How the US ended up in an escalating trade dispute with China

Key Points
  • While running for president, Donald Trump repeatedly emphasized the importance of reducing the U.S. trade deficit with China, which he labeled a currency manipulator.
  • The Trump administration has not applied the currency manipulation label to China yet.
  • After both the U.S. and China announced tit-for-tat tariffs last week, Trump said he has directed the U.S. Trade Representative to identify $200 billion worth of Chinese goods for an additional 10 percent tariff.
  • In response, China's Commerce Ministry said the U.S. "has initiated a trade war" and that China will protect its interests.
A worker monitors the loading of containers onto a ship at the harbor in Qingdao, China.
STR | AFP | Getty Images

Worries about a U.S.-China trade war hit global markets Tuesday, following a war of words between the Trump administration and Beijing.

It has been a journey of more than two years for the White House's efforts to reduce the U.S. trade deficit with China, which rose to $375.2 billion in 2017 from $347 billion in 2016.

Here's a rundown of key events up to this point:

May 2, 2016: During the presidential campaign, Donald Trump compared the U.S. trade deficit with China to "rape."

June 28, 2016: Trump laid out seven steps on trade to bring back American jobs, including labeling China a currency manipulator on day one in the White House and using "every lawful presidential power to remedy trade disputes." Those tactics included tariffs.

Nov. 2016 - Jan. 2017: Trump won the U.S. presidential election, then selected known China hawks for key positions on trade.

  • Peter Navarro, author of "Death by China," was named head a newly formed National Trade Council.
  • Robert Lighthizer, who previously negotiated restrictions on steel imports and was deputy U.S. trade representative during the Reagan administration, was named U.S. Trade Representative.

April 7, 2017: Chinese President Xi Jinping met with Trump at his Mar-a-Lago resort in Florida. The two-day summit ended on friendly terms. Xi agreed to a 100-day plan for trade talks to increase U.S. exports and reduce the deficit with China, as well as increase cooperation on limiting North Korea's nuclear threat.

April 12, 2017: Trump told The Wall Street Journal he will not label China a currency manipulator in the Treasury Department's forthcoming report.

Aug. 18, 2017: At Trump's direction, the U.S. Trade Representative began its "Section 301" investigation into "China's acts, policies, and practices related to technology transfer, intellectual property, and innovation."

March 8, 2018: Trump signed 25 percent tariffs on steel and 10 percent duties on aluminum, citing national security. Canada and Mexico are initially exempt.

March 22, 2018: Following the conclusion of the Section 301 investigation, Trump announced plans for tariffs, a settlement in a World Trade Organization dispute and investment restrictions on China.

April 1, 2018: China increased the tariff rate on pork products and aluminum scrap by 25 percent. Beijing also imposed a 15 percent tariff on 120 other U.S. commodities ranging from almonds to apples. The duties took effect that week.

April 3, 2018: The Office of the U.S. Trade Representative released a proposed list of tariffs on roughly $50 billion worth of Chinese imports, including products used for robotics, information technology, communications and aerospace. The approximately 1,300 product lines will be open for public comment before any duties are imposed.

April 4, 2018: China's Ministry of Commerce released its own tariff list covering 106 U.S. products, including soybeans, beef, corn, some aircraft and a range of vehicles. There was no effective date for the tariffs, designed to address $50 billion worth of U.S. goods.

April 5, 2018: Trump said he has asked the U.S. Trade Representative to consider $100 billion in additional tariffs against China.

April 6, 2018: China's Ministry of Commerce said if the U.S. goes through with those tariffs, Beijing is prepared to fight back immediately.

April 10, 2018: China filed a complaint with the World Trade Organization about Trump's tariffs on steel and aluminum imports.

On the same day, Xi spoke broadly about China's plans to increase imports, lower tariffs on automobile imports, open up its financial services industry to foreigners and step up intellectual property protection. The speech at the Boao Forum for Asia did not directly address the trade dispute with the U.S., and did not cover new areas of reform.

Trump said in a tweet he was "very thankful" for Xi's "kind words on tariffs and automobile barriers."

April 16, 2018: The U.S. Commerce Department banned Chinese telecom equipment giant ZTE from buying U.S. components for seven years, saying the company has violated a settlement reached over illegal shipments to Iran and North Korea. Trading in ZTE shares was subsequently halted in Hong Kong and Shenzhen.

