Transcription
China, China, China, China, China, China, China, China, [Music] China.
2,000 years ago, China built its Great Wall. Today, the US is building its own wall against China. Not with stones and bricks, but through customs tariffs. We will build a great wall.
Two colossal powers on the two ends of the Pacific, the Far East and the Far West. Not only our problems, but world's problems. The future of the global economy may well be shaped by the tense competition between these two giants.
Don't let some of these politicians go around saying, you know, cuz I'm telling you, these countries are calling us up kissing my. They are, they are dying to make a deal. Please, please, sir, make a deal. I'll do anything. I'll do anything, sir. The happiest people in the world would be China. They wouldn't be paying 104%. I, they'd be paying no percent. We'd be paying them 104%.
In April, US President Donald Trump imposed tariffs of up to 104% on all products imported from China. Beijing did not leave this move unanswered, however. [Music] Fore. Just a few hours after the foreign ministry's statement, China announced it would impose 84% tariffs on US goods and restrict exports of certain strategic [Music] products.
This showdown, which will affect the entire global economic order, may have happened in a single day, but it has been an evolving process that has been ongoing for nearly 40 years. [Music]
Starting in 1978, China began moving towards liberalizing its economy, slowly abandoning the strict communist system it had adhered to for decades. From the 1980s onward, it began exporting products made through cheap labor to the US. This resulted in a trade deficit for the US and a surplus for China.
After joining the World Trade Organization in 2001, China's export numbers skyrocketed, growing from 266 billion in 2001 to $1.4 trillion by [Music] 2008. China was saving while the US was consuming. The term "chimerica," a combination of China and America, and the metaphor of Siamese twins, were used to describe the mutual dependency of both countries in [Music] trade.
During the 2008 global financial crisis, while the US's economy shrank by nearly 2%, China's grew by 9.8%. [Music]
China's success was not achieved through liberal market economics, but through long-term state-controlled economic planning, exchange rate policies that supported exports, subsidies, loans, grants, infrastructure investments, and state capitalism that controlled production costs.
If you're the American president, you have to pay a lot of attention to that because your job is to create a lot of jobs in American society. And if you don't have Chinese consumers being engaged and buying American products and and Chinese investors can't invest in the United States and create more American jobs, then you'd be in trouble.
On May 19th, 2015, the Chinese government launched the "Made in China 2025" economic plan and began financially promoting 10 strategic high-tech sectors, including electric cars, information technology, telecommunications, artificial intelligence, advanced robotics, agricultural technology, aerospace engineering, maritime engineering, biio medicine, and rail infrastructure. Thanks to its plan, brands like Huawei, ZTI, DJI, and BYD rapidly emerged as major global [Music] competitors.
By 2018, the state support given to Chinese tech firms and exports began to draw criticism in the US and Europe, which claimed it was distorting competition. The Western block cited a range of arguments against Beijing's support of its tech sector, accusing it of being responsible for vulnerabilities due to trade deficits, national security threats, violations of intellectual property rights, and technology transfer imbalances, espionage, theft, and claiming that China's state-backed capitalist model created unfair competition.
"This morning, we're taking an additional step forward. We're bringing a new trade case against China and we're being joined by Japan and some of our European allies." [Music]
Signaling an interest in moving towards protectionist economic policies during his first presidential campaign, Trump was initially sworn in as US president in 2017 when the US trade deficit with China had reached $375 billion. "So help me God." Congratulations.
In March 2018, Trump raised the wall against China by imposing 25% tariffs on $50 billion worth of goods and duties of 25% and 10% on Chinese steel and aluminum, respectively. In the fall of that same year, he announced that he was preparing additional tariffs on $267 billion worth of imports from [Music] China. China responded with tariffs of equal [Music] value.
The confrontation didn't stop in 2018. Chinese companies ZTE and Huawei were accused of selling technology to Iran, and the US continued to build the wall by restricting them in many areas, especially in chip supply. Huawei's CFO was arrested by the US in Canada in December 2018 for allegedly violating the West's sanctions against Iran. Chinese DJI drones were banned in the US on the grounds of national security and BYD's activities in electric vehicle production were also restricted in the US as the company posed a threat to [Music] Tesla.
Although the trade war tension had somewhat subsided by 2020 and during the COVID-19 pandemic, a cautious and restrictive stance on trade with China became a bipartisan consensus in the US regardless of which party was in power. Meanwhile, Beijing was rapidly advancing toward its "Made in China 2025" goals. The barriers erected by the US pushed Beijing to invest in domestic innovation and technology and the move bore fruit.
According to an October 2024 report by Bloomberg, China has become a global leader in five technology areas: unmanned aerial vehicles, solar panels, graphene, high-speed railways, electric vehicles, and lithium batteries. The tech race with the US was now neck and neck.
"Tariffs will make our country rich, properly used." It was clear that tariffs would be Trump's main weapon against Beijing in his second presidency. The banning of Chinese-origin TikTok and artificial intelligence software, Deepseek, on the grounds that they posed a threat to US national security also became part of the wall he was building against China.
"They're manipulating their currency today as an offset against the tariffs. Not supposed to do that. The game isn't supposed to be played that way."
In February, Trump imposed a 10% tariff on Chinese imports. China responded by imposing a 15% tariff on US coal, and liquefied natural gas, and a 10% tariff on imports of US crude oil, agricultural machinery, and large motor vehicles.
"Don't worry, I already follow you." And in April, Trump raised the stakes, hiking the tariffs up to 125%. China responded first with a tariff rate of 84%. Then reciprocated with 125%.
As economists speculate as to the outcome of the battle and the world nervously watches on, the US-China trade war is likely to have repercussions around the world, with the World Bank warning that it could lead to a sharp contraction of up to a whopping 80% in trade between the two countries and a nearly 7% decrease in global GDP. [Music]
Given the deep economic interdependence between the two countries, the question of who will win the trade war is gradually turning into a different question: Who will lose the most? [Music]