The Trade Relationship Between the US and China

Welcome back to TAXING TARIFFS! In this post we will start to detail the trade relations between the U.S. and the People’s Republic of China.

On Jan. 30, 2026, The Wall Street Journal published an Opinion Commentary article by the U.S. President titled “Donald J. Trump: My Tariffs Have Brought America Back.” In the article he extolled his imposition of tariffs on nearly all foreign countries last April. Trump went on to mention the deals that he has made with China, the U.K., the European Union, Japan, South Korea, Vietnam, Indonesia, the Philippines, and Malaysia. It is worthy of note that he began this list of deals with China and didn’t list or mention Canada and Mexico. It’s interesting that he would begin the list with China since Trump’s dominant player position in the series of post-tariff setting negotiations and deals came to an end when he faced China in this set of rounds. Whatever Trump’s motivation for listing China first it is certain that U.S. – China trade relations are important to both countries and to the rest of the world.

In 2024, the People’s Republic of China total trade in goods with the U.S. was $582.5 billion. This total trade was made up of $143.5 billion of U.S. exports to China, and $438.9 of U.S. imports from China. China is the fourth-largest U.S. export market and includes aircraft, agriculture, semiconductor chips and equipment, gas turbines, medical devices, various and sundry U.S. consumer goods, and many different production inputs.

Our tale of trade between China and the U.S. begins in 2018. That’s when Trump first introduced new Chinese tariffs in this latest set of tariff volleys. We’ll take 2017 as the baseline for our investigation of trade rates; that coincides with the beginning of Trump’s first term (Jan. 20, 2017). In 2017 the U.S.-China Two Way Average Tariffs, not accounting for tariff exemptions, were 2.7% and 8%. That is to say, the average U.S. tariff rate on goods from the China was about 2.7%, and China’s average tariff rate on U.S. goods was about 8%. This data comes from the Congressional Research Service and can be found at crsreports.congress.gov. Tariffs were below 10% on both sides of the China-U.S. trade relationship. Oh, how the magnitude of tariff rates has changed since then.

There are three pieces of legislation that Trump has used to impose tariffs on China, as well as other countries. Section 301 of the Trade Act of 1974 (19 U.S.C. sub-Section 214) addresses unfair trade barriers. Section 201 of the Trade Act of 1974 (19 U.S.C. sub-Section 2251) protects U.S. industry against import surges. And Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. sub-section 1862, as amended) considers the national security effects of U.S. imports and allows/requires for an investigation to precede decisions on tariffs. In 2018, using Section 232 of the Trade Expansion Act, then-President Trump imposed import tariffs of 25% on steel and 10% on aluminum for China and other countries. China retaliated by raising tariffs on aluminum waste scrap to 49%, and on pork, fruits, and nuts to 20%. The tit for tat had begun, and the volleys would only continue.

Also in 2018 the Office of the U.S. Trade Representative found “that the PCR engaged in forced technology transfer, cyber-enabled theft of U.S. intellectual property and trade secrets, discriminatory and non-market licensing practices, and state-funded strategic acquisitions of U.S. assets.” As a result the U.S. imposed tariffs from 7.5% to 25% on approximately $370 billion of Chinese goods imports. China came back with tariffs on $110 billion of U.S. trade. By 2023 the average tariff percentages between the U.S. and China rested briefly at 19% and 21% respectively. Both sides well above 10%.

Then in 2020 there seemed to be a pause in the rush to tariffs. The U.S. and China signed a “Phase One” trade deal. The deal addressed the U.S. trade deficit with China. And this is where relations changed from a back-and-forth imposition of tariffs to a purchasing deal. China agreed that in a two-year period starting in 2020 that it would purchase at least $200 billion of goods above a 2017 baseline. This deal included products from agriculture, energy, and manufacturing, as well as some services. By 2021 U.S. Census Bureau had determined that China had fallen short of its commitments by 60%.

Due in part to the failure of the purchasing deal, in May of 2024 USTR extended most 2018 tariffs and raised tariffs to 100% on some goods including electric vehicles, batteries, medical products, ship-to-shore cranes, semiconductors, solar cells, steel, and aluminum. Of most importance to electronics manufacturing, in December 2024, USTR initiated an investigation on China policies in mature-node chips and their effects on critical industries, and silicon carbide substrates and wafers used in chip production. Then came 2025, and what a year it was for tariffs, tariffs, and more threats of tariffs.

Well that’s all the space and time we have for this post of TAXING TARIFFS. How do you feel about U.S.-China trade relations? Are the back-and-forth tariff volleys making your head spin? Should tariffs be involved in our semiconductor industries? Answer those questions on taxingtariffs@microncorp.com and we’ll see you next time on TAXING TARIFFS.