Introduction
This essay critically examines the multifaceted reasons behind the US-China trade wars, a pivotal issue in contemporary international economic relations. Emerging prominently in 2018 under the Trump administration, the trade conflict between the world’s two largest economies has had far-reaching implications for global trade networks, economic policies, and geopolitical stability. The purpose of this analysis is to explore the underlying causes of this trade war, including economic imbalances, intellectual property disputes, and broader strategic rivalries. By evaluating these factors, the essay aims to provide a sound understanding of the motivations driving both nations, supported by evidence from academic sources and official reports. The discussion will be structured into three main sections: economic disparities and trade imbalances, concerns over intellectual property and technology transfer, and geopolitical and strategic considerations. The conclusion will summarise the key arguments and reflect on their implications for international economic relations.
Economic Disparities and Trade Imbalances
One of the primary catalysts for the US-China trade war is the significant trade imbalance between the two nations. For decades, the United States has maintained a substantial trade deficit with China, reaching $419 billion in 2018 according to the US Census Bureau (US Census Bureau, 2019). This imbalance, often cited by US policymakers as evidence of unfair trade practices, prompted the imposition of tariffs on Chinese goods to reduce the deficit and protect domestic industries. From an economic perspective, the US argument hinges on the notion that China’s export-driven economy, bolstered by state subsidies and currency manipulation, undermines American manufacturing and job creation (Morrison, 2018). Indeed, tariffs were positioned as a tool to level the playing field, with the US imposing duties on over $550 billion worth of Chinese goods by 2019 (Council on Foreign Relations, 2021).
However, this perspective is not without critique. Some scholars argue that the trade deficit is less a result of Chinese malfeasance and more a reflection of structural issues within the US economy, such as low domestic savings rates and high consumer demand for affordable goods (Roach, 2018). Furthermore, China’s role in global supply chains means that tariffs often hurt American consumers and businesses through higher prices and disrupted supply networks. Thus, while economic disparities are a central driver, the effectiveness and rationale behind the US tariff strategy remain contested.
Intellectual Property and Technology Transfer Concerns
Beyond economic imbalances, a significant reason for the US-China trade war lies in disputes over intellectual property (IP) rights and forced technology transfers. The US has long accused China of engaging in practices that undermine American innovation, including IP theft, cyber espionage, and requiring foreign companies to share proprietary technology as a condition for market access. According to a report by the Office of the United States Trade Representative, the annual cost of IP theft to the US economy is estimated to be between $225 billion and $600 billion, with China being a major contributor (USTR, 2018). This issue became a focal point in the trade war, with the US targeting Chinese tech giants like Huawei through export controls and tariffs as a means of curbing alleged unfair practices.
From China’s perspective, these accusations are often seen as overstated or as a pretext for containing its technological rise. Chinese authorities argue that their policies are aligned with developing a competitive domestic tech industry, a legitimate aim for a developing economy (Wei, 2019). Nevertheless, evidence from various studies suggests that IP violations have indeed been a persistent issue, with numerous US firms reporting losses due to inadequate legal protections in China (Branstetter, 2018). Arguably, resolving these tensions requires not only punitive measures like tariffs but also multilateral agreements to strengthen IP frameworks globally. The complexity of this issue illustrates that the trade war is as much about innovation and future economic dominance as it is about current trade imbalances.
Geopolitical and Strategic Considerations
The US-China trade war cannot be fully understood without considering the broader geopolitical and strategic rivalry between the two powers. Beyond economics, the conflict reflects a struggle for global influence, with the US viewing China’s rise as a threat to its hegemonic position. The Trump administration’s National Security Strategy explicitly identified China as a “strategic competitor” seeking to challenge American power and reshape the international order (White House, 2017). Tariffs and trade restrictions, therefore, serve not only economic ends but also act as tools to curb China’s ambitions, particularly in critical sectors like technology and infrastructure (e.g., the Belt and Road Initiative).
Conversely, China perceives US actions as an attempt to contain its rightful development and integration into the global economy. Beijing has responded with retaliatory tariffs on US goods, such as soybeans and aircraft, targeting politically sensitive sectors to exert pressure on American policymakers (Tan, 2020). This tit-for-tat approach underscores the strategic dimension of the trade war, where economic policies are intertwined with national security and ideological differences. While both sides justify their actions as protecting national interests, the escalation risks destabilising global trade systems, a concern highlighted by international bodies like the World Trade Organization (WTO, 2019). Generally, this geopolitical lens reveals that the trade war is symptomatic of deeper tensions, unlikely to be resolved through economic measures alone.
Conclusion
In conclusion, the US-China trade war is a complex phenomenon driven by a confluence of economic, technological, and geopolitical factors. The significant trade imbalance between the two nations has been a longstanding grievance for the US, prompting tariff measures aimed at protecting domestic industries, though their efficacy remains debated. Similarly, disputes over intellectual property and technology transfer highlight concerns over innovation and economic fairness, revealing systemic issues that extend beyond bilateral relations. Finally, the overarching geopolitical rivalry underscores the strategic motivations behind the conflict, framing it as part of a broader contest for global dominance. These reasons collectively illustrate the multifaceted nature of the trade war, with implications that ripple across international economic relations. Moving forward, addressing these issues will likely require not only bilateral negotiations but also multilateral cooperation to reform trade rules and reduce global tensions. As such, the US-China trade war serves as a critical case study for understanding the interplay between economics and geopolitics in the 21st century.
References
- Branstetter, L. (2018) China’s Forced Technology Transfer Problem—And What to Do About It. Peterson Institute for International Economics.
- Council on Foreign Relations (2021) The US-China Trade War. Council on Foreign Relations.
- Morrison, W. M. (2018) China-US Trade Issues. Congressional Research Service.
- Roach, S. S. (2018) Unbalanced: The Codependency of America and China. Yale University Press.
- Tan, H. (2020) China’s Retaliatory Tariffs on US Goods. CNBC International.
- US Census Bureau (2019) Trade in Goods with China. US Department of Commerce.
- USTR (2018) Section 301 Report into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. Office of the United States Trade Representative.
- Wei, S. J. (2019) The US-China Trade War: Causes and Consequences. Journal of International Economics, 121, 103-118.
- White House (2017) National Security Strategy of the United States of America. White House.
- WTO (2019) World Trade Report 2019: The Future of Services Trade. World Trade Organization.
