Who will blink first in the US-China trade war?

[WORLD] The US-China trade war, a protracted economic conflict between the world’s two largest economies, shows no signs of abating. With tariffs on hundreds of billions of dollars in goods and rising tensions over issues such as intellectual property rights, market access, and technological supremacy, the battle is poised to shape global trade dynamics for years to come. As both nations continue to dig in their heels, the central question looms: who will blink first?

Since its initiation in 2018, the US-China trade war has escalated into a critical economic confrontation with far-reaching global implications. What began with the US imposing tariffs on Chinese imports, citing unfair trade practices and a massive trade deficit, has evolved into a complex geopolitical dispute. Now, four years later, both countries remain locked in a high-stakes battle that could determine the future of international trade. While President Biden and Chinese President Xi Jinping continue to engage in strategic diplomacy, neither side appears ready to give in. But as both nations face growing economic pressures, the world is watching closely to see who will make the first concession.

The Stakes of the Conflict

At its core, the trade war is about more than just tariffs; it is about control over critical industries, access to global markets, and national security. The US has long accused China of engaging in unfair trade practices, including intellectual property theft, forced technology transfers, and currency manipulation. Conversely, China views the US as trying to stifle its economic growth and technological rise, particularly in areas like artificial intelligence, 5G technology, and semiconductors.

For the US, the trade war represents a battle to maintain its global economic dominance and protect its intellectual property. For China, it is about asserting its position as an emerging superpower and breaking free from what it sees as the constraints of the US-led international order.

Economic Impact

Both nations have faced significant economic repercussions since the trade war began. According to the Peterson Institute for International Economics, the US tariffs on Chinese goods have led to higher costs for American consumers and businesses, particularly in industries like agriculture, electronics, and automotive manufacturing. On the other hand, China has retaliated with its own tariffs on American exports, notably agricultural products like soybeans and pork, which has hurt US farmers.

In 2020, the trade war's effects were compounded by the COVID-19 pandemic, further disrupting global supply chains and trade flows. However, the Biden administration has taken a more diplomatic approach compared to its predecessor, with efforts to ease tensions while still addressing key issues like technology transfer and market access. Yet, as both sides struggle to manage their domestic economic challenges, the question remains whether the pain of the trade war will force either party to back down.

Who Is Feeling the Pressure?

Despite the long-standing nature of the conflict, the pain is not equally distributed. In the US, the agricultural sector has faced some of the most direct impacts, with tariffs on Chinese goods leading to a dramatic drop in exports. In 2019, for example, US soybean exports to China fell by 75%. Farmers have been hit hard, and while the US government has provided aid to help offset losses, the long-term impacts are undeniable.

Meanwhile, China’s economy, though resilient, has been impacted by the tariffs as well. China's growth rate, which had been steadily increasing for decades, has slowed in recent years, partly due to the trade war. In response, China has sought to diversify its trade relationships, expanding its economic ties with countries in Africa, Europe, and Asia to reduce its dependence on the US market.

The Role of Technology

Technology, especially the race to dominate the 5G and semiconductor markets, has become one of the most contentious issues in the trade war. The US has taken aggressive actions against Chinese tech giants, most notably Huawei, citing national security concerns. The US has restricted Huawei’s access to critical American technology, including semiconductors, which has significantly impacted the company’s operations. In retaliation, China has accelerated its efforts to develop its own high-tech industries and reduce reliance on US technology.

In this context, the trade war has morphed into a broader geopolitical struggle over technological dominance. Both nations are engaged in a race not only for economic power but for control of future technologies that will shape the global economy for decades to come.

Diplomatic Efforts and the Road to Resolution

Over the past few years, both the US and China have made attempts to de-escalate the conflict through negotiations. The Phase One trade deal, signed in January 2020, marked a brief truce, with China agreeing to purchase more US goods and address some of the US’s concerns about intellectual property. However, the deal left many core issues unresolved, including the long-term impact of tariffs and the strategic competition over technology.

Under the Biden administration, the US has pursued a more multilateral approach, seeking to rally allies in Europe and Asia to counter China’s growing influence. Meanwhile, China has emphasized its commitment to economic self-reliance, particularly in high-tech sectors. Although both sides continue to talk, there is little indication that a lasting resolution is imminent.

Global Implications

The trade war is not just about the US and China; its ripple effects are felt around the world. Countries in Asia, Europe, and Africa have had to navigate the shifting trade landscape, adjusting to new tariffs, changing supply chains, and altered market conditions. As the US and China continue to clash, other nations are left to find ways to protect their own economic interests while balancing the competing powers.

For global companies, the trade war has created an environment of uncertainty. Businesses must navigate tariffs, regulatory changes, and shifting trade policies, all of which complicate decision-making and investment strategies.

The Bottom Line: Will Anyone Blink?

As both the US and China approach their respective political and economic limits, the key question remains: who will blink first? For China, backing down may mean losing face and ceding ground in the global order, while for the US, conceding could signal a decline in its influence over global trade and technology. The battle for supremacy is likely to continue for the foreseeable future, with neither side willing to give up its core objectives.

However, the growing economic pressure on both countries could lead to a reevaluation of priorities. As the trade war continues, it remains to be seen whether the US or China will adjust their approach, make concessions, or escalate the conflict further. In the end, the outcome will not only determine the future of US-China relations but also shape the trajectory of global economic power for years to come.

The US-China trade war is far from over, and both nations are preparing for a long-term struggle that will impact economies worldwide. While the rhetoric may soften at times, the underlying tensions over technology, trade, and geopolitical influence remain. Whether through diplomacy, concessions, or further escalation, the global community is watching, hoping that a resolution might one day emerge, but uncertain about when—or if—that will happen.