The trade war between the United States and China is one of significant economic conflicts of 21st century.
It formally erupted in January 2018 under Trump administration, its roots lie in decades of shifting economic power, deep structural grievances, and a growing geopolitical rivalry.
The conflict wasn’t sparked by a single event, but rather a economic and political factors.
1. Trade Deficit and Economic National Security
One of the primary drivers for the U.S. was the bilateral trade deficit. By 2017, the U.S. trade deficit with China had grown to approximately $375 billion.
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The U.S. government argued that this imbalance was evidence of an “unbalanced” relationship where China exported significantly more to the U.S. than it bought in return.
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President Trump campaigned on the promise of “bringing back manufacturing jobs” to the American “Rust Belt,” arguing that unfair trade practices had hollowed out the U.S. industrial base.
2. Intellectual Property (IP) and Technology Transfer
Perhaps the most legally significant cause was Section 301 investigation launched by the U.S. Trade Representative (USTR) in 2017. The investigation concluded that China engaged in several “unfair” practices:
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Forced Technology Transfer: U.S. companies were often required to form joint ventures with Chinese firms to access Chinese market, which frequently involved handing over proprietary technology.
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IP Theft: U.S. accused China of widespread state-sponsored cyber-espionage and theft of intellectual property, costing American firms billions annually.
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The U.S. viewed China’s industrial policy—aimed at dominating high-tech sectors like AI, robotics, and electric vehicles—as a threat to American technological leadership and national security.
3. Structural Economic Differences
The conflict was also a clash of two very different economic systems:
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State Capitalism vs. Free Markets: U.S. criticized China’s use of massive state subsidies for its domestic industries, which allowed Chinese firms to underprice international competitors.
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Currency Concerns: Historically, U.S. had accused China of currency manipulation—keeping the Yuan artificially low to make its exports cheaper and more attractive globally.
The tarrif war progressed through a series of events,
| Date | U.S. Action | China’s Response |
| Jan 2018 | Tariffs on solar panels and washing machines. | Investigation into U.S. sorghum exports. |
| Mar 2018 | 25% tariff on steel and 10% on aluminum. | Tariffs on 128 U.S. products (fruit, wine, pork). |
| July 2018 | Official Start: 25% tariffs on $34B of Chinese goods. | Equivalent tariffs on U.S. goods (soybeans, autos). |
| 2019 | Blacklisting of Huawei over security concerns. | Restrictions on unreliable entities and rare earths. |
4. The Geopolitical Thucydides Trap
Beyond numbers and laws, many analysts see trade war as a symptom of a broader geopolitical struggle. As China rose toward becoming world’s largest economy, U.S. moved from a policy of engagement to strategic competition. The trade war became a tool to slow China’s rise and protect U.S. global hegemony.
Current State (2026)
Phase One deal was signed in 2020 to pause escalation, many of structural issues remain. Biden administration maintained most of Trump-era tariffs and even expanded them in 2024 to include 100% tariffs on Chinese Electric Vehicles (EVs). Entering 2026, conflict has evolved from a simple trade war into a broader de-risking of the two world powers economies.