China-US trade war heats up: 3 reasons why it won't cool down anytime soon

International News

The truce in the US-China trade war is in tatters.
China said on May 13 that it will impose new tariffs on a range of American goods in retaliation for President Donald Trump’s decision to raise duties on $200 billion in Chinese imports.

Although trade talks may continue, for now the trade war that Trump began in January 2018 is back on, which will mean more economic pain for companies and consumers in both the US and China.
As an economist who focuses on international trade, I believe there are three reasons the conflict could continue for a long time.

1. Mastering the fundamentals

All evidence suggests that negotiators have made little headway resolving the fundamental disagreements between China and the US.The most pressing issues involve deep structural features of the Chinese economy that China has little incentive – or in some cases, ability – to change. In short, the US believes that the Chinese government has been both too involved and not involved enough in how its economy functions.

The most important and long-standing issue is that the Chinese economy owes part of its rapid development in recent decades to heavy subsidization of targeted companies and industries. The US wants China to be much more transparent about this support and to reduce subsidies overall.


 At the same time, the Chinese government has not been doing enough when it comes to protecting foreign intellectual property in China. Copyright enforcement is still weak, and US companies are forced to transfer technologies to Chinese counterparts as a condition of doing business in the country.