From fierce trade wars to technological and AI dialogues, the US-China trade relationship in 2025 offers many key lessons, shaping prospects for cooperation and competition in 2026.

In a recent commentary on chinausfocus.com, He Weiwen, a senior research fellow at the Center for China and Globalization, stated that 2025 marks one of the most significant periods in the 47-year history of China-U.S. trade relations, as the relationship has evolved from escalating tensions to constructive dialogue. The events of the past year have provided valuable lessons for both sides and opened up more positive prospects for 2026.

The trade war has no winners

Immediately after President Donald Trump returned to the White House for his second term on January 20th of this year, Washington implemented its "America First" program with a 10% tariff on Chinese goods announced on February 1st. Subsequently, tariffs escalated sharply, reaching a peak of 145%. China retaliated fiercely, leading to a spiral of reciprocal tariffs. However, Beijing maintained that any tariff above 70% would be sufficient to halt trade.

The consequences of the trade war have severely affected both sides. According to Chinese customs, exports to the US between January and November 2025 reached approximately $385 billion, a decrease of 18.9% compared to the same period last year and a decrease of 28% compared to three years ago. China's export market share to the US fell to 11.3%, compared to 14.7% a year earlier and 16.3% three years ago.

On the US side, businesses and consumers bear the main burden. According to the US State Department, only 14% of the total tariff costs are paid by foreign exporters, while 64% are borne by US businesses and 22% by US consumers. US exports to China in the first 11 months of 2025 decreased by 13.2% compared to the same period the previous year, with soybean exports particularly falling to zero and only resuming after negotiations in Kuala Lumpur (October 2025).

A survey of approximately 100 small American businesses that import goods from China, reported in the New York Times, revealed the significant difficulties these businesses face. According to the U.S. Chamber of Commerce, there are 33.2 million small businesses (with fewer than 500 employees), accounting for 99.9% of all businesses and 44% of GDP. The U.S. Census Bureau reports that small businesses account for 41.2% of imports from China.

Technology and resource competition

Beyond tariffs, 2025 also saw a fierce confrontation over high technology and resources. Washington banned exports of ethanol, electronic design automation (EDA) software/hardware, and high-performance chips to China. In response, China tightened controls on rare earth exports.

In September, Washington announced regulations on market access, including all subsidiaries of Chinese parent companies on a list of restricted entities. China responded with the strictest restrictions yet on rare earths. This was a major blow to the US economy, as China controls 87% of the world's refined rare earth production, 78% of refined lithium, 98% of gallium oxide, and 65% of processed cobalt.

However, Washington eventually lifted or suspended the restrictions, and China suspended its latest rare earth controls for a year. On December 8, President Trump announced that approved customers in China would be allowed to use Nvidia H200 chips, a significant sign of positive cooperation.

The ban on chips has effectively boosted the development of China's semiconductor industry. In the first 11 months of 2025, China's semiconductor industry recorded a 10.2% year-on-year increase in output, with exports rising 24.7%. Professor Richard Baldwin of the IMD Business School in Lausanne, Switzerland, stated on LinkedIn on December 4th that US policy has effectively led to greater dependence on China and less dependence on allies.

Opportunities for collaboration in the AI ​​era

Trade relations between China and the United States have greatly benefited both sides for decades. Two-way merchandise trade reached over $688 billion in 2024, 275 times more than in 1979. Exports to China have supported approximately 930,000 jobs in the U.S., and the Chinese market generated an additional $490 billion in profits for American businesses operating in China in 2022.

Artificial intelligence (AI) is seen as a promising area for collaboration. A report by the Semiconductor Industry Association (SIA) estimates that AI technology and the industry will contribute $15 trillion by 2030. Jensen Huang, CEO of Nvidia, stated that China is only slightly behind the US in AI. The combined efforts of China and the US will account for more than 75% of the world's "unicorn" companies (startups valued at $1 billion or more) by 2025.

SIA's 2025 report shows global semiconductor revenue reaching $630.5 billion in 2024, a 19.7% increase from 2023. The US accounts for 50.4% of the global market, while China is the largest market with a 20.1% growth rate in 2024. Of Nvidia's total global revenue, 22% comes from China.

Orientation for 2026

According to expert Weiwen, both sides need to adhere to the principles of equality and mutual respect, managing differences while seeking common interests. All unilateral tariffs that violate WTO regulations should be abolished so that bilateral trade can gradually recover.

The governments and businesses of both countries should also develop a comprehensive plan for AI cooperation, encompassing areas such as semiconductor industry, quantum computing, AI modeling, industrial robotics, and smart manufacturing. Chinese investment in established US industrial areas should be encouraged, while US investment in new manufacturing drivers and China's green transformation should also be encouraged.

Source: Tin Tuc News

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