The Impact of the U.S.-China Trade War: A Comprehensive Analysis and Outlook

Abstract

This paper analyzes the evolution, causes, and global economic impacts of the U.S.–China trade war since 2018, with particular focus on the transition to “Trade War 2.0” after 2025. Drawing on tariff theory, global value chain (GVC) theory, and strategic trade theory, it examines how escalating tariffs, supply chain disruptions, and technological competition reshape international trade dynamics. The study finds that the trade war has not effectively reduced the U.S. trade deficit but instead led to trade diversion and higher costs, undermining global efficiency. It has also accelerated supply chain restructuring and intensified competition in high-tech industries. The impacts on economic growth, industrial structure, and investment in both countries are uneven, with significant spillover effects on developing economies. Furthermore, the trade war has weakened multilateral institutions and promoted regional economic integration. The paper concludes that future U.S.–China economic relations will likely involve a combination of strategic competition, partial cooperation, and ongoing uncertainty.