The history of the U.S.-China trade relationship
In 1972, after years of hostility and isolation, U.S. President Richard Nixon paid China a visit. This tour changed diplomatic and trade relations between the two nations. In 1972, China’s total merchandise trade value with the United States amounted to only 95 million U.S. dollars. In the next decade, the trade between China and the United States witnessed robust growth. When China joined the World Trade Organization in 2001, the bilateral trade value surpassed 120 billion U.S. dollars.Nowadays, China is the U.S.’s third-largest trade partner and most significant import origin. In 2022, the total value of U.S. trade in goods with China amounted to approximately 690 billion U.S. dollars, composed of a 154 billion U.S. dollar export value and a 537 billion U.S. dollar import value.
Since Coca-Cola became the first U.S. company that entered China in 1979, an increasing number of U.S. enterprises included China in their business plans. As of 2023, more than 8,600 U.S. companies are operating in China. That year, the actual utilized foreign direct investment from the U.S. to China stood at 2.47 billion U.S. dollars, while more than 5.5 billion dollars flowed into the U.S. from China in the form of FDI.
The Sino-U.S. trade tensions
In July 2018, the Trump administration initiated a 25 percent tariff on Chinese goods worth 34 billion U.S. dollars, marking the beginning of a trade war. Several rounds of more tariffs and retaliation followed throughout the next years.In early 2021, however, a week before Joe Biden’s inauguration, the United States and China reached an enforceable agreement on restoring a jeopardized trade relationship. The initial trade deal, known as the Phase One Agreement, demanded China expand its purchases on certain U.S. goods and services by a combined 200 billion U.S. dollars before the end of 2021. Nevertheless, by December 2021, figures showed that China only reached 57 percent of its commitment.
Following the Russia-Ukraine War in 2022, the bilateral relationship between China and the United States fell to another low ebb. That year, the Biden government imposed sanctions on several Chinese companies. In response, China has taken several countermeasures to retaliate against U.S. sanctions recently, including export controls on gallium and germanium, two materials used in computer chips and other products.
