US President Donald Trump said on Sunday that unless the China trade deficit is solved, there will be no deal, according to Reuters.
Trump further stated that "sometimes you have to take medicine" when asked about recent market volatility, insisting he was not deliberately trying to trigger a selloff.
US Commerce Secretary Howard Lutnick confirmed on Sunday that the tariffs would not be postponed and the policy will remain in place for days and weeks.
Treasury Secretary Scott Bessent noted that more than 50 nations have approached the administration for negotiations but cautioned, “They’ve been bad actors for a long time, and it’s not the kind of thing you can negotiate away in days or weeks.”
Market reaction
At the time of press, the US Dollar Index (DXY) was down 0.44% on the day at 102.89.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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