October 19, 2025 – As the U.S.-China trade conflict escalates, questions are rising about whether America can afford to cut ties with one of its largest trading partners. With the two economies intricately linked through the exchange of essential goods like rare earth minerals, smartphones, soybeans, and microchips, experts warn that economic fallout from severing these ties could be severe.
The High Stakes of U.S.-China Trade
Despite the ongoing geopolitical tensions, the economic interdependence between the U.S. and China remains substantial. According to Scott Kennedy from the Center for Strategic & International Studies (CSIS), both sides still benefit significantly from trade. Kennedy emphasized that mutual dependence remains “quite high,” and that cutting off trade would harm both economies, though experts suggest the U.S. would feel the impact more acutely.
Over the past decade, the U.S. trade deficit with China has widened from $295 billion (€252 billion) in 2014 to $382 billion in 2024. In that year, China exported $526 billion worth of goods to the U.S., more than triple the amount of U.S. goods imported by China. A significant portion of these goods includes smartphones and computers—$127 billion worth—indicating how deeply Chinese products have integrated into American daily life. If tariffs were raised further, U.S. consumers would feel the sting directly through higher prices.
Tariffs, Counter-Tariffs, and Retaliation
The trade conflict has intensified since former President Trump imposed 100% tariffs on Chinese goods, angering Beijing. In retaliation, China has imposed its own counter-tariffs and export restrictions, notably on rare earth minerals. These materials, crucial for electric vehicles, semiconductors, and defense technologies, are pivotal to U.S. industries. The U.S. relies on China for over 90% of its rare earth supply, and Beijing controls about 60% of global rare-earth production, as well as nearly 90% of refining capacity.
This reliance highlights the vulnerabilities within the U.S. economy, particularly in sectors that depend on advanced technology. However, the damage extends beyond minerals. According to the U.S. Department of Agriculture, China has not purchased a single soybean from the U.S. since May 2025. Last year, U.S. soybean exports to China were valued at nearly $13 billion. Now, China has turned to Brazil and Argentina for its soybeans, reducing the U.S.’s market share.
This shift is a direct result of the U.S. tightening chip export controls and restricting China’s access to advanced technology, including artificial intelligence (AI).
The Changing Landscape of Trade
Despite the ongoing tensions, China has made strategic moves to reduce its dependency on the U.S. market. Christina Otte, from Germany Trade & Invest (GTAI), notes that the U.S. is now less critical to China’s economy than it once was. Between September 2024 and September 2025, Chinese exports to Africa rose by 56%, to Southeast Asia by 16%, to the EU by 14%, and to Latin America by 15%. This shift shows China’s growing economic diversification, with trade with the U.S. dropping by more than 10% year-over-year in the first half of 2025.
Moreover, Chinese companies are increasingly moving production to countries like Vietnam and Malaysia to maintain indirect access to the U.S. market. Otte observes that China is also reducing its financial ties to the U.S., with its holdings of U.S. Treasury securities dropping from $1.3 trillion in 2013 to $765 billion in 2025. This marks a significant change, as China is now behind Japan and the U.K. in foreign holdings of U.S. debt.
Resilient Ties Amid Growing Tensions
Despite these changes, the U.S.-China relationship, often referred to as “Chimerica”, remains resilient, according to Scott Kennedy. He describes the ongoing trade relationship as “bruised, but not dead,” emphasizing that the economic ties between the two countries are unlikely to vanish easily. Kennedy believes that, although tensions are high, both nations still rely on each other for crucial supply chains in areas like aerospace and semiconductor production.
Chinese President Xi Jinping and former President Donald Trump are expected to meet in October 2025 at the APEC Summit in Gyeongju, South Korea. Both leaders are likely hoping to ease tensions before the situation escalates further. However, the future of U.S.-China relations remains uncertain, as each side grapples with geopolitical dominance and economic interdependence.
Conclusion: The Future of U.S.-China Trade
As the U.S.-China trade war continues, both nations face complex challenges. While the U.S. remains highly dependent on Chinese imports, especially in critical sectors like technology and raw materials, China is increasingly diversifying its trade relationships and reducing its reliance on the U.S. market. Experts warn that while global trade between these superpowers may slow down, the deep economic ties will likely persist for years to come, despite the ongoing tensions.
This story may be updated with more information as it becomes available.
