US-China trade war began with Trump

Editor’s note: “Behind the News” is the product of Sun staff assisted by the Sun’s AI lab, which includes a variety of tools such as Anthropic’s Claude, Perplexity AI, Google Gemini and ChatGPT.

The trade war between China and the United States progressed this week with President Donald Trump temporarily reducing tariffs on Beijing, which should come as a relief to businesses.

Why is there business conflict between the two countries, and where might it go in the future?

Where do things currently stand?

On Monday, a significant breakthrough occurred when both countries agreed to drastically roll back tariffs for an initial 90-day period. This move came as a response to mounting economic pressures and concerns about global growth.[17][18][19]

Trump agreed to reduce tariffs on Chinese imports from as high as 145% down to 30%, while maintaining certain additional tariffs — such as the 20% levy related to China’s role in the fentanyl trade.[19][21][22] This approach allowed the administration to ease tensions without abandoning key negotiating points.

The tariff reduction was part of a bilateral agreement reached after talks in Switzerland, aimed at facilitating further negotiations on broader structural issues.[19][20][17]

China’s concessions

China made several concrete concessions to enable this de-escalation:

• Drastic tariff reduction: China lowered its tariffs on U.S. goods from 125% to 10% for the initial 90-day period.[23][24][25][26][27][28]
• Suspension of nontariff countermeasures: China agreed to pause or revoke all nontariff measures imposed since April 2, including:[24][25][26]

1. Lifting export restrictions on certain rare earth minerals and critical materials
2. Removing dozens of U.S. companies from its “unreliable entity list” and “export control list”
3. Halting regulatory investigations and sanctions targeting specific U.S. firms

• Creation of a tariff exemption list: China established a “whitelist” of U.S.-made products exempt from the 125% tariffs, including select pharmaceuticals, microchips and aircraft engines.[30]
• Commitment to no new tariffs: China pledged not to introduce new tariffs or nontariff barriers against U.S. goods during the 90-day negotiation window.[24][25]

How did the conflict begin?

The trade war between the United States and China began in 2018 and has continued through multiple U.S. administrations, intensifying significantly in recent years. This economic conflict stems from several longstanding grievances between the world’s two largest economies.

The United States has consistently accused China of engaging in unfair trade practices that disadvantage American businesses and workers. These accusations include forced technology transfers, intellectual property theft and state subsidies that give Chinese companies unfair advantages over American competitors.[1][2]

U.S. officials have argued that China requires American companies to hand over key technologies as a condition for market access and has used cyber intrusions to steal commercial secrets.[1] These concerns led to formal Section 301 investigations, which found that China was engaging in practices detrimental to U.S. economic interests.[8]

The persistent trade imbalance between the two nations has been a major point of contention. In 2017, the U.S. trade deficit with China reached $375.6 billion.[1] American policymakers, particularly during the Trump administration, argued that this deficit harmed U.S. manufacturing and workers, and that tariffs would help reduce it while bringing jobs back to America.[1][2][9]

Economic competition and industrial policy

China’s rapid economic rise, supported by government subsidies to key industries like renewable energy and technology, has intensified competition with the United States. This has raised concerns about the loss of American jobs and industrial capacity.[2]

The U.S. has also cited concerns about China’s state-led economic model and its efforts to dominate advanced technologies, viewing these as threats to American economic leadership.[1][2]

National security dimensions

Beyond economics, the trade conflict has significant security implications. The U.S. has expressed worries that China’s technological advances, often acquired through joint ventures or alleged IP theft, could undermine U.S. national security and military advantages.[1][2][10]

American officials have highlighted dependency on China for critical minerals and high-tech components as risks to national security. Tariffs and other trade barriers were implemented partly to reduce this vulnerability and ensure the resilience of key supply chains, especially for defense-related industries.[10]

Escalation

U.S. tariff implementation:

The United States imposed multiple rounds of tariffs on Chinese goods, citing the concerns outlined above. These measures were designed to:

• Address unfair trade practices and intellectual property theft[7][8]
• Reduce the trade deficit[9][8]
• Protect American industry and jobs[9][7]
• Safeguard national security[10]
• Combat the fentanyl crisis by pressuring China to take stronger action against the export of fentanyl and its precursor chemicals[7][11]
• Gain leverage in trade negotiations[9][8]

This year, the conflict had escalated dramatically, with the U.S. imposing tariffs as high as 145% on Chinese goods.[1][2]

China’s response:

China responded forcefully to U.S. tariffs with a comprehensive set of countermeasures:

• Retaliatory tariffs: China matched or escalated in response to each new U.S. tariff increase. After the U.S. imposed a 34% tariff, China responded with a 34% tariff on all American imports, later raising its baseline tariff on U.S. goods up to 125% at the height of the dispute.[12][14]
• Export controls on critical materials: China introduced new export licensing requirements and restrictions on key rare earth elements and critical minerals, such as samarium, gadolinium, terbium and dysprosium. These materials are essential for electronics, defense and clean energy sectors, allowing China to leverage its dominance in these supply chains.[15][12]
• Nontariff barriers and regulatory actions: China added numerous U.S. companies to its “Unreliable Entity List” and “Export Control List,” effectively restricting their ability to do business in China. It also initiated antitrust and antimonopoly investigations into major U.S. firms and launched anticircumvention and antidumping investigations targeting specific American products.[15][12]
• Suspension of imports: China suspended imports of certain U.S. agricultural products, such as soybeans and logs, from specific exporters, citing food safety and biosecurity laws.[12]
• Formal WTO complaints: China filed formal complaints with the World Trade Organization, challenging the legality of the U.S. tariff measures after each major escalation.[12]

U.S.-China relations before Trump

Before Trump’s first term as president (which began in January 2017), U.S.-China relations were characterized by a complex mix of economic engagement, strategic competition and diplomatic cooperation.

