U.S. - China Trade War & Implications for the GCC region

Executive Summary

• The U.S. President, Donald Trump rose to power on back of populist rhetoric measures such as leveling the playing field for U.S companies and demanding more usage of steel and aluminum sourced from America in autos. The rhetoric is transforming into reality as President Trump is renegotiating trade agreements and imposing tariff measures to fulfill his campaign promises.
• U.S and China, the two largest economies traded approx. USD 650bn worth of goods last year. However, the trading pattern is skewed with China exporting USD 506bn worth of goods to the U.S, while its imports from the U.S stood at USD 130bn in 2017. China's trade deficit with U.S stands at USD 376bn in 2017.
• To trim the trade deficits and make it balanced U.S sought a deal with China for enhanced market access, to open up its service sector foreign ownership limits, loosen technology transfer requirements for direct investments and increase U.S imports.