US-China trade war: How did it start and what does it all mean?
Tuesday 14 May 2019 13:52, UK
The biggest economies in the world are slugging it out in a tit-for-tat trade war, with President Donald Trump landing the latest punch. Here's what you need to know.
:: What are trade tariffs?
They are taxes imposed by a country on imported goods from overseas.
They give a price advantage to local companies and help protect them from cheap foreign competitors.
The US government's tariffs on thousands of different Chinese goods have to be paid by the companies importing the products.
The money goes to the government who can use it as they see fit.
:: How did the China-US trade war start?
President Trump has long attacked the trade deficit between the two countries, which in 2018 was $419.2bn (£322bn)
The deficit means China sells far more to America than the US sends the other way.
During his election campaign, Mr Trump said China was "raping" the US and hurting American businesses by selling things such as steel and aluminium cheaply.
China has been accused of "dumping" products on foreign markets because it subsidises the cost of some exports.
Previous US presidents and countless businesses have also been frustrated by the way Beijing enforces regulations to penalise foreign companies.
Mr Trump's protectionist "America First" policy led him to start imposing the tariffs early last year.
:: What's happened now?
The US has raised tariffs on $200bn (£153bn) of Chinese imports from 10% to 25%, affecting products from 5,700 categories.
Among the list of goods affected are car parts, cooked vegetables and vacuum cleaners.
Experts say it will take several months for US consumers to notice any increase in cost - assuming the tariff hikes are passed on.
Negotiators met in Washington to try to avert the tariff increase but failed to break the deadlock.
China has not yet said how it will respond but it has previously hit back with its own charges on a similar scale.
However, it is said to be running out of goods to penalise due to the heavy trade imbalance.
:: What does each side say?
China's commerce ministry says the country "will have to take necessary countermeasures".
Their chief negotiator in Washington, vice premier Lie He, said the tariffs are "not a solution" and "we should not hurt innocent people".
In a flurry of tweets, President Trump said the US would to continue to negotiate in a "very congenial manner" but refused to back down.
He posted: "We have lost 500 Billion Dollars a year, for many years, on Crazy Trade with China. NO MORE!"
"Tariffs will bring in FAR MORE wealth to our country than even a phenomenal deal of the traditional kind," he added.
:: What are the potential effects?
Some businesses may not be able to afford paying extra for Chinese products and could be forced to cut jobs or even go bust.
For example, small US tech firms that use cheap Chinese components may be particularly vulnerable.
Shoppers could also suffer if firms pass on some or all of the extra cost, while Chinese jobs may be at risk if American companies buy less or ask for a discount to make up for the tariffs.
President Trump has dismissed the suggestion shoppers are bearing the brunt.
He has claimed the tariffs have "had little impact on product cost, mostly borne by China" and are "partially responsible for our great economic results".
But some experts disagree and say they have caused "substantial increases".
A by the National Bureau of Economic Research said "the full incidence of the tariff falls on domestic consumers, with a reduction in US real income of $1.4bn (£1bn) per month by the end of 2018".
:: What's the effect on the UK?
The spat between the world's biggest superpowers creates uncertainty for businesses in Britain and around the world.
Chancellor Philip Hammond told Sky News a "full-blown trade war" between the United States and China "would be very dangerous" for the global economy.
Some UK companies could find buying products from American suppliers gets more expensive - potentially hurting their profitability and plans for growth.
Of course, if they decide not to "take the hit" the increase could end up passed on to the customer.