Future in danger: US China trade talks start in London!

In May, both sides had made an agreement to temporarily reduce tariffs: tariffs to Chinese products were reduced from 145 percent to 30 percent, while tariffs dropped from 125 percent to 10 percent. Trump had described China's opening as an important goal, and despite this progress, Trump finally expressed that China had "completely broken" the agreement.

background of the trade conflict

The trade conflict between the USA and China has existed since the beginning of 2018 and is shaped by the introduction of new and increase in existing import duties. The background includes the United States' trade balance deficit, the protection of intellectual property and forced technology transfer in China. In 2017, the USA exported to China worth $ 130.4 billion, while imports from China were $ 505.6 billion, which led to a growing trade deficit.

The US government has introduced several punitive tariffs to various products in the past to counteract the perception of unfair trading practices of China. In 2018 in particular, the tariffs and the mutual payment rose considerably, which further strain the trade relationships between the two countries.

Currently it can be seen that the Chinese industry could benefit from the customs break, which is also reflected in a slightly improved shopping manager index for the processing business. Despite these positive aspects, however, the index remains under the expansion threshold of 50 points, which underlines the initial uncertainty of how the geopolitical tensions will affect the economic situation.

The upcoming talks in London could be crucial for whether another escalation step can be avoided or whether the trade relationships between the two largest economies in the world continue to break. Finance Minister Bessent already spoke of a possible phone call between Trump and XI Jinping, which could possibly take place promptly.

The ongoing trade dispute not only affects the USA and China, but also on the global supply chains, whereby companies already have losses and traces of sales worldwide. The European Chamber of Commerce has also documented negative effects for European companies in China, which illustrates the far -reaching consequences of this conflict.