The trade war between the United States and China is often framed as a dispute over tariffs and trade balances. However, this perspective only scratches the surface of a far deeper strategic confrontation—one that represents a contest for economic, technological, and geopolitical dominance in the 21st century.
At the core of the dispute lies a growing dissatisfaction within the U.S. regarding its ballooning trade deficit with China, which reached approximately USD 419 billion in 2018. Yet the deficit is merely a symptom of broader structural tensions. Washington has consistently accused Beijing of unfair trade practices, including intellectual property theft, forced technology transfers, and massive state subsidies that give Chinese firms an unfair advantage. These practices, American policymakers argue, have cost the U.S. economy hundreds of billions of dollars and threaten its global technological leadership.
Under the Trump administration, the U.S. responded with a series of aggressive protectionist measures. Guided by the “America First” doctrine, Washington imposed tariffs on hundreds of billions of dollars’ worth of Chinese goods, aiming to pressure Beijing into altering its economic behavior. China retaliated with tariffs of its own, targeting American agriculture and manufacturing—two politically sensitive sectors. Although the Phase One Trade Agreement was signed in January 2020, the underlying tensions have persisted and, in many respects, deepened.
The crux of the conflict lies not in trade imbalances but in a fundamental clash of strategic ambitions. China’s “Made in China 2025” plan signals its intent to dominate high-tech industries such as artificial intelligence, semiconductors, green energy, and robotics—areas where the U.S. has long enjoyed a competitive edge. From Washington’s perspective, this is not merely about market competition but a geopolitical threat to its longstanding leadership in technology and defense.
The Biden administration has largely continued, and even expanded, the confrontational stance toward Beijing. In 2024, the U.S. imposed a 100% tariff on Chinese electric vehicles, signaling a shift from mere trade protection to strategic decoupling—or more precisely, de-risking. This policy aims to reduce U.S. dependence on Chinese supply chains, particularly in future-critical industries like clean energy and battery production.
Beyond tariffs, Washington has tightened export controls on advanced technologies, especially semiconductors. Over 140 Chinese entities have been added to the Entity List, severely restricting their access to U.S. innovation. This strategy is designed to slow China’s ascent in technological domains that could underpin both economic and military power.
China, for its part, has responded with a two-pronged strategy: tactical retaliation and long-term resilience-building. In addition to imposing counter-tariffs, Beijing has launched a major push for self-sufficiency, investing heavily in domestic semiconductor manufacturing and energy technologies. The promotion of yuan-based trade through strategic partnerships with countries such as Russia, Brazil, and ASEAN members is part of a broader dedollarization effort, aimed at reducing reliance on the U.S.-dominated financial system.
China’s approach also includes assertive geopolitical maneuvering. Its activities in the South China Sea serve both to assert territorial claims and to safeguard vital maritime trade routes. Meanwhile, the Chinese political system’s centralized decision-making offers a speed and coherence in economic policy that democratic rivals often lack.
Globally, the U.S.–China trade war has triggered disruptions far beyond the borders of the two nations. Supply chains have been upended, costs of production have risen, and emerging economies—particularly in Southeast Asia—have faced significant economic headwinds. Some nations, like Vietnam and Mexico, have benefitted from supply chain shifts, but the broader global economy has suffered from increased uncertainty and diminished investor confidence.
Geopolitically, the conflict has accelerated a drift toward economic multipolarity. New alliances and trade blocs are forming as countries seek to hedge against overdependence on either Washington or Beijing. Yet this trend also risks further fragmenting the already fragile multilateral trade system. A more divided world economy could undermine decades of progress in economic integration and development.
Looking ahead, the trajectory suggests further escalation. By 2025, U.S. tariffs on Chinese imports are projected to reach 125%, with China responding in kind. If left unchecked, this conflict could entrench a new global economic Cold War—one characterized by decoupling, technological bifurcation, and declining multilateralism.
In this contest, there will be no clear victor. The economic losses, geopolitical frictions, and rise of protectionist sentiment indicate that a zero-sum mindset yields only collective harm. The path forward must prioritize diplomacy, institutional reform, and a renewed commitment to global cooperation. The U.S.–China trade war should serve not as a blueprint for future engagements, but as a cautionary tale of how strategic rivalry, when left unmanaged, can destabilize the global commons.
