As for the Chinese side, Chinese authorities have ordered Boeing to suspend the delivery of its jets to Chinese airlines. This major step comes amid escalating trade tensions with the United States. Chinese carriers have been hit with orders to halt purchases of aircraft manufacturing equipment and spare parts from U.S. companies. This final decision delivers yet another body blow to American companies. This decision is particularly noteworthy given that both countries continue to clash over tariffs and other trade policy.
Our current escalation is just the latest indicator of how heated U.S.-China relations have gotten. These strains are mainly due to the punitive tariff tactics used in the Trump administration. The U.S. has imposed tariffs on select goods from China, with some levies reaching as high as 245% in recent weeks. In turn, Chinese officials have denounced these “unilateral tariffs” as the imposition of a Bully’s Revenge.
Despite the tough rhetoric, Beijing has expressed willingness to negotiate with Washington but insists that discussions must occur on “an equal footing.” This stance further highlights China’s commitment to confirming its will and interests while managing the complex web that is the nature of international trade.
In the past, the services trade between the two countries has greatly benefitted the United States. The year before, the country ran a $192 billion surplus in this area. Last year, the U.S. services trade surplus with China was $32 billion. Travel services, legal services, consulting services, and financial services are just some of the industries that fall under this category. In particular, Chinese students in the U.S. support the industry’s trade in the travel-related services sector tremendously.
In recent years, China’s imports of U.S. services have surged more than ten-fold to $55 billion in 2024 compared to two decades ago. This significant and persistent growth in services trade signals a more complicated interdependence between these two economies, even as tensions continue to simmer.
Wendy Cutler, a former U.S. trade negotiator, commented on the situation, stating, “Beijing is clearly signaling to Washington that two can play in this retaliation game and that it has many levers to pull, all creating different levels of pain for U.S. companies.” This frank declaration sums up a brutal echo chamber of a tit-for-tat escalatory dynamic both countries have been implementing.
Except the U.S. has run a growing financial services surplus with China, mudding the trade war’s waters even more. As each country continues limiting access and placing tariffs, experts are sounding alarm bells that this decoupling could go much deeper than economic action.
Cutler noted that with high tariffs and other restrictions in place, “the decoupling of the two economies is at full steam.” Underneath this rosy sentiment lies plenty of concern. Public sentiment now dreads that this persistent wrangling will lead to a permanent rift between the two economic titans.
China’s retaliation against U.S. tariffs on Chinese imports goes beyond aviation, targeting several aerospace and manufacturing sectors in the continuing trade dispute. China has used non-tariff restrictive measures, most notably expanding export controls on rare-earth minerals, critical components in both hi-tech and defence-related technologies. These steps underscore China’s capacity to play the long game with its resources in the current U.S.-China trade war.
Jianwei Xu, a leading analyst at a top Chinese think tank, lamented the unintended – but perhaps not surprising – consequences of a move like this. “In the end, only when a country experiences sufficient self-inflicted harm might it consider softening its stance and truly returning to the negotiation table.” This point of view is especially frightening given that we are a half-year into continued trade hostilities.
Qian, another expert in international relations, cautioned about the broader implications of this decoupling: “We could see deeper decoupling — not only in supply chains but in people-to-people ties, knowledge exchange, and regulatory frameworks. This may signal a shift from transactional tension to systemic divergence.”
As the two countries continue to work through an increasingly complex relationship, the future of U.S.-China relations hangs in the balance. Yet the complexities of their economic interdependencies with each other, facing the backdrop of growing nationalist populist sentiments, would make any negotiation even more complicated.