It all started with the US imposing tariffs on imported Chinese goods in March 2018, claiming that China had been involved in unfair trade practices for the past many years. Thus, began the famous US China trade war in 2018. Since then, both the US and China have been imposing taxes on items imported from each other. Donald Trump threatened to impose 10% tariff on goods worth billions of dollars including television sets and medical devices, which are imported from China to the US, resulting in a number of conflicts in the trading industry.
Only a month after that, China reacted to this by imposing an even higher rate of tax on various goods and items imported from the US. This continued till the first half of 2019, after which the presidents of both the countries, Donald Trump and Xi Jinping, announced a truce where they agreed that no further tariffs are to be imposed on traded goods. However, the already levied taxes were to remain in effect.
The global economy suffered huge losses, but also made some profits during this trade war. Employment rates went significantly down as a result of high uncertainty in the markets.
US claimed that China is responsible for manipulation of the currency and Donald Trump threatened to increase the tariff rates on major items imported from China. However, the International Monetary Fund (IMF) evaluated both Yuan and the US dollar and declared that the Chinese currency was correctly valued whereas the US dollar was overvalued.
This turned the tables and China began imposing trade sanctions on the US, while the US delayed the execution of taxes on Chinese goods. China suspended the purchase of agricultural products from the US and decreased its US treasury holdings.
It is possible that the trade war between both the countries dampens down and the sanctions get removed in the near future. The investors and traders are waiting and watching for the next steps taken by both the governments as whether the bubbling tensions would diminish or emerge in an all-out trade war between these largest economies in the world.