Picture this, the continuing story between the United States and China has begun. China’s impact on international trade is significant as the world’s largest manufacturing country. And in 2024, the value of goods that the U.S. imported from China was roughly $440 billion. At the same time, China exported approximately $145 billion worth of goods to the U.S. This growing trade imbalance underscores the irony and fragility of both countries’ economies.
With its manufacturing prowess, China is able to produce many multiples of what its own domestic population consumes. Such an initial services deficit contributes to China’s massive goods surplus of nearly $1 trillion, meaning that China exports much more in the way of goods than it imports. The ramifications of this economic partnership stretch well beyond the two countries’ national borders, disrupting global supply chains and markets.
Smartphones were the biggest share of U.S. imports from China, making up 9% of all Chinese imports. Interestingly enough, a huge share of all of those smartphones are produced on the company’s behalf, too, deeper entangling the two countries’ economic fortunes. The importance of U.S.-China supply chains for such critical technology production only highlights the stakes behind any possible technology-based trade spats.
Moreover, China plays a central role in refining vital metals used in various industries, including copper, lithium, and rare earth elements. These materials are crucial for technology and renewable energy industries, showcasing how interconnected global supply chains have schooled. This means any disruptions in China’s production or export capabilities would have dire consequences for industries across the globe.
Then, in 2023, the U.S. Commerce Department surprised everyone by announcing proof of a monumental change. Chinese solar panel manufacturers began shifting their assembly operations to countries including Malaysia, Thailand, Cambodia, and Vietnam. This strategic move appears to be a response to tariffs imposed by the U.S., emphasizing the adaptive strategies companies employ amidst trade tensions.
Unsurprisingly, the trade landscape has drastically changed as a result of the punitive additional tariffs both countries have laid on each other. In response to U.S. retaliatory tariffs, China has increased its own tariff and non-tariff trade barriers against U.S. products. China sees itself on the frontline of deflecting U.S. international coercion. Rather, it has announced its intent to “fight to the end” to defend its economic sovereignty from outside attacks and influences.
Indeed, the U.S. and China combined represent roughly 43% of the global economy, per the International Monetary Fund. Their trade relationship is critical as evidenced by this statistic. It is a move that affects not only the economic well-being of each state, but the long-term stability of global markets. A break in this historic relationship would create massive economic and security consequences for both countries, and frankly, the world.
As of 2024, soybeans make up nearly 90% of U.S. exports to China. These beans mainly go to feed China’s estimated 440 million pigs. This U.S. agricultural dependence is the smoking gun of the U.S.-China trade relationship. It further calls into question food security and economic viability for both countries.
Even with China’s overwhelming exports, China’s retaliatory tariffs on U.S. imports will likely hit Chinese consumers hard too. The tariffs will only serve to increase American import costs, leading to higher priced American products in China. This would be disastrous for consumer purchasing power and potentially overall economic stability.
In 2023, goods trade between the U.S. and China was estimated at over $585 billion. This is a very huge figure, emphasizing how important their economic interactions are. Both countries are dealing with an unprecedented trade war. Finally, they need to be more proactive in thinking through how their policies will shape global trade dynamics.
Going forward, the interaction between U.S. and Chinese trade policies will continue to impact international markets and affect global economic stability. Stakeholders across all sectors should take notice. The bilateral fight between the two biggest economies has heightened as they each face-off against each other’s respective economic policies and respond to one another.