Donald Trump’s return as the 47th President of the United States on January 20, 2025, has reignited tensions in the ongoing economic conflict with China. The injustice that sparked the conflict in early 2018. Using largely the same statutory authority, Trump launched a sweeping series of trade barriers to help fight back against what he termed China’s unfair commercial practices and IP theft. We know that the trade landscape is ever changing. New legislation is already being considered that would further change these dangerous and complex US-China dynamics.
In 2018, Trump initiated a new round of tariffs on Chinese imports. This measure triggered a trade war that soon devolved into a period of extreme protectionism from both countries. The trade war escalated further when, in retaliation, China raised tariffs on a host of US goods including cars and soybeans. The signing of the US-China Phase One trade deal in January 2020 seemed to be a turning point. This pact sought to achieve this by introducing in-depth structural reforms and restoring good faith and order between the two nations.
Impact of Current Policies
Under President Joe Biden, the economic landscape has changed so much. He has largely maintained the tariffs that Trump enacted and even raised some of these levies. This continuity should indicate a bipartisan recognition of the difficulties at play in US-China trade relations. As US Treasury Secretary Scott Bessent told this blog right after the US intervention kicked off, the stakes are high: “Everything is on the table.
The Biden administration is right to seek out every alternative to a restrictive trade policy. Yet, they’ve been soberly realistic in dealing with continuing tensions. Bessent noted that if export controls are implemented—targeting software, engines, or other critical components—it would likely be done in concert with G-7 allies. This approach reflects the administration’s concern for multilateral cooperation in addressing economic challenges posed by China.
Trump’s Trade Promises
Indeed, Trump is running harder than ever for the 2024 presidential election. He’s promised to withdraw from the WTO global trading system and raise dramatic tariffs on Chinese goods, including proposing to raise them up to 60%. This promise underscores his commitment to addressing perceived economic injustices and could escalate the trade conflict further if he returns to office.
Such aggressive and confrontational trade policies would profoundly affect US-China relations. They have the potential to massively disrupt global markets. Today’s AUD/USD is currently trading at 0.6480, down 0.08% on the day. This drastic decrease represents more than just the market’s response to a potential shift in global trade patterns.
Future Outlook
As both nations navigate this complex relationship, it remains uncertain what specific measures will be implemented in the coming months. How political desires and realities combine will determine both the outcome of this trade negotiation and perhaps even the fate of a stable global economy.