The economic conflict between the United States and China began in early 2018. Understandably since then, it has had quite a bit of significant newsworthy developments. It was President Donald Trump’s trade barriers that started the fight in the first place. Second, it later grew as concerns over China’s unfair trade practices and IP theft came to light. In response, China retaliated by implementing tariffs of their own on various US products, including cars and soybeans. This unexpected move sparked a tit-for-tat exchange that has shaken the very foundations of global markets.
In January of 2020, the states were involved in frenetic negotiations. They finally did arrive at a truce of sorts, signing the US-China Phase One trade agreement. This deal required fundamental changes and reforms to be made within China’s economic and trade environment. Following the agreement, an initial 90-day reprieve took some heat off global markets. It by no means settled the stormy waters ahead.
Continuity of Tariffs Under Biden Administration
Although the Phase One trade deal provided a momentary respite, President Joe Biden chose to maintain the tariffs imposed by his predecessor and even introduced additional levies. This action has been interpreted as another sign that the US government is still committed to a continued confrontational approach toward China. The trade war is evidently not over by a longshot.
Trump’s return to the political forefront has scrambled the deck and raised new and profound questions about the future of US-China relations. In the run up for his 2024 election campaign, Trump promised to slap 60% tariffs on Chinese goods. Such a radical action would deepen the already dramatic conflict should he once again win the presidency. We all got to see him officially return to the White House that day, as the 47th US President, on January 20, 2025.
As tensions rise again, experts predict a renewed cycle of retaliatory measures that could disrupt global supply chains further and affect international economic stability.
Economic Implications of the Trade War
The trade war that’s still raging between the U.S. and China has already caused serious upheaval in global supply chains. These disruptions have depressed spending and investment, worsened inflationary pressures, and harmed the Consumer Price Index itself. The US Dollar Index was last 0.22% lower at 100.58, underlining market nervousness in the face of these economic unknowns.
Analysts acknowledge that both countries are caught in a cycle of retaliatory, tit-for-tat policies. These measures will send shockwaves across the world, affecting economies at home and abroad. Global trade is a very tangled web. The policies we choose in Washington and Beijing have enormous effects on other countries across the globe.
Room for Collaboration
Even amidst these heightened tensions, there are prominent voices calling for more constructive engagement between the two great powers. China’s Vice President Han Zheng emphasized this perspective during a recent address, stating, “there is ample room for collaboration between the US and China.” He mentioned his desire to have US businesses help do the work of improving US-China relations.
Han’s comments represent a real yearning for a more cooperative spirit moving forward. He particularly emphasized that closer bilateral cooperation would help achieve win-win outcomes for the two countries and contribute to global economic stability.