The US-China trade agreement remains one of the most hotly debated issues in global economics. While both nations once hoped for mutual growth, years of tariffs, trade wars, and technological competition have eroded trust. In 2024, with tensions still high and structural differences unresolved, a lasting trade deal remains elusive.
A Look Back: From Normalization to WTO Membership
The Early Days: 1979 to 2001
The foundation of U.S.–China trade began with the 1979 normalization of relations under President Jimmy Carter. This was a turning point, allowing American businesses and consumers access to a vast new market. The 2001 entry of China into the World Trade Organization (WTO) marked the culmination of these early efforts, with expectations that China would embrace free-market reforms and respect intellectual property rights.
Despite early optimism, the realities of China’s non-market economy began to show. U.S. companies found themselves contending with state-owned enterprises (SOEs) that enjoyed massive government support and faced limited market access for American firms. These issues slowly built into the trade disputes that would shape U.S.–China relations for decades.
The Post-WTO Era: Rapid Growth and Rising Tensions
From 2001 to the 2010s, bilateral trade between the U.S. and China exploded, with total trade reaching $231 billion by 2004. However, the relationship was increasingly lopsided, with China running a substantial trade surplus. While American consumers enjoyed cheap goods, domestic manufacturers struggled against Chinese competition and accused Beijing of unfair practices such as intellectual property theft and forced technology transfer.
By the time of the 2018–2019 trade war under President Donald Trump, the U.S. had imposed tariffs on hundreds of billions of dollars’ worth of Chinese goods, which China reciprocated. This escalation culminated in the 2020 Phase One trade deal, which promised to address certain trade imbalances but left key issues unresolved.
The US-China Trade Agreement Landscape in 2024–2025
Persistent Tariffs and Trade Deficits
→ These rising costs from trade restrictions have downstream effects, including inflationary pressures. Although recent data shows some easing, the global picture remains complex -as seen in our article on retail inflation hitting a six-year low in April 2025.
As of 2024, tariffs on Chinese goods, implemented during the trade war, remain in place. Under President Joe Biden, the U.S. maintained many of the tariffs set by his predecessor, and in some cases, imposed new ones. The U.S. now faces a staggering average tariff rate of 124.1% on Chinese imports, with China’s retaliatory tariffs averaging 147.6% on U.S. exports.
These tariffs have not succeeded in reducing the U.S. trade deficit with China. In 2024, the U.S. trade deficit with China stood at $295 billion, the largest for any country. Despite the high tariffs, Chinese goods continue to dominate U.S. imports, including key components for high-tech industries.
Technology and Intellectual Property Disputes
In addition to tariffs, technology and intellectual property (IP) have become central to the trade dispute. The U.S. accuses China of stealing trade secrets and forcing foreign companies to transfer technology to Chinese firms. In response, the U.S. has imposed export controls on critical technologies, including semiconductors and artificial intelligence (AI) software.
This “tech decoupling” has intensified, with China facing significant barriers to acquiring advanced technologies from the U.S. At the same time, China continues to push for dominance in industries such as AI and renewable energy. The ongoing conflict over technology transfer and IP protection further complicates any potential trade deal.
Market Access and State Intervention
Despite its WTO membership, China has not fully opened its markets to foreign firms. U.S. companies continue to face barriers in sectors like finance, telecommunications, and agriculture. Joint-venture requirements, complex licensing regimes, and restrictions on foreign ownership have limited the ability of American businesses to compete on an equal footing in China.
On the other hand, China accuses the U.S. of unfairly labeling its policies as subsidies, arguing that the line between state support and industrial policy is blurred in a non-market economy like China’s. This disagreement over market access and state intervention remains a key point of contention.
Key Challenges for a US–China Trade Agreement
Several factors make a lasting trade agreement between the U.S. and China unlikely:
1. Economic System Differences
The U.S. operates a market-based economy, while China maintains significant state control over key industries. This fundamental difference makes it difficult to reconcile the two systems in a trade agreement. For example, the U.S. demands China reduce state support for its SOEs, while China views such support as essential for its economic development.
2. Political Constraints
Both governments face political pressure that complicates the negotiation of a comprehensive trade deal. In the U.S., Congress plays a significant role in trade negotiations, and there is growing resistance to making concessions to China. In China, any hint of compromising on key issues like industrial policy or technology could be seen as a loss of face.
3. Geopolitical Rivalry
The U.S.–China trade conflict is now deeply intertwined with broader geopolitical competition. The U.S. is strengthening alliances in the Indo-Pacific region to counter China’s growing influence, while China seeks to expand its global reach through initiatives like the Belt and Road Initiative. This rivalry means that economic issues are no longer isolated but part of a larger strategic competition.
4. Trust and Verification Issues
Years of distrust between the U.S. and China, particularly over China’s failure to meet commitments under previous agreements, make any new deal difficult to enforce. Both sides will want strong enforcement mechanisms, but neither trusts the existing systems, such as the WTO, to resolve disputes.
Recent Negotiation Efforts
In May 2025, U.S. officials met with Chinese counterparts in Geneva for high-level talks, but no significant breakthroughs were achieved. While both sides described the talks as constructive, key issues like tariff reductions and technology transfer were left unresolved.
The Biden administration has continued to apply pressure through tariffs and export controls, while China has refused to yield on core issues. With both sides entrenched in their positions, the prospects for a comprehensive trade agreement remain slim.
The Future of the US-China Trade Agreement and Relations
The future of U.S.–China trade relations is likely to be defined by continued conflict and competition rather than cooperation. Structural differences between the two economies, political constraints, and broader geopolitical rivalry make a comprehensive trade agreement unlikely in the near future.
For businesses and consumers, the ongoing trade war means higher costs, disrupted supply chains, and continued uncertainty. Both countries may continue to engage in periodic negotiations, but any lasting deal will require substantial concessions from both sides, which neither seems willing to make.