From the late 1970s through the 2010s, the U.S. and China dramatically expanded their economic ties. U.S.-China trade grew from $5 billion in 1980 to $231 billion by 2004, and China became the United States’ second-largest trading partner by 2006.[35][36]

The relationship was largely defined by mutual economic benefit; the U.S. imported large volumes of consumer goods from China, while China became a major market for U.S. exports and investment.[36]

Despite deepening trade, there were persistent concerns in the U.S. over issues such as China’s currency practices, intellectual property theft, human rights record and restrictions on foreign businesses.

The U.S. raised complaints about China’s state-led industrial policies and market barriers, but these concerns were typically managed through dialogue, WTO mechanisms and periodic negotiations, rather than broad punitive measures.

Prior to Trump, there were no large-scale, across-the-board tariffs imposed between the two countries. Disputes were generally handled through targeted trade remedies or antidumping cases, not sweeping tariff increases.[36]

The relationship was often described as “competitive but cooperative,” with both sides seeking to avoid outright economic conflict.

The U.S.-China trade war represents a complex intersection of economic, strategic and security concerns between the world’s two largest economies. While recent developments suggest a willingness to de-escalate tensions and find common ground, the fundamental differences in economic systems and strategic objectives that fueled the conflict remain largely unresolved.

The temporary reduction in tariffs provides an opportunity for further negotiations, but achieving a lasting resolution will require addressing deep-seated issues related to intellectual property protection, market access, industrial subsidies and technology competition. As both nations navigate this challenging relationship, the global economy remains significantly affected by their ability to find sustainable compromises.

Sources

[1] https://trumpwhitehouse.archives.gov/briefings-statements/president-donald-j-trump-confronting-chinas-unfair-trade-policies/

[2] https://www.cfr.org/backgrounder/contentious-us-china-trade-relationship

[3] https://www.reuters.com/world/china/us-china-reach-deal-slash-tariffs-officials-say-2025-05-12/

[4] https://www.bbc.com/news/articles/clyg2939ej2o

[5] https://apnews.com/article/china-us-switzerland-tariffs-negotiations-b3f5174d086e39b2522ab848ddad9372

[6] https://www.nytimes.com/2025/05/12/business/china-us-tariffs.html

[7] https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/

[8] https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/

[9] https://www.bbc.com/news/articles/cn93e12rypgo

[10] https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-ensures-national-security-and-economic-resilience-through-section-232-actions-on-processed-critical-minerals-and-derivative-products/

[11] https://www.csis.org/analysis/china-and-impact-liberation-day-tariffs

[12] https://www.hklaw.com/en/insights/publications/2025/04/chinas-comprehensive-retaliation-against-us-tariffs

[13] https://en.wikipedia.org/wiki/China–United_States_trade_war

[14. https://www.nytimes.com/article/trump-tariffs-canada-mexico-china.html

[15] https://www.cnn.com/2025/05/12/business/us-china-trade-deal-announcement-intl-hnk

[16] https://time.com/7284765/us-china-trade-war-pause/

[17 https://www.nytimes.com/2025/05/12/business/china-us-tariffs.html

[18] https://www.washingtonpost.com/world/2025/05/12/united-states-china-trade-war-eases/

[19] https://www.bbc.com/news/articles/czx0ry7kdk5o

[20] https://www.newsweek.com/timeline-us-china-tariffs-trade-war-2071098

[21] https://www.bbc.com/news/articles/cn93e12rypgo

[22] https://finance.yahoo.com/news/trumps-tariff-truce-china-brings-204400914.html

[23] https://www.nytimes.com/2025/05/12/business/economy/trump-trade-china-tariffs.html

[24] https://logisticsviewpoints.com/2025/05/12/u-s-and-china-agree-to-temporary-tariff-reductions-following-geneva-discussions/

[25] https://www.scmp.com/economy/global-economy/article/3309975/china-us-reduce-majority-tariffs-after-first-round-trade-talks

[26] https://www.cnn.com/2025/05/12/business/us-china-trade-deal-announcement-intl-hnk

[27] https://finance.yahoo.com/news/trumps-tariff-truce-china-brings-204400914.html

[28] https://procurementmag.com/news/us-china-reach-deal-ease-tariff-strain

[30] https://www.reuters.com/world/china/china-creates-list-us-made-goods-exempt-125-tariffs-sources-say-2025-04-30/

[35] https://www.cfr.org/timeline/us-china-relations

[36] https://www.cfr.org/backgrounder/contentious-us-china-trade-relationship

[37] https://www.aljazeera.com/economy/2025/5/13/why-did-the-us-and-china-slash-tariffs-and-whats-next

[38] https://www.cnn.com/2025/04/02/politics/fact-check-trump-tariffs-trade/index.html