Understanding the Implications and Outcomes of the US-China Trade War by SHAN XIE

Introduction

sx101 — 2025-05-07 09:21:46 UTC

Tariff, trade war, decoupling. Many of us may find these words appearing alarmingly more frequently in news during the past few years, and it is reaching a spick in the past few months. The long-lasting trade war between the United States and China is certainly one of the hottest issues on this planet. Ignited in 2018 with the Trump administration’s reciprocal tariffs (Mullen, 2021), it has profoundly reshaped the global economy and politics, causing disruption in global supply chains and stimulating technological rivalry. As the two largest countries and economies in the world, the scope and influence of this trade war are massive and are relevant to every individual across the world. As a Chinese student studying in the US, I have personally experienced the effect of this trade war. From US visa policy uncertainty to the increasing hostility back home toward the idea of studying in the States, this conflict is not only about the economy; it affects a large part of my daily life. In this essay, I will explore the origins, means, and possible outcomes of the trade war to help us understand this major historical event better.

Causes

sx101 — 2025-05-07 09:25:21 UTC

The US-China trade war stems from a mix of long-term economic tensions and geopolitical competition. Economically, the US has carried a large trade deficit with China for years. While China has been utilizing its powerful manufacturing ability to produce billions worth of products and selling them to the world. The United States, as one of China’s main buyers, felt the threat of a large trade deficit. Relying too much on Chinese imports also caused the low and middle-end manufacturing industry, and thus jobs, to flow out of the US. Causing an increasing unemployment rate and weakening the manufacturing sector. The US has recognized this problem and started to address it. As President Trump pointed out in his recent comment on the mining industry: “We’re bringing back an industry that was abandoned”, the number of mine workers has declined almost 50% in the past decade (Friedman, 2025). The United States is also not happy with the Chinese government’s state subsidies under its famous ‘Made in China 2025’ plan, which gives Chinese companies unfair advantages in global competitions since they can sell products for a much lower price with the state subsidies. Intellectual theft is another major concern raised by the US, which has caused great economic loss. To sum up, the cargo ship of China is heading towards the US, and it has been causing rifts and losses.

The economic sector is not the full picture behind the causes of the US-China trade war. Geopolitically, the US perceives China’s Belt and Road Initiative and technological upgrade as threats to US hegemony. The last two US administrations both framed China as a systematic rival, considered it a major, if not the largest, competitor in the world. Chinese President Xi Jinping’s“Chinese Dream” rhetoric, which fused economic ambition with nationalism, also made China more aggressive in foreign policy. This increasing political tension also played an important role in the formation and escalation of the US-China trade war.

sx101 — 2025-05-07 09:29:19 UTC

Tariffs as Weapon

sx101 — 2025-05-07 09:30:43 UTC

Although we may all know what tariffs are. It has only become urgent and familiar to me recently as a major weapon of the US-China trade war. Here is a video from a Chinese economic influencer (with EN subtitles) explaining what tariffs are in the bigger picture of the US-China trade war.

https://www.youtube.com/watch?v=uiMsul6sKus (小Lin说, 2025).

The main takeaway from her video is that tariffs are a common method for countries to regulate their trade relations. It has been employed by many countries at different times. However, the unilateral tariffs issued by Trump administration in this trade war has irritated economic entities around the world, causing mistrust and catalyzing broader decoupling out of the tit tat tactic and to avoid duties. Although the rationale behind Trump's tariffs seems to be legitimate, deindustrialization, job loss, trade deficits, and intellectual property theft are all urgent problems the US needs to address. The unilateral tariffs he issued may not be the best solution to these problems. It hurts the US consumers, alienates US allies, and causes great disruption to the global trade market. Let alone his constant and abrupt policy change has done great damage to the US's credibility across the globe.

Meanwhile, China’s response to this tariff rise is also worth noting. Xi’s hand is tied in a situation like this. He did what must be done for the CCP's rule out of a legitimacy concern, and for domestic stability. The mentality is different here since he does not need to be worried about votes or, to some extent, the Chinese citizens. His priority is to make sure that he stays in power and the party's rule is secured. Therefore, there is no other option for him when facing Trump's tariffs but to retaliate equally, since any backward move may damage his and the party's legitimacy, especially under the increasing nationalism he fostered through these years. This creates a forced escalation between the two great powers. Either of them has the ground to cool things down. The tariff confrontation may be effective in solving short-term issues, yet failed to address the core disputes.

sx101 — 2025-05-07 09:35:05 UTC

Global Reaction

sx101 — 2025-05-07 09:36:16 UTC

As another major player in the world, the EU has been coping with the war from the beginning. This TV interview with an Oxford professor provides a great opportunity for us to see through a distinctive perspective.

https://www.youtube.com/watch?v=qlUt1oDlYZY (Al Jazeera English, 2025).

