[Music] the world's leading superpowers are locking horns game on here a trade war between the united states and china is here over the past 16 months america and china have been trading blows through tariffs on goods we are looking at a reality that has you know a 25 tariff on every single product that would come in from china the impact is being felt on industries worldwide but what is the story behind the america china trade war so the trade war what have you guys been looking at the us doesn't like that china is growing so fast and set to overtake uh america as like the biggest economy in the world if it hasn't already by certain measures right basically china and u.s are kind of caught in this race of imposing tariffs on each other so u.s slaps a high tariff on certain products and then china retaliates it's multiple industries across multiple markets it's huge and i think right now would be a really good time to look at what's happened and how it could impact the world from now on at the economist we've been covering the trade war extensively sumaia keynes is our trade and globalization editor based in washington dc how did this whole trade war kick off how did this whole trade war start for a long time there have been frustrations that past american administrations had with the chinese on the 2016 presidential campaign trail you started to see some really tough rhetoric we can't continue to allow china to rape our country and that's what they're doing and so he gets into office his united states trade representative that's the kind of official trade negotiator they're working on this big report so they're essentially investigating china's economic practices essentially the question they're asking is has china done anything that would frustrate america's economic interests and they find surprise surprise yes how long a history is there of uh these complaints the u.s has about china these concerns go back for a really long time and i think to understand them properly you really need to go way back to the expectations that people had when china was thinking about entering the world trade organization china's economic rise has been dramatic in 1978 china's gdp at market prices was just six percent of america's last year it had grown to 66 when considering local spending power china has already overtaken america this unprecedented growth began with deng xiaoping he started opening up china's economy to the world in 1978 and the country quickly became the world's factory over the next decade exports as a share of gdp tripled and by 1988 15 of china's exports went to america [Music] the world trade organization opened its doors to china in 2001 and it was america that ushered it in bringing china into the wto is a win-win decision it will protect our prosperity and it will promote the right kind of change in china after joining the wto china became an economic superpower but people had expected the country to also become more like a western capitalist economy that didn't happen america now claims that china achieved its growth by not playing fair are those claims justified to find out the answer i spoke with david rennie he's our beijing bureau chief there's two ways in which china certainly hasn't been playing fair one way is just that china treats chinese companies differently so if you are a western business your chinese competitor not only has better market access but maybe the land that it built its factory on was given for free maybe it got a giant tax break china just doesn't have a level playing field there's then the really dirty stuff stealing foreign companies technology if you ask chinese officials about the accusation that china is stealing its way to the top they'll say well hang on america steals secrets too so why are you coming after us the american government will tell you sure they spy and they steal stuff but never for commercial purposes with donald trump's election in 2016 you had a president who actually set about getting tough with china once he was in office and we've never really had that before the trump administration has been using tariffs or taxes on imported goods to try to force the chinese to change their ways in july 2018 america imposed tariffs of 25 on 34 billion dollars worth of chinese products that almost doubled the average tariff rate on chinese imports from 3.8 percent to 6.7 percent and it's american firms that have to pay that tax but with every increase from america came an increase from china since the start of the trade war china has more than doubled its average tariff rate america's has tripled the fight has become overtly political because china's tariffs are hitting president trump's voter base many counties where trump won in the 2016 election were here in the great plains and these are the counties most affected by china's tariffs someone who knows all about the impact tariffs are having beyond the data is chad baum from the peterson institute for international economics he's been analyzing international trade for decades but the trade war has put his research in the spotlight some people have referred to it as is my world cup or my super bowl it's something that i've been studying in the background for 20 years and now all of a sudden the world seems to be interested in this what role do terrorists play in in a trade war tariffs are basically a a tax but it's a tax that's only paid for goods that are produced outside of the country in a specific place one of the things that china has done in its tariffs is it's imposed really high tariffs on american exports of of soybeans this is a huge product that farmers in iowa and across the midwest grow only to sell to china so how are these tariffs and the trade war impacting the wider world economy i think at some level we're seeing the decisions that businesses make be affected by this nowadays they're not sure what markets are going to be open to them in the future and that's going to impact their investment decisions the international monetary fund the imf they expect economic growth to be a lot lower in the future because of the tensions are rising during the trade war the global economy is is slowing down and everybody's increasingly concerned about that as things stand now a ceasefire in the trade war could be drawing near the two leaders are hoping to agree on a phase one deal soon which could mean some tariffs being lifted the trump administration wants china to buy more american produce and tighten up their intellectual property rules if that phase one deal is signed will it be the beginning of the end of the trade war i took that question back to samaya the americans are hugely ambitious for for the kinds of changes that they would want from the chinese but those ambitions i don't think will be reflected in the preliminary phase one deal the chinese government wants its economy to do well and wants its citizens to to get richer to the extent that the americans persist in demanding these big changes to the chinese economy it's going to be really difficult to get a deal even if there is a phase one deal there will be a lot of issues still to be resolved but there's more to the trade war than just tariffs america has also imposed restrictions on some chinese firms especially ones in the tech industry we cannot allow any other country to out-compete the united states in this powerful industry of the future specifically over one chinese company huawei can offer cheaper prices because they are heavily subsidized by the chinese government we've made another film that looks closely at huawei and why the west is worried about it it includes a rare interview with huawei's ceo run zhang fei meiguo chi sensei and we looked into how these tensions will impact american industries already dependent on huawei technology the biggest issue i think with all of this political turmoil surrounding the huawei name is uncertainty you can watch the huawei film right now by clicking on the link opposite if you want to learn more about the trade war you can click the other link where you'll find all the research we used to make this film as well as other articles you've written including a special report by david rennie as always if you liked what you saw hit that subscribe button