weeks. How far will they get? Only time will tell, however markets priced the news as a step in the right direction. Another pivotal piece of news was the postponement of tariffs on items from China on the 10% tariffs products until December 15th, including hardware (cell phones and laptops). Trump reiterates his view on the agricultural products from the US to China. So far, they have not done so, but he hopes that with the upcoming trade talks, the tide will turn.
August 12th, 2019.
China announces that they will release a lengthy article on August 13th, outlining their abilities to take on anything the US throws at them. This foreshadows the disband of any talks set to take place soon in the coming month. An aggressive statement from the Asian superpower.
August 9th, 2019.
Trump announces that the trade talks set for September may be canceled. Trump mentioned that he is ready to negotiate and make a deal happen while China is not.
August 6th, 2019.
just days after the Chinese Yuan dropped to 7 against the greenback. The US labeled China as a currency manipulator. Just as Chinese companies exposed, they were not purchasing US agricultural goods (a deal that was supposed to be true).
Equities begin to drop on a rate cut, economic fear strikes the markets. Economic fear dragging over from the trade war as well. China labeled as a currency manipulator, Trump announcing that he has the power to do the same and fear of a deal never being reached hammers markets from all time highs. The fear from the trade war turning into a currency war and a hot war propelled strong selling in global equities.
The Yuan dropped to levels that have not been seen in over a decade. This was a retaliatory measure against the US imposing tariffs on the remaining USD $300 Bn worth of Chinese goods.
This was a retaliatory measure taken to improve China’s position in the trade war. Making their goods more attractive to purchase. The US threatened to get the IMF involved, while the PBOC denied the claim that they are currency manipulators.
August 1st, 2019.
The US implements a 10% tariff on the remaining USD $300 Bn worth of Chinese goods. Effective immediately in September.
There was caution from Trump to increase the tariffs on the current USD $250 Bn worth of Chinese goods to 25%.
July 30th to 31st, 2019.
A two-day trade negotiation between US Trade Rep Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He ended with little progress.
However, the two nations decided to meet in September to re-discuss. Some of this brought upside to US equity markets.
In this meeting, the US reported that China would buy large quantities of agricultural goods. Which were not specifically confirmed by China.
This talk also lead the US to stepping back on Huawei and easing sanctions on the Chinese telecom giant.
July 16, 2019.
Trump acts and warns China that the US will slap tariffs on USD $325 Bn worth of Chinese goods. Just after he called a tariff truce at the G20 summit. Huawei was in the news again. The news was that the telecom giant would be aided by the US Government. The US Gov said they would license companies to sell goods to Huawei only if there was no security threat.
June 29th, 2019.
The US eases on Huawei ban and the trade talks look to be back on the table. The two nations agreed to come together again after they talked at the G20 summit. This is when Trump also announced that the US would ease up on immediate tariffs.
June 26th, 2019.
A truce between the nations ahead of the G20.
June 21st, 2019.
The US retaliates, again and adds more companies to their Chinese “entity list”. This makes it so that the newly added companies cannot purchase goods (parts or components) from US companies without government approval. They were all technology companies, and micro chip companies to be more specific.
June 18th, 2019.
Trade talks are yet again on the table just before the G20 summit. Trump and Xi had a discussion over the phone about a potential meeting to relaunch the trade talks. This was just after trump threatened another tariff round on the remaining USD $300 Bn of Chinese goods.
June 1st, 2019.
China retaliates, tariffs! Putting the threatened tariffs from May into effect. USD $60 Bn worth of US goods are now subject to tariffs.
- Products in list 1: 25% tariff from 10%
- Products in list 2: 20% tariff from 10%
- Products in list 3: 10% tariff from 5%
- Product in list 4: 5% tariff
Slight downside as the tides shift in trade talks, more tariffs, and talks started to evaporate. The complete implementation of the proposed tariffs helped this downside open up. Down over 7.5% from the top.
May 31st, 2019.
Chinese retaliation, to combat the US “entity list”; China made their own “unreliable entities” list.
May 16th, 2019.
China announces the increase on tariffed US goods. They will be effective June 1st. This was scheduled in a retaliation of the imposed US tariffs earlier in the month. The tariffed products include mainly agricultural products such as beef, lamb, pork and vegetables, coffee and furniture.
China also announced a tariff exemption system for some US goods. Those that were already affected by tariffs won’t be subject to the increase in tariffs June 1st.
US was also working on tariffs back home, they will discuss hitting USD $300 Bn worth of Chinese goods with 25% tariffs, mainly electronics.
May 10th, 2019.
The US takes matters into their own hands, increasing tariffs from 10% to 25% on the USD $200 Bn worth of Chinese goods on List 3. This comes after the 11th round of trade talks where the nations could not reach a trade agreement.
This caused China to retaliate, their Ministry of Commerce announced that China’s hand was just forced, and retaliatory measures will need to be taken.
May 5th, 2019.
Trump and the US threaten additional tariffs on USD $200 Bn worth of Chinese goods. Increasing from 10% to 25%. These tariffs have been at 10% since September 2018. Trump also flirted with the idea of slapping the remaining USD $325 Bn worth of Chinese goods with 25% tariffs.
Trump said this threat is set into place because China is not attempting to renegotiate a deal, instead they are not keeping their commitments.
April 30th to May 1st, 2019.
The US and China continue trade negotiations in Beijing. Where both parties leave satisfied, describing the talks as “productive” and holding new meetings in Washington in early May.
Off the turn of the year, the upside opened up. The Powell put and the PPT continued to buy up equities and the optimism of trade talks helped the upside. The optimism came from a deadline to sign a trade deal and a truce reached, along with further meetings between the two nations that went “well”.
