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US-China Trade War: The ongoing trade tensions between the United States and China continue to shape global markets, with tariffs and retaliatory measures impacting various industries. President Donald Trump announced a temporary pause on higher tariffs for most countries but intensified trade restrictions on China.
Trump’s Tariff Pause
In a surprising move, President Trump declared on Wednesday that he was pausing the implementation of higher tariffs for 90 days for most countries. The decision came after more than 75 trading partners chose not to retaliate and initiated discussions with the United States.
However, this pause did not extend to China. Trump instead raised tariffs on Chinese goods to 125%, effective immediately. Announcing the move on social media, Trump wrote, “Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.”
Despite this temporary relief for most nations, the broader trade war remains unresolved. A 10% across-the-board duty remains in place, and tariffs on imports such as autos, steel, and aluminum are still in effect. Treasury Secretary Scott Bessent confirmed that additional duties on products like lumber and pharmaceuticals would also proceed as planned.
Uncertain Scope of the Tariff Pause
The White House has not clarified which countries will benefit from the pause. Earlier on Wednesday, the European Union voted to impose new retaliatory tariffs on U.S. goods, though these will only take effect next week. Meanwhile, Canada and Mexico secured exemptions for goods covered under the USMCA trade agreement. However, for products outside the deal, tariffs remain—25% on general goods and 10% on Canadian energy and fertilizers.
The Scale of US-China Trade
Despite the trade war, economic ties between the U.S. and China remain significant. According to the Observatory of Economic Complexity (OEC), China exported $436 billion worth of goods to the U.S. in 2023, making the U.S. the largest importer of Chinese products. In contrast, the U.S. was China’s third-largest export market, with American exports to China totaling $154 billion.
According to the Office of the U.S. Trade Representative, total U.S.-China trade in goods reached an estimated $582.4 billion in 2024. U.S. goods exports to China declined by 2.9% from the previous year, totaling $143.5 billion. Meanwhile, imports from China grew by 2.8% to $438.9 billion. This trade imbalance widened the U.S. goods trade deficit with China to $295.4 billion, an increase of 5.8% over 2023.
Key Imports and Exports: What Do the US-China Trade?
Technology: Semiconductors and AI Chips
Semiconductors are a key trade battleground. China imports about $10 billion worth of chips from the U.S. annually, including $8 billion worth of Intel-manufactured central processing units (CPUs) used in laptops and servers. In 2024, China accounted for 29% of Intel’s global revenue, up from 27% in 2023.
While U.S. chipmaker Micron could face challenges due to Chinese tariffs, Nvidia’s artificial intelligence chips remain unaffected. These chips are produced in Taiwan by TSMC, a contract chip manufacturer, making them exempt from Chinese import duties.
Agriculture: Soybeans and Farm Equipment
U.S. agricultural exports, particularly soybeans, remain vital. In 2023, the U.S. exported $15.2 billion worth of soybeans to China, its top agricultural export. However, retaliatory tariffs are taking a toll. China has imposed a 34% duty on U.S. farm equipment, affecting companies like Caterpillar, Deere & Co., and AGCO. Additionally, China has halted imports of sorghum from C&D (USA), citing food safety concerns, and suspended imports of U.S. poultry meat, bone meal, and related products.
Chinese Exports: Consumer and Industrial Goods
China’s top exports to the U.S. in 2023 spanned various sectors, including:
- Technology: Broadcasting equipment ($54.5 billion), computers, office machine parts
- Consumer Goods: Toys, video and card games, furniture, knit sweaters, plastic products, clothing, footwear
- Industrial Products: Electric batteries, heaters, motor vehicle parts, light fixtures, iron housewares, medical instruments
U.S. Exports: Energy and Pharmaceuticals
The U.S. continues to export high-value goods to China, including:
- Energy: Crude petroleum, petroleum gas
- Technology: Integrated circuits, gas turbines, special machinery
- Pharmaceuticals: Vaccines, blood products, antisera, toxins, packaged medicaments
- Agriculture & Raw Materials: Corn, scrap copper, raw cotton, ethylene polymers
- Beauty & Skincare: Acyclic hydrocarbons, beauty and skincare products
Also Read: Explained: How China And The EU Are Strengthening Trade Ties Amid US Tariffs
