Donald Trump is sworn in as the 47th President of the United States on January 20, 2025. His inauguration unspooled what little hope remained for improving US-China relations. This new round of fighting threatens to escalate an already high-stakes and explosive trade relations. These relationships have been remaking the global economic order since 2018. In light of these developments, China’s Commerce Ministry has urged the US to rectify what it terms “wrong practices” promptly.
The source of this revived tension is, of course, the trade barriers that Trump imposed starting in early 2018. That action sparked a furious economic war. As Trump returns to office, he has pledged to impose a staggering 60% tariff on Chinese goods, reigniting the trade war where it left off. The stage is set for a repeat of tit-for-tat policy. This adversarial approach has characterized U.S.-China relations in recent years.
Background of the US-China Trade War
As the new US—China trade war escalated sharply. By January 2020, both countries appeared to have found some common ground after signing the Phase One trade deal. This deal required significant structural reforms and other changes to China’s economic and trade regime designed to rectify many long-standing complaints. Far from resolving issues, the agreement did little to quell tensions as President Joe Biden continued, and even added to, the tariffs imposed on Chinese imports.
In response, China responded with tariffs on a variety of American products ranging from automobiles to soybeans. US Trade Representative These retaliatory actions underscore the simmering trade tensions in the tit-for-tat US-China relations. Yet economic hostilities have long complicated their interactions.
Since the onset of this conflict, both sides have attempted to maintain communication through the US-China economic and trade consultation mechanism. These talks have become increasingly strained. China has proposed discussions following restrictions on rare earth materials, but the US insists it cannot engage in dialogue under threats of further intimidation and new restrictions.
Recent Developments and Economic Impact
Those discussions followed a recent round of working-level negotiations between US and Chinese officials. They set out to fix the most urgent problems stemming from the trade war. These discussions have taken place against a backdrop of increasing alarm over the wider economic impact of a runaway deterioration in U.S.-China relations. The trade war has already slashed spending too, particularly in the investment sector. This intentional reduction is literally inflating prices, as reflected by the Consumer Price Index.
At the same time, the continuing war has badly thrown global supply chains into disarray. The industries most export-dependent, and therefore most vulnerable, have been hit hardest by a rise in tariffs and other trade barriers. As businesses try to adjust to these unfortunate changes thrown upon them, consumers will be severely disappointed by paying higher prices or seeing fewer products available.
China’s Commerce Ministry continues to dig in their heels. It requires the US to act right away to stop what it defines as harmful practices. The ministry’s call underscores the dwindling urgency both countries are under. They are doing so while dancing along a razor’s edge of global economic interdependence and facing existential threats.
Looking Ahead
As Trump’s administration prepares to do battle with canons of aggressive tariff, the damage for both countries might be monumental. The possibility that hostilities will resume in trade between the U.S. and the rest of the world may herald an unprecedented era of economic isolationism or protectionism. Beijing’s frequent calls for dialogue indicate its inclination toward resolution. Overall, distrust between the two powers remains a significant obstacle to any meaningful progress.