Since the outbreak of the China-U.S. trade war in 2018, the conflict has emerged as one of the defining issues in the global economic landscape. Despite numerous attempts at negotiation over the years, no resolution has been reached. With Donald Trump’s return to the White House, U.S. tariffs on Chinese goods have escalated significantly, prompting China to retaliate with its own tariffs.
After a recent meeting in Geneva, both sides agreed to adjust – although not entirely remove – these tariffs and resume talks. The detente remains temporary, however, and further discussions are ongoing.
The tariff war has effectively served as a “stress test” of the mutual trade dependence between the two nations. Before it began, the depth of this interdependence was widely underestimated. However, once the conflict unfolded, it became strikingly clear that, despite China’s long-standing emphasis on self-reliance, the country remains heavily reliant on the U.S. for a broad array of products. The abrupt disruption in trade exposed significant vulnerabilities. On the American side, there was also a lack of awareness regarding the extent to which Chinese manufacturing and products are embedded in the fabric of everyday life.
China’s outlook in a full-scale trade war is far from optimistic, particularly in sectors like aviation manufacturing. The domestically produced C919 aircraft still relies heavily on foreign, primarily American, suppliers for critical components. A Financial Times analysis revealed that nearly all the key parts are imported, with the crucial LEAP-1C engine supplied by CFM International, a France-U.S. joint venture with core components made in Ohio. China’s own replacement engine remains in testing and is not yet viable. The C919’s supply chain includes 48 U.S. suppliers, compared to just 14 Chinese ones, providing essential systems such as avionics and flight controls through companies like Honeywell and Collins Aerospace. This heavy dependence means the United States could effectively cripple China’s large aircraft ambitions, and any retaliatory sanctions by China risk significant self-harm.
Overall, China’s manufacturing sector remains surprisingly reliant on U.S. energy and chemical raw materials, particularly ethane, a key input for plastic production. Thanks to the U.S. shale gas boom, American ethane is both abundant and cheap, prompting many of China’s new ethane cracking plants to depend on U.S. imports to produce chemicals like ethylene. Under high tariffs, this supply faces cost and stability risks. Bloomberg reported that China recently granted tariff exemptions to two domestic plastic producers heavily reliant on U.S. ethane, underscoring this dependency. Without such exemptions, tariffs running to over 100 percent would make operations unsustainable. Since 2019, China has been actively adjusting tariffs on raw materials like ethane and propane to avoid damaging its own industries.
In healthcare, China remains heavily dependent on the United States for high-end pharmaceuticals and medical equipment, including advanced cancer treatments and biopharmaceuticals. To protect public health, China has largely exempted many U.S. medical products from retaliatory tariffs. Recent reports show that some multinational drugmakers continue exporting key medicines to China tariff-free. These exemptions target urgently needed drugs, revealing China’s short-term inability to substitute critical U.S. medical supplies.
All this shows that China’s dependence on key U.S. products remains a major vulnerability, exposing the limits of its past efforts in domestic substitution and independent R&D. Eliminating this reliance in the short term will be difficult.
For the United States, finding a substitute for Chinese manufacturing, especially in consumer goods, poses the most immediate challenge. Chinese products are deeply embedded in daily life, and shortages or price hikes in items like toys can quickly trigger public backlash and influence political dynamics. The U.S. cannot ignore disruptions in essential goods. Pharmaceuticals are another key area, as China is the leading supplier of active pharmaceutical ingredients (APIs), making the sector highly vulnerable. To ease domestic pressure, the U.S., for instance, has also temporarily exempted Chinese tech products from tariffs.
These adjustments reflect pragmatic responses to real-world constraints, not signs of retreat. They show that, despite deep-seated differences, the economic interdependence between the U.S. and China in key sectors remains significant. The trade war has not resulted in a clear victor; instead, it has highlighted a fundamental reality: full decoupling is unfeasible. Both nations recognize that normal industrial and market operations cannot be sustained in a scenario of complete separation. Consequently, while tariff-driven tensions may persist, the resolution of trade issues ultimately requires returning to a framework centered on trade itself.