US-China Trade War Escalates amidst Economic Pressure

After two weeks of announcements, retaliations, and cross-statements, the trade war between the United States and China has entered a phase of controlled escalation. Both powers seek to increase economic pressure without completely compromising the diplomatic channels that remain active. “I think everything will be fine with China,” Donald Trump said yesterday, ahead of the summit with his Chinese counterpart, Xi Jinping, in South Korea at the end of the month.

The situation stems from Beijing’s clampdown on rare earth exports to the West. This squeeze impacts the already delicate trade relationship between China and the United States, following trump’s repeated increases to US duties on Chinese products, reaching a peak of 145% in the spring. Beijing responded by increasing tariffs on US exports to 125%. This resulted in a temporary decoupling of the two economies and an unprecedented level of confrontation. However, sudden slowdowns in stock prices, burning around 10 billion dollars in just a few days, prompted a shift. Negative reactions from international markets pushed Trump to reduce duties on Chinese products to 30%, while Beijing lowered customs barriers on US goods to 10%. This created a fragile détente, which appeared to consolidate in the following months but collapsed on October 9th, likely in anticipation of the South Korea summit, where the two leaders will discuss a potential solution to the ongoing “trade war.”

What is at stake, and how crucial is it for the United States to win this clash? «The United states’ trade war with China aims to maintain its superiority», explains Mario Del Pero, an Americanist and professor at SciencesPo in Paris. “The goal is to reorganize global value chains-the flows of goods and components-to reduce China’s presence and influence within them.” del Pero clarifies that when a US company relies on a component produced in China, it exposes the entire American economic system to conditionality exercised by Beijing. «Reorienting production to other countries reduces this conditionality and eases the strategic dependence of the United States on China». However, beijing can also pursue this strategy, and is already doing so. «The recent restrictions on the export of minerals, such as rare earths, demonstrate this: China is essentially saying, “we too can use our levers of economic power”». Trump promises to restore sovereignty to the American economy, defining sovereignty as independence from others. Currently, many US businesses and consumers significantly depend on China. The political objective is to break this dependence and regain economic autonomy. «This results in growing competition, where both powers transform economic instruments into tools of power, using them as weapons of geopolitical pressure».

But who holds the upper hand-the USA or China? “Neither,” Del Pero asserts. “Each power needs the other, and this is the underlying paradox.” Nonetheless, both sides attempt to