An economic conflict between China and the United States has been ongoing since January 2018, when US president Donald Trump began imposing tariffs and other trade barriers on China with the aim of forcing it to make changes to what the US has said are longstanding unfair trade practices and intellectual property theft. The first Trump administration stated that these practices may contribute to the US–China trade deficit, and that the Chinese government requires the transfer of American technology to China. In response to the trade measures, CCP general secretary Xi Jinping's administration accused the Trump administration of engaging in nationalist protectionism and took retaliatory action. Following the trade war's escalation through 2019, the two sides reached a tense phase-one agreement in January 2020. However, because of a temporary collapse in goods trade around the globe during the COVID-19 pandemic together with a short recession diminished the chance of meeting the target, China failed to buy the $200 billion worth of additional imports specified. By the end of Trump's first presidency, the trade war was widely characterized by American media outlets as a failure for the United States.
The Biden administration kept the tariffs in place and added additional levies on Chinese goods such as electric vehicles and solar panels. In 2024, the Trump presidential campaign proposed a 60% tariff on Chinese goods.
2025 marked a significant escalation of the conflict under the second Trump administration. A series of increasing tariffs led to the US imposing a 145% tariff on Chinese goods, and China imposing a 125% tariff on American goods in response; These measures are forecast to cause a 0.2% loss of global merchandise trade. Despite this, both countries have excluded certain items from their tariff lists and continue to try and find a resolution to the trade war.
Background
Trade relationship
Since the 1980s, Trump had advocated tariffs to eliminate the US trade deficit and promote domestic manufacturing, saying the country was being "ripped off" by its trading partners; imposing tariffs became a major plank of his presidential campaign. Nearly all economists who responded to surveys conducted by the Associated Press and Reuters said Trump's tariffs would do more harm than good to the American economy, and some economists advocated alternate means to address trade deficits with China.
With the United States–China Relations Act of 2000, China was allowed to join the World Trade Organization (WTO) in 2001 and was given most favored nation (MFN) status. The growth of trade accelerated after China's entry into the WTO in 2001, with the US and China becoming one another's most important trading partners. The US has consistently imported more from China than it has exported to China, with the bilateral US trade deficit in goods with China rising to $375.6 billion in 2017. According to Keyu Jin, this trade deficit is driven by a difference in saving rates between the US and China (Chinese households save more than 30% of disposable income on average, compared to 7% in the United States) while according to Xiaohuan Lan, the deficit is driven by the way the economic systems of the two countries are structured: the US imports more than it exports since its domestic consumption is greater than its domestic production of goods while China exports more than it imports since its domestic production is greater than its domestic consumption of goods.
Since the entry of China into the WTO in December 2001, the decline in US manufacturing jobs has accelerated (the China shock). The Economic Policy Institute estimated that the trade deficit with China cost about 2.7 million jobs between 2001 and 2011, including manufacturing and other industries. Since 2000, there have been several attempts to repeal the Permanent Normal Trade Relations with China. The strongest attempt was in 2005 when House Representative Bernie Sanders and 61 co-sponsors introduced a legislation that would repeal the PNTR with China.
There have been studies which have explored the strategic dimension of the trading relationship which some have argued is the best way to understand the main concerns over the way the relationship has developed.
The US government has at times criticized various aspects of the US-China trade relationship, including large bilateral trade deficits, and China's relatively inflexible exchange rates. The administrations of George W. Bush and Barack Obama imposed quotas and tariffs on Chinese textiles in order to shield US domestic producers, accusing China of exporting these products at dumping prices. During the Obama administration, the US additionally accused China of subsidizing aluminum and steel production, and initiated a range of anti-dumping investigations against China. During these two US administrations, US-Chinese trade continued to grow. During this time, China's economy grew to be the second largest in the world (using nominal exchange rates), second only to that of the US. Large-scale Chinese economic initiatives, such as the Belt and Road Initiative, the Asian Infrastructure Investment Bank and "Made in China 2025" alarmed some US policymakers. More broadly, China's economic growth has been viewed by the US government as a challenge to American economic and geopolitical dominance.
American proponents of tariffs on China have argued that tariffs will bring manufacturing jobs to the US; that bilateral tariffs should be reciprocal; that the US should eliminate its trade deficit with China; and that China should change various policies governing intellectual property and investment. Most economists are skeptical of the ability of tariffs to achieve the first three of these goals. A study estimates that US exports to China provide support to 1.2 million American jobs and that Chinese multinational companies directly employ 197,000 Americans, while US companies invested $105 billion in China in 2019. Economists have studied the impact of trade with China and increasing labor productivity on employment in the American manufacturing sector, with mixed results. Most economists believe that the American trade deficit is the result of macroeconomic factors, rather than trade policy. Two 2020 Congressional Research Service reports said most economists concluded that the long-run net effect of trade on the economy as a whole was positive and that attempts to address the trade deficit without addressing the underlying macroeconomic conditions would likely be counterproductive and create distortions in the
economy.
The US and China held talks in Beijing between US National Security Adviser Jake Sullivan and CCP Foreign Affairs Commission Office Director Wang Yi to prevent competition from escalating into conflict. The meetings aimed to stabilize strained relations and maintain open communication.
