The US-China trade war seems to have subsided – but the sense of calm is misleading
A truce has cooled the trade conflict, but neither country has done anything to limit the outbreak of new hostilities Donald Trump ’s trade wars have largely fallen off the headlines. Fears of new tariffs flare up from time to time when the US president goes off the rails – for instance, threatening to end US trade with countries with which it has a deficit unless the Federal Reserve cuts…
The trade war between the US and China has seemingly subsided, but this sense of calm is misleading. While the two economic giants have agreed to a truce, they have not taken steps to prevent future conflicts, focusing instead on gaining an advantage in an inevitable next round. The new arms race is unique, with both nations prioritizing the resilience of international supply chains and strategies to constrain rivals' supply chains essential for economic and technological progress.
This arms race, which began during the Covid pandemic, has evolved beyond initial rationales, with restrictions on American tech exports, investments, and technology transfers to China proliferating over the last decade. These restrictions have not only impacted China's military capabilities but also its technological advancements.
China's strategic dominance over critical minerals, such as rare earths and magnets, poses significant threats to the US and Europe. If China were to block access to these materials, the global economies could face losses amounting to $1.5tn annually. Both sides are ramping up efforts to limit each other's access to frontier semiconductors and the machinery needed to produce them.
While the US is investing in mining and processing critical minerals and restricting China's access to high-end semiconductors, China has tightened export controls on artificial intelligence chips and solar power technology. China's mercantilistic strategy, characterized by massive export growth and zero import growth, is unsustainable for the rest of the world.
While China may dominate renewable energy technologies, such as solar power and electric vehicles, in the foreseeable future, this is not worth starting a war over. The looming conflict in supply chains brings back memories of historical conflicts, such as the Axis powers seizing territories due to limited raw material access or the US blocking sales of American scrap steel and oil to Japan, which may have contributed to Japan's decision to attack Pearl Harbor.
Written by urgent.news from The Guardian's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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