The United States' changing trade policy following Donald Trump's taking office threatens the global economy as Washington indiscriminately targets key allies and rivals alike.

US President Donald Trump holds his signed memorandum on intellectual property tariffs on high-tech goods from China, at the White House in Washington, US, March 22, 2018.
US President Donald Trump holds his signed memorandum on intellectual property tariffs on high-tech goods from China, at the White House in Washington, US, March 22, 2018. (Reuters Archive)

The United States and China imposed fresh tariffs on each other's goods on Monday with the trade dispute between the world's two biggest economies expected to adversely affect the global economy. 

US tariffs on $200 billion worth of Chinese goods and retaliatory tariffs by Beijing on $60 billion worth of US products took effect at midday Asian time on Monday.

Trump had warned that the retaliatory duties by Beijing would ignite a fresh round of tariffs on $267 billion worth of Chinese imports, meaning that all Chinese exports to the US could effectively be subjected to new duties.

What has happened so far? 

US President Donald Trump has imposed three rounds of trade tariffs on Chinese products, blaming the country for unfair trade practices. 

Washington is demanding Beijing improve market access and intellectual property protections for US companies, cut industrial subsidies and slash a $375 billion trade gap.

The US slapped a 25 percent tariff on $34 billion of Chinese goods in early July.

Terming Washington's actions "bullying," Beijing quickly responded that it would retaliate with penalties of the same scale on American goods — and it spelled out details to impose tariffs on 545 US exports, including farm products, autos and seafood, according to the Xinhua state news agency.

Another round of duties on $16 billion went into effect on August 23, bringing the total amount of Chinese goods facing a 25 percent charge to $50 billion.

After the latest round of tariffs came into affect the value of Chinese goods coming into the ambit of Trump's new duties stood at $250 billion with a potential to reach a total of $512 billion. 

Beyond the spat with China

The Trump administration, ever since coming to power, has taken protectionist steps in the global economy.

Those moves saw Washington withdraw from a number of international trade agreements, including North American Free Trade Agreement (NAFTA)and Trans-Pacific Partnership (TPP).

The US president has also threatened to withdraw the US from the World Trade Organization (WTO) if “they don’t shape up.”

Trump imposed tariffs for the first time in March this year, levying 25 percent on steel imports and 10 percent on aluminum. 

He said they were justified by national security concerns and therefore outside the WTO’s remit.

The US president has credited his electoral success to his hard line on trade, which he has argued hurts US workers and favors foreign competitors.

Rivals and allies, including India, China, Russia, Japan, Turkey and the European Union, have all dismissed that claim, regarding the US tariffs as “safeguards” under the WTO rules, entitling them to a combined $3.5 billion in annual compensation.

The US companies now have to pay 25 percent tax for steel and 10 percent tax for aluminum if they want to import from those countries, according to Trump’s new tariffs. 

Most countries affected by the US tariffs have responded back in kind.

In June, Mexico announced new tariffs on whiskey, cheese, steel, bourbon and pork from the US. 

In July, Canada said there would be 25 percent and 10 percent surcharges on two sets of American goods, worth the same value as Canadian goods facing steel and aluminum tariffs. 

The EU also retaliated by imposing 25 to 50 percent taxes on more than $3 billion of US goods, including blue jeans, Harley-Davidson motorcycles, peanut butter, orange juice, rice and corn. 

India and Russia have also announced retaliatory tariffs on American products.

Others have acted quickly to work around Trump’s tariffs, turning to alternative trade agreements.

Japan and the EU signed a free trade deal that creates the world's largest open economic area, amid fears that a US-China trade war will diminish the role of free trade in the global economic order. 

Source: TRTWorld and agencies