Trump administration's complaints
Donald Trump's first noted advocacy for tariffs was prompted by Japanese economic success in the 1980s, arguing that the US trade deficit was a burden and that tariffs would promote domestic manufacturing that would keep the United States from being "ripped off" by its trading partners. In early 2011, he stated that because China has manipulated their currency, "it is almost impossible for our companies to compete with Chinese companies." Imposing tariffs was subsequently a major plank of his successful 2016 presidential campaign.
In the 2016 US presidential election, Trump ran on a protectionist economic platform. During his 2016 presidential campaign, Donald Trump promised to reduce the US trade deficit with China, which he attributed to unfair trade practices, such as intellectual property theft and lack of access by US companies to the Chinese market. Trade advisor Peter Navarro was given an office on the 14th floor of Trump Tower, where he worked on economic plans that heavily focused on starting a trade war against China. As president, in August 2017, he directed the Office of the United States Trade Representative (USTR) to investigate Chinese economic practices. The resulting report, issued in March 2018, attacked many aspects of Chinese economic policy, focusing particularly on alleged technology transfer, which the report stated cost the US economy $225 billion and $600 billion annually. Following the issuing of the report, Trump ordered the imposition of tariffs on Chinese products, the filing of a WTO case against China and restrictions on Chinese investment in high-tech sectors of the US economy. Navarro was influential in pushing Trump to start the trade war; in his 2021 book In Trump Time, Navarro wrote that he urged Trump to go "full Sudden Zen" and start an all-out trade war against China.
In supporting tariffs as president, he said that China was costing the American economy hundreds of billions of dollars a year because of unfair trade practices. After imposing tariffs, he denied entering into a trade war, saying the "trade war was lost many years ago by the foolish, or incompetent, people who represented the US" He said that the US has a trade deficit of $500 billion a year, with intellectual property (IP) theft costing an additional $300 billion. "We cannot let this continue," he said. Former White House Counsel, Jim Schultz, said that "through multiple presidential administrations – Clinton, Bush and Obama – the United States has naively looked the other way while China cheated its way to an unfair advantage in the international trade market."
In August 2017, Robert Lighthizer investigated China's alleged unfair trade practices. According to the administration, the Chinese government's reforms have been minimal and have not been fair and reciprocal: "After years of US-China dialogues that produced minimal results and commitments that China did not honor, the United States is taking action to confront China over its state-led, market-distorting forced technology transfers, intellectual property practices, and cyber intrusions of US commercial networks."
Technology is considered the most important part of the US economy. According to US Trade Representative Robert E. Lighthizer, China maintains a policy of "forced technology transfer," along with practicing "state capitalism," including buying US technology companies and using cybertheft to gain technology. As a result, officials in the Trump administration were, by early 2018, taking steps to prevent Chinese state-controlled companies from buying American technology companies and were trying to stop American companies from handing over their key technologies to China as a cost of entering their market. According to political analyst Josh Rogin: "There was a belief that China would develop a private economy that would prove compatible with the WTO system. Chinese leadership has made a political decision to do the opposite. So now we have to respond." Lighthizer said that the value of the tariffs imposed was based on US estimates of the actual economic damage caused by alleged theft of intellectual property and foreign-ownership restrictions that require foreign companies to transfer technology.
Over half of the members of the American Chamber of Commerce in the People's Republic of China thought that leakage of intellectual property was an important concern when doing business there.
Initiating steel and aluminum tariff actions in March 2018, Trump said "trade wars are good, and easy to win," but as the conflict continued to escalate through August 2019, Trump stated, "I never said China was going to be easy."
Peter Navarro, White House Office of Trade and Manufacturing Policy Director, explained that the tariffs are "purely defensive measures" to reduce the trade deficit. He says that the cumulative trillions of dollars that Americans transfer overseas as a result of yearly deficits are then used by those countries to buy America's assets, as opposed to investing that money in the US "If we do as we're doing ... those trillions of dollars are in the hands of foreigners that they can then use to buy up America."
China's response and counter allegations
The Chinese government argues that the US government's real goal is to stifle China's growth, and that the trade war has had a negative global effect. The Chinese government has blamed the American government for starting the conflict and said that US actions were making negotiations difficult. Zhang Xiangchen, China's ambassador to the World Trade Organization, said the US Trade Representative was operating with a "presumption of guilt", making claims without evidence and based on speculation.
The Chinese government has denied forced transfer of IP is a mandatory practice, and acknowledged the impact of domestic R&D performed in China. Former US treasury secretary Larry Summers assessed that Chinese leadership in some technological fields was the result of "huge government investment in basic science" and not "theft" of US properties. In March 2019, the National People's Congress endorsed a new foreign investment bill, to take effect in 2020, which explicitly prohibits the forced transfer of IP from foreign companies, and grants stronger protection to foreign intellectual property and trade secrets. China had also planned to lift restrictions on foreign investment in the automotive industry in 2022. AmCham China policy committee chair Lester Ross criticized the bill, saying the text of the bill was "rushed" and "broad", and also criticized a portion of the bill that granted the country power to retaliate against countries that impose restrictions on Chinese companies.