In spite of several rounds of bilateral talks over the past 17 months, major differences between the two countries remain unresolved. It looked like this would potentially end this month when a Chinese delegation came to Washington, D.C., ostensibly to agree on a trade deal. That did not occur, however, as President Donald Trump accused the Chinese of negotiating in bad faith and changing the terms of a possible trade agreement.

 

As a result of this failure, Washington and Beijing escalated the trade war with tit-for-tat increases in the tariff. First, the United States increased tariffs to 25 per cent on $200 billion worth of Chinese goods. Then, China announced that it would retaliate by raising its tariffs on $60 billion worth of American goods.

 

While Trump and Chinese President Xi Jinping are engaged in Who will blink first gamesmanship, its effects are beginning to be felt.

 

Even before the latest round of tariffs kicked in, consumer and industrial activities slowed down in April in both countries. Analysts warn that tariffs will impact both economies negatively.

 

It is projected that China could shed more than 1 per cent of its GDP, if there is no de-escalation. The consulting firm Trade Partnership Worldwide estimates that a trade war could result in the loss of more than 2.23 million jobs annually in the United States. In the U.S., though, the biggest

losers will be American consumers, who will see their cost of goods go up and their wallets shrink because of the tariffs.