April 10th, 2019.
On this day, The US and China agreed to establish a third part enforcements office to their trade talks to monitor the enforcement of their trade deal. At this point there was not trade deal to enforce.
April 3rd to 5th, 2019.
China and the US meet in Washington. This is when the parties began to edge towards what they thought was a trade deal. They had a soft deadline setup where they would know if a deal could be reached or not in the next 4 weeks.
April 1st, 2019.
China bans fentanyl.
March 31st, 2019.
Chinese tariffs on US autos were suspended, they were set to take place on April 1st, 2019, but we’re extended to a further date. This was a retaliatory action against US tariffs, where China placed 25% tariffs on US auto products. There was no deadline to the suspension.
March 28th to 29th, 2019.
The one-month silent period between the two nations comes to a halt, as the US and China meet in Beijing after their 1-month break from each other. The trade talks were “constructive”. During these talks, both nations discussed a third party to enforce the trade deal. Hinting at a trade deal soon. Or so we thought.
February 21st to 24th, 2019.
Trade talks continue in Washington with Liu He and Trump, there were optimistic views on the trade talks in hopes of a deal. Which lead Trump to extend tariff deadlines.
February 11th to 15th, 2019.
Beijing is the place; trade talks take place and trade talks are set to take place in Washington the next week.
February 7th, 2019.
Trump says he is not willing to meet with Xi until the tariff ceasefire is over, March 1st. This was an aggressive stance by Trump, foreshadowing further tariffs. They were originally set to meet in February.
January 30th to 31st, 2019.
A two-day long negotiation process is held in Washington between the two nations. This is when Trump announced that he will in fact meet with Xi in person in February.
January 7th to 9th, 2019.
The first meeting since the two nations agreed on a 90-day truce, ending in March 1st. This negotiation period was extended to a third day due to unresolved issues between the nations.
The two main topics of the negotiations were “trade issues” and structural issues”.
The two left on what seemed a good note as China’s Commerce Ministry described the talks as “extensive and established a foundation for the resolution of each other’s concerns.
This was the first time that the US brought up China’s promise to purchase a lot of agricultural goods, energy and other products from the US.
December 14th,2018.
China removes tariffs on autos from the US and on auto parts from the US for 3 months, from January 1st, 2019. They removed the additional 25% of tariffs on the US autos and 5% on the auto parts. Instead autos will be subject to China’s standard 15% tariff rate on foreign autos.
The downside continues to open up in the US equities as the trade war gains ground. Down from the highs over 20.50% and from the top of the red box to the bottom, a 16.75% drop. The downside came form the rate hikes, fear in economic conditions and fear of increasing trade war tension as more tariffs were announced.
December 2nd, 2018.
A truce has been reached, a temporary one though between China and the US. This was just after the G20 meeting a day before in Buenos Aires, Argentina.
This is a 90-day quiet period where both nations agreed to cease implementing new tariffs for 90 days or the remaining 3 months, effective immediate until January 1st. The US took back the threat of implementing an additional 15% on the already 10% tariffed goods from China. Worth USD $270 Bn.
October 30th, 2018.
The US plans a contingency if talks don’t go well in Argentine in the following months. They plan new tariffs on USD $257 Bn of Chinese goods.
Downside in the US equities starts to open up, what is the beginning of a bear market. S&P 500 futures slipped into correction territory dropping over 11% from the September 24th, 2018 high. This was just after the tariffs we’re implemented on a large portion of Chinese goods to the US. The increased tariffs sparked fear into the markets and the selling too control. The trade war was officially set off and the repercussions were felt by US equities, harsh selling off the back of a rate hike in the US as well.
September 24th, 2018.
Third round of tariffs hits as the US implements USD $200Bn worth of Chinese goods, the total now UDS $250 Bn with an increase to 25% from 10% at the turn of the new year. China responded with USD $60 Bn worth of US goods, increasing from 5% to 10%.
September 18th, 2018.
China officially announced a retaliation on the newly announced US tariffs. Worth USD $60 Bn on US goods.
September 17th, 2018.
US announces the USD $200 Bn of tariffs on Chinese goods, effecting on September 24th. The initial rate is 10% the rate by 2019 is 25%.
September 7th, 2018.
Trump shocks markets with the threat of further tariffs on Chinese products, on USD $267 Bn more to bring the total above UDS $500 Bn. In 2017, the US important over USD $500 Bn worth of goods from China.
August 14th, 2018.
China launces WTO claim against US tariffs on solar panels. Which China claimed to have damaged their trade interests with the US.
August 7th, 2018.
On this day, the second round of tariffs have been completed. List 2 items on USD $16Bn worth of Chinese goods to increase to 25% from 10%. China retaliates immediately with an increase of tariffs to 25% from the 10% on USD $16Bn worth of US goods.
August 3rd, 2018.
After the US announced a potential increase on USD $200 Bn of tariffs on Chinese goods, the Chinese Ministry of Commerce proposed an increase on USD $60 Bn worth of US goods which include over 5000 US products.
- 2493 products subject to 25% tariffs
- 1078 products subject to 20% tariffs
- 974 products subject to 10% tariffs
- 662 products subject to 5% tariffs
August 2nd, 2018.
Trump announces the increase of tariffs on USD $200 Bn worth of Chinese goods, from 10% to 25%.
July 10th, 2018.
The second round of tariffs becomes known, over 6000 products from China are subject to tariffs, 10%.
July 6th, 2018.
The US begins to collect tariffs (25%) on over 800 products from China, valued at USD $34 Bn on List 1. While the second round of tariffs is in talks, on 284 Chinese products worth USD $16 Bn subject to an increase to 25% of tariffs.
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