12 December 2018

China-Europe Trade Dispute Deepens With New Sanctions

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China announced a new trade duty on Thursday that targets chemical producers in the European Union, part of an ongoing trade spat between these two key markets. China announced a duty on toluidine imports from Europe. This sanction, unveiled by China's commerce ministry, will take effect on Friday and last five years.  

Toluidine is mainly used in the production of dyes but is also an ingredient in some pesticides and pharmaceuticals. Most European companies exporting toluidine to China will now face a punitive tariff of 36.9%.

China is the EU’s second biggest trading partner behind the United States, and if this trade feud continues, it could have ramifications on the EU, which sees increased exports as a way to help end the prolonged recession. Trade in goods and services between the two amounted to nearly 480 billion euros last year. The toluidine tariff is just another item in a long list of products they have been fighting over: solar panels, telecom equipment, steel, wine and autos.

The main worry among economists is that new tariffs could lead to a set of retaliatory reactions that could eventually turn into a trade war. There is much at stake in the fight over Asia, with the United States, China and the EU all pursuing trade agreements to gain power in the region. The U.S. is currently working to create the Trans-Pacific Partnership, an agreement with multiple Asian countries that many analysts in China see as a threat and a hedge against China’s growing power.

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