STOCKS are falling as the US-China dispute turns into a “currency war”.
The two world powers are currently locked in an increasingly bitter row over trade deals with both sides threatening to hike tariffs on their respective imports. Here’s the latest.
How did the US-China trade war start?
The basis for the dispute lies with the US President Donald Trump wanting to “Make America Great Again”.
Part of the campaign aims to redress what Trump sees as unfair trade deals the US has agreed to in the past.
He wants to bring more production back into the country in order to protect US jobs, as he believes such past agreements have been a “rip-off” for the US.
During the 2016 election campaign, Trump accused Beijing of “raping” US workers.
Chinese Premier Xi Jinping has also said he does not want to be seen backing down, with both leaders seeing the honour of their nation at stake.
What have the US and Donald Trump said?
Words turned to action on July 6, 2018, when both sides levied tariffs on $34bn worth of goods.
This was then increased by $16bn by both sides on August 23, 2018.
The stakes were raised yet again on September 17, 2018, when the US imposed $200bn at a rate of 10 per cent while China was more cautious imposing the same rate but on $60bn.
A ceasefire of sorts was then introduced in December 2018 with the two sides agreeing to start negotiations and tariffs were paused.
But despite numerous rounds of talks no agreement has been reached and the US then said it would raise tariffs on $200bn of China goods to 25 per cent.
On May 13, 2019, China said it would increase tariffs on £46bn ($60bn) of US exports, which caused stock markets to tumble.
Trump then declared a national emergency over threats against US technology – paving the way for a ban on Chinese firm Huawei.
On May 15, he signed an executive order effectively barring US companies from using foreign telecoms believed to pose a security risk to the country.
Trump did not name any company specifically in the order, but analysts suggested it is mainly directed at Chinese telecommunications giant Huawei.
What about Xi Jinping and China?
The US dollar weakened on August 6 after Washington criticised Beijing as a “currency manipulator”, marking a sharp escalation in the year-long trade dispute between the two economies.
The Asian stock market saw the yuan fall further, after the US Treasury Department officially labelled Beijing a currency manipulator, a status that opens the way to possible additional sanctions.
Blaming the decline on “trade protectionism“, China’s action followed Donald Trump’s threat last week to slap punitive tariffs to an additional $300billion of Chinese imports.
The Ministry of Commerce announced it was suspending promised purchases of American farm products.
As a result, technology stocks bore the brunt of the selling, with Apple sliding 5.2 per cent. The tech depends on Chinese factories to assemble its iPhones.
The US Treasury Department said it had determined for the first time since 1994 that China was manipulating its currency, knocking the US dollar sharply lower and sending China’s offshore yuan to a record low.
What happened at the 2019 G20 summit?
Trump demanded his allies cough up more military cash before his crunch meeting with Vladimir Putin at the G20 summit in Japan.
President Trump first met with host Japanese Prime Minister Shinzo Abe as the summit kicked off on Friday – just days after he blasted the US-Japan security pact as unbalanced.
As he sat opposite Mr Abe in Osaka this morning, Trump said: “We’ll be discussing trade, we’ll be discussing military.”
The pair have enjoyed a close friendship since President Trump took office.
Trump joked about his previous trip to Japan in May – when he presented an award to a sumo wrestling champion in Tokyo.
But earlier this week, the president criticised what he characterised as an unfair security partnership.
The US has committed to defending Japan – which renounced the right to wage war after its defeat in World War Two.
Japan in return provides military bases that Washington uses to project power deep into Asia.
Trump used “power flexing” in a bid to intimidate the Chinese leader Xi Jinping when the pair met at the G20 summit, according to a body language expert.
The US president displayed a “state of aggressive arousal”, says Judi James, as he sought to assert himself at the beginning of their crunch trade talks.
Trump will later hold his first meeting with Russia’s Vladimir Putin since US special counsel Robert Mueller found extensive evidence of Russian meddling in the 2016 US election.