Summary
Highlights
The video introduces the US-China trade conflict as a modern 'Great Wall' built with customs tariffs. It highlights the imposing of up to 104% tariffs by US President Donald Trump on Chinese products and China's immediate retaliation with 84% tariffs on US goods and restrictions on strategic product exports.
Beginning in 1978, China liberalized its economy, moving away from strict communism and exporting cheap labor products to the US. This led to a significant trade deficit for the US and a surplus for China. After joining the WTO in 2001, China's exports skyrocketed, and its economy continued to grow even during the 2008 global financial crisis. China's success was attributed to state-controlled economic planning, exchange rate policies, subsidies, and infrastructure investments.
In 2015, China launched the 'Made in China 2025' plan, financially promoting 10 strategic high-tech sectors. This led to the rapid emergence of global competitors like Huawei, ZTE, DJI, and BYD. By 2018, this state support drew criticism from the US and Europe, who accused China of distorting competition, posing national security threats, violating intellectual property rights, and causing technology transfer imbalances.
Donald Trump, elected in 2017 when the US trade deficit with China was $375 billion, initiated protectionist policies. In March 2018, he imposed 25% tariffs on $50 billion worth of Chinese goods, and duties on steel and aluminum. China reciprocated with tariffs of equal value. The conflict escalated with actions against Chinese companies like ZTE and Huawei, restricting them in areas like chip supply and banning DJI drones over national security concerns.
Even as trade tensions somewhat subsided during the COVID-19 pandemic, a bipartisan consensus for a restrictive stance on trade with China emerged in the US. China continued to advance towards its 'Made in China 2025' goals, becoming a global leader in several technology areas. Trump's second presidential campaign saw continued threats of tariffs and actions against Chinese tech. The video concludes by highlighting the World Bank's warning that the trade war could sharply contract trade between the two countries and decrease global GDP, questioning who stands to lose the most.