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An omnipresent topic in the economic news of the current year 2018 were the
developments regarding the smoldering trade dispute between the USA and China.
Within short periods of time, a downright exchange of strikes between the
administrations of the two countries evolved, with the President of the USA, Donald
Trump, in particular, pithily announcing to China an increasingly serious threat of
sanctions. Although the Chinese side was noticeably striving to de-escalate the verbal
dispute, it also presented a series of sanctions which were described in the relevant
press as so-called retaliatory tariffs.
The reason behind this diplomatic duel, however, has substance. It is evident that the
USA and China share an exceptional status with regard to economic fundamentals.
The US has the largest international trade deficit of US$ 375.2 billion vis-à-vis China.
China, on the other hand, is by far the largest creditor of the USA on an international
scale and currently holds around US$ 1.2 trillion in government bonds. Accordingly,
China exerts a major economic influence over the USA. This objective situation
opposes the subjective self-reflection of the government under President Trump, which
hardly misses an opportunity to operate on an international level with the help of
supposed deals according to the credo "America first".