The US-China Trade War: Tariffs, Tensions, and Global Impact

The US-China trade war, initiated under Trump and continued under Biden, involves steep tariffs, escalating tensions, and significant economic fallout. Tariffs on Chinese goods have risen to 50%, with China retaliating and resisting US demands. In 2024, US-China trade totaled $582.4 billion, with a $295.4 billion US trade deficit. Key sectors like technology and agriculture face severe impacts. China's White Paper calls for cooperation and criticizes US protectionism. The ongoing conflict threatens global trade, investor confidence, and economic stability, with no resolution in sight.

In a bold move that continues to reverberate through international trade, the United States under former President Donald Trump implemented steep reciprocal tariffs against several nations and regions, including the European Union, India, and even many small countries. Russia, however, was notably excluded, with Trump stating that the US does not "do business with them." These tariffs, which began during Trump’s presidency and have been maintained with slight modifications under President Joe Biden, signal a protracted trade war, particularly with China.

The Escalation of US Tariffs

Trump's tariff strategy included a 104% duty on Chinese goods, a 27% tariff on Indian products, and a 20% levy on EU imports—all atop a pre-existing 10% baseline tariff. The US-China trade dispute has seen particularly sharp exchanges, with the US imposing a series of escalating tariffs on Chinese goods, starting with 34% and later rising to 50%. China responded in kind, matching the initial 34% tariff and resisting US demands to lower duties.

China's Commerce Ministry criticized the US actions as "a mistake upon a mistake," and the average tariff on Chinese goods climbed to 19.3% by the end of Trump’s term. That figure has risen slightly to 20.8% under Biden, underscoring the continued tensions between the two economic powerhouses.

The Economic Fallout

Despite the ongoing trade war, the economic ties between the US and China remain significant. In 2023, China exported $436 billion worth of goods to the US, making America its largest export market. Broadcasting equipment topped China’s exports to the US, valued at $54.5 billion. Meanwhile, soybeans, worth $15.2 billion, were the leading American export to China.

In 2024, total goods trade between the two nations reached $582.4 billion. While US exports to China declined by 2.9% to $143.5 billion, imports from China rose by 2.8% to $438.9 billion, pushing the US trade deficit with China to $295.4 billion—a 5.8% increase from the previous year.

Key sectors impacted by the tariffs include technology and agriculture. China imports $10 billion worth of US semiconductors annually, with companies like Intel relying heavily on the Chinese market (29% of Intel's global revenue in 2024). In agriculture, retaliatory Chinese tariffs have hit major US firms like Caterpillar and Deere & Co., while American poultry and sorghum products face import suspensions under the banner of food safety concerns.

The Broader Global Impact

The trade war has ramifications far beyond US-China relations, given that the two nations collectively represent 43% of global economic output. Escalating tensions risk undermining investor confidence, slowing cross-border capital flows, and destabilizing global economic growth.

China’s trade surplus of approximately $1 trillion poses another challenge. By offloading excess goods into international markets, China risks "dumping" low-cost products, which could undercut local manufacturers in other countries, threaten jobs, and depress wages.

China's White Paper: A Call for Cooperation

In an official White Paper, China acknowledged the long-standing economic ties between the two nations, emphasizing their complementary strengths in resources, technology, and markets. While China stated it does not seek a trade war, it vowed to protect its national interests and respond firmly to any further US-imposed restrictive measures.

The White Paper also criticized US tariffs as tools of unilateralism and economic bullying, calling for Washington to abandon its protectionist stance and meet China halfway. It highlighted that the US remains China’s largest source of service trade deficit, with a deficit of $26.57 billion in 2023.

As the trade war between the world’s two largest economies shows no signs of abating, its impact on global trade and economic stability continues to grow. Both countries must navigate a complex web of economic interdependence and political tensions to avoid further destabilizing the global economy.

While the prospects for resolution remain uncertain, the stakes for both nations—and the world—could not be higher.