The US-China trade war is flaring up for the third time. With tempers flaring across the spectrum as Donald Trump every day prepares himself for a likely re-assuming of his place in the White House in January 2025. Since its launch in early 2018, this trade war has profoundly altered global trade patterns. It has disrupted supply chains across the globe and altered the course of international relations.
The trade war began in earnest when former President Donald Trump first slapped a number of trade barriers on China. He called unfair commercial practices and intellectual property theft the root causes for his actions. These actions were an unprecedented departure from past U.S. trade policy, prompting an almost instantaneous retaliatory response from China. In retaliation, China slapped tariffs on soybeans and other American products. Notably, this included automobiles and soybeans, exacerbating the economic trade war already being fought between the two countries.
Continuation of Tariffs Under Biden Administration
Upon taking office in January 2021, President Joe Biden opted to maintain many of the tariffs established by his predecessor. This was positive, but Biden promised to address the root problems of unfair trade practices. He knew what the economic impact would be if you just suddenly raised these tariffs. Beyond keeping the tariffs already in place, Biden has gone so far as to impose additional tariffs on Chinese goods, escalating the trade war further.
The Biden administration’s priorities have come under fire from both ends of the political spectrum. Critics contend that keeping these tariffs in place prevents the start of productive conversations. Still others argue that these tariffs are necessary to protect American industries from predatory and unfair competitive practices. These measures further underscore the seriousness of the current trade war. Perhaps more importantly, they expose what could be a catastrophic future for the stability of our global supply chain.
The Phase One Trade Deal and Its Impact
Late in January of 2020, the US and China signed the US-China Phase One trade agreement. This agreement sought to calm fears and restore goodwill between the two. This deal obligated China to implement structural reforms and make deep, fundamental changes to its economic and trade practices. The agreement was viewed as a major move toward reducing tensions and stabilizing relations between the two superpowers.
The Phase One deal failed to right many of the wrongs and left many issues untouched. Economic analysts noted that the agreement provided only short-term relief. It did not succeed in changing the fundamental trajectory of China’s trade and IP practices. The continued unrest and building crises since then indicate lasting stability will take a great deal more effort and broader negotiations.
Trump’s Return and Its Implications
As Donald Trump’s campaign for president in 2024 accelerates. He has pledged to raise American tariffs on China—up to an eye-popping 60%. His return to office would almost certainly restart the trade war, and with even more fervor. Trump’s administration laid the groundwork for these aggressive trade policies even before taking office. Re-imposing these sorts of retaliatory measures would trigger profound economic damage for the United States, China, and their respective trading partners.
The prospect of escalating tariffs raises concerns about the future of global supply chains, which have already been destabilized by the ongoing trade war. As many businesses are still dealing with the impacts of the uncertainty of tariffs and ever-changing trade policies that have made long-term planning and investment decisions so difficult.