THIS is with reference to the report ‘US and China reach deal to cut tariffs, easing slump fears’ (May 13). The deal, mind you, is for 90 days, indicating that the fears about the dreaded slump are pretty much there. The trade war between the United States and China, which escalated notably from 2018 onwards, has had profound implications for the global economy, international relations, and the very nature of global trade.

The roots of this trade war can be traced back to the growing economic power of China and the perception in the US that China was not adhering to global trade norms, particularly in terms of intellec- tual property rights, forced technology transfers, and industrial policies that favoured Chinese companies over foreign competitors.

US President Donald Trump, who took office in January 2017, made it clear that he intended to address the US trade deficit with China that had ballooned to an unsustainable level of $400 billion. The initial trigger for the trade war came in March 2018, when Trump announced tariffs on steel and aluminium imports, citing national security concerns. In response, China retaliated by imposing tariffs on a range of US goods, including agricultural products, cars and aircraft.

This tit-for-tat cycle of tariff impositions and retaliations marked the beginning of a broader trade war, with both sides imposing tariffs on goods that are worth hundreds of billions of dollars. These tariffs had a dual effect: they increased costs for consumers and businesses in both the countries and disrupted supply chains that ran across the globe.

The trade conflict also had significant consequences for financial markets. Stock prices in both countries fluctuated with each new round of tariff announcements, and investors grew increasingly wary of the potential long-term damage the trade conflict could cause.

The US-China conflict was actually a lot more than a trade dispute, reflecting broader geopolitical tensions between the two countries. And, that remains true even today. As China’s global influence grew, the US increasingly viewed the country as a strategic rival. The trade war, therefore, indicated a larger struggle for global dominance, with both nations trying to assert their economic and technological supremacy.

By early 2020, the two countries had suffered considerable economic harm, and there was increasing pressure to find a resolution.

As both nations continue to navigate the tricky landscape, it remains to be seen how their economic relationship will evolve in the years ahead, and whether they can find a path forward that balances competition with collaboration in a world that is getting increasingly interconnected.

Shahzeb
Hyderabad

Published in Dawn, May 20th, 2025