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Global Trade At A Crossroads: Prospects For U.S.-China Deal Fade


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Economic Research: Hong Kong's Trend Growth To More Than Halve By 2030

Global Trade At A Crossroads: Prospects For U.S.-China Deal Fade

The latest retaliations in the U.S.- China trade dispute seem to dash any chance of a near-term resolution. S&P Global Ratings believes the uncertainty will further sap global business and investor confidence.

On Aug. 23, 2019, the Office of the U.S. Trade Representative (USTR) announced an additional tariff of 5% on all the approximately US$550 billion worth of goods imported annually from China. This increase will be made in stages: the tariffs on U$250 billion (so-called Lists 1 to 3) of imports will rise to 30% tariff from 25% effective Oct. 15, 2019 (amended on Sept. 11, 2019, from the original Oct. 1, 2019); and those on US$300 billion (List 4) to 15% from 10% on Sept. 1, 2019 for list 4A goods (see chart 1) and on Dec. 15, 2019 for list 4B goods (see chart 2).

Chart 1


Chart 2


This U.S. action responds to China's recent plan to impose additional tariffs of 5%-10% on approximately US$75 billion worth of 5,078 goods imported from U.S. This will be executed in two stages: effective from Sept. 1, 2019 for one batch, and Dec. 15, 2019 for the second. Furthermore, China announced it is reinstating the 25% and 5% tariffs on automobiles and parts imported from the U.S. effective Dec. 15, 2019.

In mid-August, the U.S. said it would delay some of the newer planned tariffs. This implied a better likelihood of resolution in coming months (see "Global Trade At A Crossroads: Tariff Delay A Respite For U.S. Tech", published on RatingsDirect Aug. 15, 2019).

In our view, these recent events have shaken investor confidence further, and incrementally worsened the global business and economic outlook. These latest developments also raise the risk that the trade dispute could spill over into the services arena. In services, the U.S. enjoys a trade surplus with China.

A timeline of the trade dispute between the two countries is shown in chart 3.


Related Research

  • Global Trade At A Crossroads: Tariff Delay A Respite For U.S. Tech, Aug. 15, 2019.
  • Global Trade At A Crossroads: Latest Tariff Threat Would Be An Even Bigger Blow To The U.S. Tech Sector, Aug. 6, 2019
  • Global Trade At A Crossroads: Tariff Tweet Adds Heat To U.S.-Sino Dispute, Aug. 2, 2019

This report does not constitute a rating action.

Primary Credit Analyst:David C Tesher, New York (1) 212-438-2618;
Secondary Contact:Terry E Chan, CFA, Melbourne (61) 3-9631-2174;
U.S. Chief Economist:Beth Ann Bovino, New York (1) 212-438-1652;
Asia-Pacific Chief Economist:Shaun Roache, Singapore (65) 6597-6137;

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