In this video, Professor Golden articulates Europe’s concern about the Trump administration’s fast-paced and somehow arbitrary policies, raising concerns about its consequences to the world trade system. He also points out that the US may force the EU to shift more toward China. In my opinion, although the EU shares the US’s concerns over China’s market-distorting subsidies, IP theft, and lack of trade reciprocity, it opposes the US’s unilateral tariffs, fearing damage to its own trade with both countries. The EU can play an important role in this trade war since its support is valuable to both sides of the war and may have the power to swing the result of the trade war. How to pick a side or even if they should pick a side at all remains a problem for the EU at this point.

sx101 — 2025-05-07 09:37:45 UTC

Possible Outcomes

sx101 — 2025-05-07 09:39:18 UTC

The US-China trade war has proven itself to be an unprecedented form of clash between two great powers. Historically, the US also had smaller-scale trade wars against postwar Europe in the 1970s, and Japan in the following decade on specific categories of products such as cars and electronics. However, due to their geopolitical dependence on America at the time, which is a leverage absent with China today (Rasmus, 2018), neither Europe nor Japan can be compared with China today as a powerful opponent faced by the US. Not only does China not depend on the US to provide national defense, but it also has more methods to retaliate than its predecessors, according to Rasmus. Slow down the buying of the US Treasury bond and devaluing the RMB (China’s currency) to inflict wounds on the US economy (Rasmus, 2018) remains on China’s table. Therefore, it seems like the winner of this war is far from decided at this point. In my opinion, there may not even be a winner due to the fundamental change and disruption of the US-China trade war to the world’s economy. Both sides could be damaged economically in the end. The cost will eventually fall on the two countries’ people in the aftermath.

Conclusion

sx101 — 2025-05-07 09:40:29 UTC

The US-China trade is not simply disputes over tariffs and trade policies, but a deeper manifestation of a systematic shift in the global power dynamic. As both nations insist on their policies and show no signs of concession, the ripple effect of the trade war continues to influence the global economy and international relations. At this point, a clear winner is still undecided as the trade war is still escalating. Looking ahead, it is crucial for the leaders of the two countries to recognize the importance of conversation and collaboration in a highly globalized and interdependent world. This may be the best way to mitigate prolonged conflicts and to ensure prosperity. As an international student and a global citizen myself, I have experienced the benefits of a globalized world and would certainly hope that things stay this way. It is important for all of us to stay informed and engaged in this issue, as it is closely related to our current lives and the future of the world.

Citations

sx101 — 2025-05-07 09:41:45 UTC

Al Jazeera English. (2025, April 18). Who will win the US-China trade war? | Counting the Cost. YouTube. https://www.youtube.com/watch?v=qlUt1oDlYZY&t=685s

Andrew, M. (2022, May 16). Explainer: Timeline of the US-china trade war since July 2018. South China Morning Post. https://www.scmp.com/economy/china-economy/article/3146489/us-china-trade-war-timeline-key-dates-and-events-july-2018

Friedman, T. L. (n.d.). Opinion | how trump’s tariffs play right into China’s hands - The New York Times. https://www.nytimes.com/2025/04/07/opinion/tariffs-china-advanced-manufacturing.html

Rasmus, J. (2018). Trump’s Deja Vu china trade war. World Review of Political Economy, 9(3). https://doi.org/10.13169/worlrevipoliecon.9.3.0346

Unknown. (2025). The U.S.-China Trade War: China’s Challenge in Navigating U.S. Tariffs and Global Trade Tensions. Trends Research and Advisory. Retrieved April 23, 2025, from https://trendsresearch.org/insight/the-u-s-china-trade-war-chinas-challenge-in-navigating-u-s-tariffs-and-global-trade-tensions/.

小Lin说. (2025, February 17). 一口气了解关税. YouTube. https://www.youtube.com/watch?v=uiMsul6sKus

sx101 — 2025-05-07 09:46:16 UTC

Here is a copy of my essay in Word.