Explained: US-China Trade fight and what happens next

Beijing/New Delhi:  The world's two largest economies United States and China are edging closer towards an all-out trade war.

The Donald Trump administration has published a list of about 1,300 Chinese exports that could be targeted for tariffs. In a retaliatory measure, China has decided to impose additional tariff of 25 percent on 106 items of products under 14 categories worth USD 50 billion,  including aircraft and cars.

The date of implementation will depend on when the US government imposes the tariffs on Chinese products.

The US plans to apply the tariffs to about USD 50 billion worth of goods to punish China for its alleged theft of trade secrets, including software, patents and other technology.

China has already slapped tariffs on 128 US products, including wine and pork, totalling to USD 3 billion in retaliation to Trump's move to impose tariffs on steel and aluminium.

Trump signed a memorandum on March 22 that could impose tariffs on Chinese imports and restrictions on Chinese investment in the US. The memorandum is based on a Section 301 investigation, launched by the Trump administration in August 2017, into alleged Chinese intellectual property and technology transfer practices.

In 2017, China had a trade surplus with the United States worth $375 billion goods. Trump has demanded that the China cut the trade gap by $100 billion.

What happens next?

A Reuters report has said that the trade actions will not be carried out immediately, so there may be room for maneuver. Publication of Washington’s list on Tuesday started a period of public comment and consultation expected to last around two months. The effective date of China’s moves depends on when the US action takes effect.

Meanwhile, the US has voiced willingness to negotiate a resolution to an escalating trade fight with China after Beijing retaliated against proposed US tariffs.

Asked whether the U.S. tariffs announced on Tuesday may never go into effect and may be a negotiating tactic, Trump’s top economic adviser, Larry Kudlow, told reporters: “Yes, it’s possible. It’s part of the process, ” Reuters said.

However, if the two countries are unable to settle the dispute, a full-scale trade war could destabilize the commercial ties between both the countries.

With Agency Inputs