The US–China trade war and Phase One agreement

Abstract

The Trump administration changed US trade policy toward China in ways that will take years for researchers to sort out. This paper makes four specific contributions to that research agenda. The first is to carefully mark the timing, definitions, and scale of the products subject to the tariff changes affecting US–China trade from January 20, 2017 through January 20, 2021. One result was each country increasing its average duty on the other to rates of roughly 20 percent, with the new tariffs and counter-tariffs covering more than 50 percent of bilateral trade. The second contribution is to highlight two additional channels through which bilateral tariffs changed during this period that received less research attention. One tariff change is through product exclusions, another is trade remedy policies of antidumping and countervailing duties. The third contribution is to provide an initial exploration into why China fell more than 40 percent short of meeting the goods purchase commitments set out under the first year of the Phase One agreement. The last contribution is to consider additional trade policy actions—involving forced labor, export controls for reasons of national security or human rights, and reclassification of trade with Hong Kong—likely to affect US–China trade beyond the Trump administration.