May 13, 2018: Trump tweeted that he and Xi are working together to help ZTE "get back into business, fast" since there are "too many jobs in China lost." Earlier in the month, the company said it had to halt its main operations as a result of U.S. actions.

May 18, 2018: China announced it is ending an anti-dumping investigation into U.S. sorghum imports. Earlier in the day, U.S. officials familiar with trade talks said Beijing was offering a package to reduce the U.S. trade deficit by up to $200 billion, according to Reuters and other media.

China's Foreign Ministry subsequently said the reports were not true.

May 19, 2018: In a joint statement, the U.S. and China agreed to "meaningful increases in United States agriculture and energy exports" and "significant" increases in U.S. goods and services overall.

Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer led a delegation that met in Washington, D.C., with the Chinese, led by State Council Vice Premier Liu He.

May 20, 2018: The trade war is "on hold," Mnuchin told "Fox News Sunday." "We have agreed to put the tariffs on hold while we try to execute the framework," he said.

May 22, 2018: China said it will lower tariffs on automobile imports to 15 percent, from 25 percent. The new rate will be effective July 1.

But Trump said that same day he is "not satisfied" with last week's trade talks with China and that the negotiations are only a "start."

May 23, 2018: Trump tweeted that trade talks with China will probably have to go in a new direction in order to near a resolution.

May 29, 2018: Trump said in a statement on the White House website the U.S. will go ahead with 25 percent tariffs on $50 billion worth of Chinese imports, highlighting products related to the "Made in China 2025" program. The final list of tariffs was set for release by June 15.

May 31, 2018: Ahead of Commerce Secretary Ross' visit, China announced it will cut tariffs on July 1 for 1,449 product lines. But the items were mostly irrelevant to trade with the U.S., analysts tell The New York Times.

June 4, 2018: Ross concluded meetings in Beijing with no specific agreement on trade. The two sides spoke generally about reducing the U.S. deficit by increasing supply of agriculture and energy products to China, according to a White House statement.

Beijing is willing to increase imports from the U.S. and other countries, but all outcomes of the trade negotiations will not take effect if the U.S. imposes tariffs, according to a statement from the Chinese side published by the state-run newspaper Xinhua.

June 6, 2018: Chinese negotiators proposed a package valued at nearly $70 billion in first-year purchases, if the Trump administration would step back from tariffs, The Wall Street Journal reported, citing sources. The proposal included increased Chinese purchases of soybeans, corn, natural gas, crude oil and coal, the Journal said.

June 7, 2018: ZTE settled with the U.S. to pay up to $1.4 billion for violating a March 2017 agreement. Until it makes the payment, the Chinese telecom equipment company remains banned from buying from U.S. components.

June 12, 2018: ZTE shares plunged more than 40 percent in Hong Kong after trading resumed following a near two-month halt.

June 15, 2018: The Office of the U.S. Trade Representative released a list of 1,102 Chinese imports worth about $50 billion. A 25 percent tariff on 818 of these items, valued at about $34 billion, will take effect July 6.

The other 284 products, worth about $16 billion, will undergo a public comment process before a final decision on implementation.

China responded with its own list of 545 U.S. imports worth roughly $34 billion that will be subject to a 25 percent tariff beginning July 6. These products include soybeans, electric vehicles, a range of hybrid electric vehicles and a variety of seafood. Aircraft was not on the list.

Beijing also said will impose tariffs at an unspecified later date on an additional 114 U.S. goods including crude oil, diesel and magnetic resonance imaging kits. Altogether, the two lists covered 659 U.S. goods, worth $50 billion.

June 18, 2018: The U.S. Senate passed a military funding bill with a provision that reimposes a ban on ZTE buying components from U.S. companies. The House of Representatives' version of the bill, which passed in May, did not include the ZTE provision. While a committee works out the differences, the White House can still push for changes.

In the evening, Trump said he has directed the U.S. Trade Representative to identify $200 billion worth of Chinese goods for an additional 10 percent tariff. These duties will take effect if China does not change its practices and goes through with the tariffs it has announced, according to a statement on the White House's website.

China's Commerce Ministry said the U.S. "has initiated a trade war" and that China will protect its interests.

Note: All dates are based on Eastern Time.

— CNBC's Kate Rooney contributed to this report.