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Chinese President Xi Jinping speaks during President Trump's visit to Beijing in November 2017. Photo: Nicolas Asfouri/AFP via Getty Images

In 2002, President George W. Bush slapped steep tariffs on steel imports, warning about the collapse of the U.S. steel industry, then lifted them 21 months later to avoid a trade war with the European Union and Japan. Sixteen years later, President Trump is imposing steel tariffs of his own — but this time, the most powerful potential trade war foe is China.

The bottom line: China's capability to retaliate against Trump's tariffs now rivals that of the entire EU, and with Beijing's economic clout continuing to grow these tariffs may be the last time the U.S. gets to set the terms of engagement with China.

Then and now

In 2002, China produced less than 200 million tons of steel. By 2016, China had the capacity to churn out over 1 billion tons — so much that the government decided to pull production back to 800 million tons annually, per Reuters.

Before Bush rescinded the tariffs, the EU threatened to target Florida and Michigan, two key states for his re-election.

  • They've already announced plans for similarly politically-targeted tariffs this time around, while China has yet to make any specific threats.
China's position
  • China's domestic demand for steel is falling as its economy slows, and that excess steel is disrupting the world market, Mark Wu, a professor of international trade law at Harvard, tells Axios.
  • "China has to do something [in response to Trump's tariffs] just to signal its own resolve," Wu says. But they likely won't retaliate with the full brunt of their capability, with China content to let the West fight it out among themselves, he says.
The bigger picture
  • "We are witnessing something that no American now alive has witnessed, which is the rise of a new superpower," Frank Wu, a UC-Hastings law professor and chairman of the Committee of 100 Extraordinary Chinese-Americans, tells Axios.
  • And as China is expanding its sphere of influence to every corner of the world, the U.S. is actively retreating by pulling out of international trade pacts.
This is not really about tariffs. This is about American domestic policy and a contest for global leadership.
— Frank Wu on U.S.-China relations
What's next

Trump has been hawkish for years about a potential trade war with China, citing massive trade deficits as a sign that China is "ripping us off."

  • Ahead of Trump's tariffs announcement, Zhang Yesui, a top diplomat and former ambassador to the U.S., said: "China does not want a trade war with the US ... [But] we will not sit idly by and will take necessary measures if the US hurts China’s interests."
  • Two routes China could take...
    • Action against U.S. projects in China by denying permits to American companies or rejecting U.S. investments.
    • Tit-for-tat tariffs against American goods.
Remaining questions

One big thing that differentiates Trump's tariffs from Bush's: Trump invoked Section 232, citing national security concerns as the motivation for the trade action. Bush didn't do that.

  • That raises more questions: Will other countries claim national security to retaliate, or to take similar measures in the future? Does this eviscerate WTO rules? Could China, or another country, file a case with the WTO challenging the action?

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Mexican President Andrés Manuel López Obrador announced Sunday evening that he's tested positive for COVID-19.

Driving the news: López Obrador tweeted that he has mild symptoms and is receiving medical treatment. "As always, I am optimistic," he added. "We will all move forward."

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Former White House press secretary Sarah Huckabee Sanders will announce Monday that she's running for governor of Arkansas.

The big picture: Sanders was touted as a contender after it was announced she was leaving the Trump administration in June 2019. Then-President Trump tweeted he hoped she would run for governor, adding "she would be fantastic." Sanders is "seen as leader in the polls" in the Republican state, notes the Washington Post's Josh Dawsey, who first reported the news.

Coronavirus has inflamed global inequality

Illustration: Aïda Amer/Axios

History will likely remember the pandemic as the "first time since records began that inequality rose in virtually every country on earth at the same time." That's the verdict from Oxfam's inequality report covering the year 2020 — a terrible year that hit the poorest, hardest across the planet.

Why it matters: The world's poorest were already in a race against time, facing down an existential risk in the form of global climate change. The coronavirus pandemic could set global poverty reduction back as much as a full decade, according to the World Bank.