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Summary

In spring 2025, with Trump’s return to the White House, economic and trade tensions between the US and China intensified once again. A new round of trade war was quickly ushered in under the catchphrase reciprocal tariffs, covering goods, technology and capital flows and signaling that the trade conflict between the US and China had entered version 2.0.

This trade war is no longer just an accumulation of tariffs — it reflects a profound conflict between two economic models, two development logics and two visions of global governance. This paper argues that the cause of the trade war between the US and China goes far beyond the superficial issue of trade deficits.

The imbalance between the US and China is a long-term, structural and institutional problem: the US model of high consumption and low savings contrasts sharply with China’s pattern of high savings and low consumption, leading to inherent macroeconomic tensions between the two countries.

A large number of US companies have set up factories in China and export goods back to the US, passively inflating trade figures. Located at the middle and lower end of the global value chain, China’s exports are dominated by manufacturing, resulting in a statistical surplus but significantly lower profit margins compared to the US.

Based on empirical data, the author analyzes in detail how variables such as differences in savings rates, foreign direct investment (FDI) and its linkage to exports, and the RMB exchange rate system contribute to the trade imbalance between the US and China.

The study points out that the so-called surplus is largely the result of the logic of global capital flows and the strategies of multinational companies and not the result of unilateral unfair competition by China. This analytical perspective, based on the global industrial structure, helps to go beyond the simplistic narrative of tariffs and countermeasures and provides a deeper understanding of the core of the problem.

More importantly, this confrontation between the US and Multilateral mechanisms such as the WTO are no longer functioning properly, and indices of global trade liberalization continue to decline, while regional trade agreements (such as RCEP and CPTPP) are rapidly increasing, indicating a shift in global economic governance from rules-based systems to power-based competition. In this process, deglobalization and the rise of regionalism have become a dominant trend, and multinational companies are forced to make the difficult trade-off between political risk and cost efficiency.

Another major highlight of this paper is the multidimensional tracking of the actual impact of the trade war. On the Chinese side, the export structure has changed dramatically, with a decline in traditional manufacturing and restrictions on high value-added industries; in the US, corporate costs have risen, inflationary pressures have intensified, and consumers are facing a structural cost pass-through. The stock markets of both countries are very sensitive to political signals and show a new pattern of political–financial linkage. The study also tracks how the US and Chinese capital markets react to the Trade Tension Index, which reveals the increased sensitivity of the financial system to political uncertainty.

The article does not conclude with recommendations, but raises a more fundamental question: Can China and the US still build a sustainable logic of limited coexistence against the backdrop of intensifying global rivalry and the restructuring of the rules-based order? This is not just a bilateral question, but a test for the stability of the entire global economic system.

This paper is suitable for academics, policy makers and business strategists interested in international political economy, the restructuring of global value chains and the evolution of US-China relations. It provides not only a data-driven analytical framework, but also a profound and sober perspective for understanding the evolution of the current complex world order.