Description: The US and China intensified trade threats by imposing additional tit for tat fees on maritime trade, effectively blocking the bilateral maritime trade. The escalation began after both countries exchanged threats of elevating fees on different economic sectors, with the US threatening maritime trade while China announcing the new restrictions on the exported rare earth minerals and their usage. President Donald Trump in reaction to China’s restrictions on rare earths has stated that he planned on increasing tariffs to 100% on all goods being imported from China while also announcing the additional shipping fees. Trump’s administration also warned that countries which vote in favor of the UN International Maritime Organization proposal to reduce global warming through cutting gas emissions from ocean shipping could face sanctions, port bans or additional vessel charges. China in contrast voted in favor of the IMO’s proposal practically introducing global environmental policies as part of the trade war. Trump and Xi are still expected to meet during the APEC Summit in South Korea later this month as stated by both countries.
Impact: Trade war tensions have been reignited through hostile measures and actions undertaken by both China and the US which are threatening the progress made through the negotiations and the state of the unofficial trade ceasefire. Global markets and the affected shipping companies are slowly adjusting to the newly imposed restrictions, however, severe measures to diversify shipping routes or markets are yet to be introduced. The timing of the reignition of trade tensions is oddly suspicious as it arrives just before Trump and Xi are supposed to meet in South Korea by the end of this month. Comparing the trade escalation from earlier this year, the current trade posturing should be perceived as reasserting bilateral trade positions ahead of the leaders meeting. The US in the interim has made efforts to incentivize domestic rare earth mineral production, however, those moves would have an important impact in the long – term while China has continued on illustrating its monopolized position in the industry. The latest implosions and aggravations currently represent diplomatic posturing and are not significant threats to the ongoing negotiations. In case the leaders meeting is cancelled in the interim, the signals would change, and the posturing would transpire towards immediate imposition of restrictions and tariffs reminiscent of the trade war earlier this year.