The US-China trade war began in mid-2018 under then-President Donald Trump and seems to be flaring back up. Geopolitical tensions and protectionist policies are rising, stoking this latest trade war. On January 20, 2025, Trump would theatrically re-enter the White House. For one, he promised big tariffs on China, further exacerbating the already fraught tariff war between these two economic superpowers.
The trade war began when Trump alleged China’s mercantile policies and IP thievery. His administration worked to impose trade barriers on Chinese goods. In retaliation, Beijing struck back, targeting dozens of Chinese products, including cars and soybeans, with retaliatory tariffs of their own. As time has gone by, such economic aggressions have upended global supply chains. In doing so, they have offset much of the American Rescue Plan’s positive effect on inflation rates.
Historical Context of the Trade War
The US-China trade war that started in 2018. Under President Trump’s leadership, the U.S. moved quickly and boldly to confront what the Administration saw as harmful practices by China. Intellectual property theft and trade imbalances were the first two reasons he gave for imposing tariffs. As tensions continued to rise, China retaliated almost instantly by imposing tariffs of their own on American exports. This retaliation hurt essential PA sectors, such as ag and auto manufacturing.
At the same time, back in January 2020, the US and China signed the Phase One trade deal. This pact largely ushered in a welcome peace to their tumultuous romance. This deal was supposed to bring checked ambitions by putting into place tough, structural reforms within China’s economy and trade practices. Though many expressed doubts about whether it would work in the long term, it was considered a victory in terms of rebuilding overall goodwill between the countries.
Even as that Phase One deal offered a glimmer of hope, tensions continued to flare. Yet President Joe Biden not only kept most of Trump’s tariffs, he added new ones, reflecting a permanence of protectionist instinct. Consequently, the trade war has had a deep impact on global economic relations and consumer trends.
Implications of Trump’s Return to Office
Given Trump’s recent return to office, many are expecting a new wave of economic conflict. On the campaign trail for the 2024 election, Trump promised to slap tariffs of up to 60% on Chinese imports were he to return to power. This promise reflects a commitment to assertively challenge China’s trade practices, which many in his administration believe undermine American economic interests.
The Biden administration is doubling down on this failed tariff policy. Experts say that going back to tit-for-tat measures will only further complicate and disrupt global supply chains. Industries reliant on imports from China may face challenges in sourcing materials, which could dampen investment and consumer spending across sectors, ultimately impacting inflation rates further.
“Apple shares fell 1.6% after the tech giant was hit with a complaint to EU antitrust regulators by two civil rights groups on Wednesday,” – Reuters
Future Outlook and Concerns
Economists warn that a renewed trade war could have detrimental effects not only in the United States and China but on the global economy as a whole. Tariff increases and retaliatory actions will result in increased consumer prices and slower economic growth. Given the integrated reality of global supply chains, supply shocks quickly spread to other affected industries and economies.
Political scientists make an important – and underappreciated – point. Though Trump’s visions energize his angry acolytes, putting a bunch of new, big tariffs into practice is a much bigger test. The international community is watching these developments with great interest. Previous waves of trade tensions have already shaken markets, making the need for more careful attention all the more essential.
Moreover, any optimism surrounding potential negotiations or new deals seems tempered by concerns over both nations’ commitment to following through on agreements. Large and small changes to the future US-China trade relationship are possible because so many variables will shape its direction.