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US China Trade War

US China Trade War

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GS 2 || International Relations || International Politics || USA in World Affairs

Why in news ? :

  • The arrest of a top Huawei executive has roiled the business world and threatens to derail the tenuous trade truce between the United States and China. Meng Wanzhou, the Chinese tech company’s chief financial officer, was detained in Vancouver on Saturday at the request of US authorities.
  • She accused by the United States of helping Huawei cover up violations of sanctions on Iran, according to Canadian prosecutors.
  • US lawmakers are condemning Huawei, which they say poses a national security threat to the United States.

Why the Action Against HUAWEI ?

  • Over the past couple of years, Huawei has reportedly circumvented sanctions imposed on North Korea and Iran, providing the countries with telecom equipment that can be used for extensive spying on populations, so-called dual use technologies. But the vast majority of criticism has surrounded Huawei’s growing influence on global communications in the coming years. The Chinese company will provide technology for 5G wireless internet across the world.
  • In 2012, Huawei and ZTE Corp, another Chinese telecom company, were the subjects of an investigation that looked into whether their equipment could pose a threat to US interests.
  • That report by US Congress concluded that “Huawei did not fully cooperate with the investigation and was unwilling to explain its relationship with the Chinese government or Chinese Communist Party, while credible evidence exists that it fails to comply with US laws.”

Trade War between China & USA :

  • The US levied a 25 per cent tariff on more than 1,300 Chinese goods, to the tunes of 50 billion dollars. And China responded by levying additional duty on 106 American products.

Prelims bits : What is a trade war?

  • A trade war is an economic conflict in which countries impose import restrictions on each other in order to harm each other’s trade.
  • In a trade war, two or more counties create trade barriers on each other in retaliation for other trade barriers.

What are trade barriers?

  • Trade barriers are what governments use to hinder or control free trade (mainly imports from another country).
  • There are two types of trade barriers :
  • Tariff barriers – Eg: Import tariff, Export tariff, Specific duty, Ad valorem duty, Countervailing duty, Anti-dumping duty, Protective tariff etc.
  • Non-Tariff barriers – Eg: quotas, embargoes, sanctions, levies and other restrictions.