Since 1985, trade between the United States and China has grown exponentially, transforming China into America’s largest trading partner. In the late 1980s, trade volumes were relatively small, with China being a developing economy focused on limited exports. The normalization of diplomatic and economic ties, including China’s “Reform and Opening Up” policies under Deng Xiaoping, laid the foundation for deeper economic engagement. The U.S. granted China Most Favored Nation (MFN) status, significantly boosting Chinese exports to the American market.
The 1990s saw rapid industrialization in China, coupled with a surge in manufacturing exports. China’s accession to the World Trade Organization (WTO) in 2001 marked a turning point, leading to a significant expansion of trade. By the mid-2000s, China became a global manufacturing hub, with U.S. companies heavily reliant on Chinese supply chains for consumer goods, electronics, and industrial components. The U.S. trade deficit with China widened, leading to domestic concerns about job losses in the manufacturing sector.
By the 2010s, tensions grew over trade imbalances, intellectual property rights, and market access. The U.S.-China trade war (2018–2020) under President Donald Trump introduced tariffs on hundreds of billions of dollars worth of goods, disrupting global supply chains. China retaliated with its own tariffs, affecting industries like agriculture and technology. Despite these tensions, both economies remained interdependent, with China being a key supplier of goods and a major buyer of U.S. agricultural products.
From 2020 to 2024, relations remained complex, shaped by geopolitical tensions, the COVID-19 pandemic, and competition in emerging technologies. The Phase One Trade Agreement (2020) led to temporary tariff reductions, but broader economic disputes over technology restrictions, semiconductor access, and national security concerns persisted. The Biden administration maintained a tough stance on China, emphasizing supply chain diversification while still allowing high trade volumes.
Despite political challenges, U.S.-China trade remains one of the largest bilateral trade relationships in the world. Both nations continue to seek strategic advantages in critical sectors like AI, semiconductors, and green energy, while balancing economic competition with the necessity of trade. Moving forward, trade policies will likely focus on reducing dependencies, enforcing fair trade practices, and addressing national security concerns, shaping the future of global commerce.