The article details the worsening trade war between the United States and China, highlighting its potential to escalate beyond economic ramifications. The conflict, rooted in long-term geopolitical competition, has seen escalating tariffs, reaching levels that effectively halt trade between the two nations. While both sides are expected to eventually negotiate a solution, the underlying tensions remain.
The trade war is presented as a culmination of years of economic decoupling, initiated during the Trump administration and continued under Biden. This includes restricting Chinese investment in the US, banning exports of advanced technologies, and pressuring allies to limit exports crucial to Chinese technological advancement. Simultaneously, China has reduced its economic reliance on the US, diversifying its export markets and actively seeking self-sufficiency in key technological sectors.
Under Xi Jinping's leadership, China has adopted a more assertive foreign policy while implementing internal repressions. The country has decreased its reliance on US trade (from 25% to approximately 13%), and actively severed specific economic ties with the US through various actions targeting imports and US companies operating within China. This strategy is seen as a preemptive measure against US sanctions.
The article expresses concerns that the conflict could broaden beyond economic sanctions, potentially extending to financial and technological restrictions, and even military conflict in regions like Taiwan and the South China Sea. The severity of the economic impact on both sides is emphasized, with potential growth slowdowns, job losses, and increased prices for consumers.
Despite the tensions, the article suggests that both sides will likely negotiate a resolution eventually, although any agreement is anticipated to be temporary and insufficient to address the fundamental geopolitical and economic differences. China's continued export surplus and its limited imports are highlighted as a key issue. The possibility of China diverting exports to other regions is considered, with the potential implications for both developing countries and Europe examined.