DATA ANALYSIS

From 2014 to 2018, the USA maintained a relatively stable AHS weighted average tariff rate, hovering around 1.5–1.7%. A significant spike occurred in 2019, with tariffs increasing to 13.78%, driven by the US-China trade war and the imposition of Section 301 tariffs on Chinese imports. Following this, the average tariff rate normalized to 1.5% by 2020, reflecting a return to pre-trade-war levels for most sectors but retaining targeted tariffs on specific goods. Between 2014 and 2018, China’s average tariff rates decreased steadily, reflecting its efforts to liberalize trade and align with WTO commitments. By 2019, tariffs were reduced further to 2.53%, indicating a strategy to offset the effects of U.S. tariffs by fostering trade with other partners. A slight uptick in tariffs to 3.07% in 2022 may suggest targeted protectionist measures or strategic adjustments in response to economic challenges. Overall, Average tariff rate of China is higher than the USA.

A closer look at sectoral tariff data reveals variations in protection levels across key industries. The USA maintained low tariffs for transportation goods (0.8–1.0%), reflecting its reliance on competitive global markets for vehicles and parts. The USA’s tariffs on food products remained moderate (2.7–9.1%) across years. China imposed significantly higher tariffs (8.4–11.5%) to safeguard its agricultural sector and ensure food security. Tariffs on fuels were minimal for both countries, with the USA often imposing zero tariffs and China maintaining rates below 1%, reflecting the strategic importance of energy imports. U.S. tariffs ranged between 2.8–34.3%, with notable spikes in 2019 due to targeted tariffs on Chinese consumer electronics and other goods. China’s tariffs were higher during the earlier years (10–11.5%) but gradually decreased to 5.5%, aligning with trade liberalization efforts. Both nations retained relatively high tariffs on textiles and clothing, with the USA imposing 7.9–9.1% and China imposing 6.1–8.7%. These tariffs reflect a mutual focus on protecting domestic textile industries, which are labor-intensive and politically sensitive. The analysis of tariff data underscores the strategic use of trade policies by the USA and China to achieve broader economic and geopolitical goals. While the USA adopted aggressive tariff measures during the trade war, China leveraged reductions to maintain economic stability and strengthen global partnerships. These trends highlight the dynamic interplay between trade policy and economic outcomes in shaping bilateral and global trade relationships.

The U.S. applies specific tariffs on goods like agricultural products. For example, $1.20 per liter of wine above a certain alcohol content. It's typically used for commodities where quantity is a key concern. Ad Valorem Tariffs widely used across various industries, including textiles and machinery. During the US-China trade war, the US implemented duties as high as 25% on certain Chinese goods. Mixed tariffs are less common but used for goods like footwear, where both volume and value are significant factors. In China, specific tariffs are used primarily for agricultural imports and bulk goods like grains or raw materials. Ad Valorem Tariffs are the most commonly applied tariff type in China. Tariffs on U.S. soybeans during the trade war reached 25% Ad Valorem. It’s frequently used to target value-added goods such as electronics and vehicles. Mixed tariffs occasionally applied to products like luxury goods or items with fluctuating prices.

The US relies on NTBs to advance its trade and strategic objectives. Buy American policies mandate government procurement to prioritize domestically produced goods, fostering local manufacturing. Export controls are rigorously applied, especially on dual-use technologies critical to national security, with many restrictions targeting China. The US frequently employs anti-dumping measures to penalize goods priced below market value, as seen with tariffs on Chinese steel. Other NTBs include sanctions and embargoes targeting countries or entities deemed security risks and licensing procedures requiring one-time licenses for certain imports.

Additionally, the US imposes technical barriers to trade through unjustified technical standards (TBT) and sanitary and phytosanitary (SPS) measures, which restrict imports under the pretext of health or safety concerns. Quotas, rules of origin, and packaging and labeling requirements further complicate market entry for foreign exporters. These measures collectively ensure product standards align with domestic policies but also act as barriers for foreign competition.

China employs a variety of NTBs to regulate imports and protect domestic industries. These include stringent licensing and quota systems, such as import licenses for chemicals and pharmaceuticals, which create administrative hurdles for foreign firms. Additionally, technical standards like the China Compulsory Certification (CCC) impose strict compliance requirements for safety and quality. Complex customs procedures often result in documentation delays, increasing transaction costs for importers. Furthermore, subsidies for state-supported industries, including steel and solar panels, distort competition and favor domestic production. Foreign investment restrictions limit ownership in critical sectors like technology, media, and finance.

During the U.S.-China trade war (2018–2019), NTBs became a central instrument in reducing U.S. imports, accounting for nearly 50% of the overall decline. These barriers disproportionately affected non-state-owned importers, insulating state-owned firms from the economic fallout. Researchers estimate that new NTBs in 2019 led to a $38 billion loss in consumer welfare, primarily due to increased prices, with 93% of this impact attributed to NTBs. These measures illustrate China’s strategic use of NTBs in trade conflicts, not only with the U.S. but also with other nations.

In the US., the Bureau of Industry and Security (BIS) under the Department of Commerce oversees the Export Administration Regulations (EAR), which regulate the export and reexport of goods, software, and technology with dual-use or military applications. The BIS aims to advance national security, foreign policy, and economic goals while preventing unauthorized access to sensitive technologies. Exporters are required to obtain licenses for controlled items and may seek assistance through BIS advisory services for compliance guidance.

BIS ensures compliance through rigorous End-Use Checks (EUCs), conducted globally to verify the legitimacy of foreign recipients and prevent diversion of U.S. items to unauthorized users or uses. Companies failing these checks may face increased regulatory scrutiny or inclusion on restrictive lists like the Unverified List or Entity List. The EAR also addresses anti-boycott laws and collaborates with international stakeholders to promote adherence to non-proliferation and trade policies.

China enforces its export restrictions primarily through the Export Control Law (ECL), effective since December 2020, and the recently updated Regulations on Export Control of Dual-Use Items, effective December 2024. These measures govern dual-use items, military goods, nuclear materials, and technical data, emphasizing strict compliance with licensing requirements. Exporters must disclose details such as transportation, arrival, and usage, and any changes to key export conditions require reapplication for licenses.

The ECL's "catch-all" provisions enable controls over items not explicitly listed but deemed critical to national security or potentially used for prohibited military purposes. Furthermore, the regulations impose re-export controls on foreign-made goods incorporating Chinese-origin materials or technology, aligning with global practices like the U.S. Export Administration Regulations (EAR). China also introduced a "Watchlist" akin to the U.S. Unverified List, restricting simplified authorizations for entities under scrutiny. Penalties for non-compliance, such as exporting without a license, are severe, including hefty fines and suspension of business operations. The alignment between export control and sanctions regimes strengthens China’s ability to respond to geopolitical challenges.

The US views trade agreements as essential to growing its economy and advancing its geopolitical interests. Administered by the Office of the United States Trade Representative (USTR), these agreements aim to ensure fair trade, enforce compliance, and expand market access for American businesses. The U.S. is a key member of the WTO and supports its principles of free and fair trade. The Marrakesh Agreement, which established the WTO, outlines rules for global trade among 154 member nations. The U.S. has actively participated in WTO negotiations, such as the Doha Development Round, advocating for market-opening agreements to boost global economic recovery.

The United States has established comprehensive Free Trade Agreements (FTAs) with 20 countries. These agreements build on WTO rules with stronger provisions, addressing goods, services, and intellectual property. Key examples include bilateral FTAs such as agreements with individual countries like South Korea and Israel and multilateral FTAs such as the North American Free Trade Agreement (NAFTA) and its successor, the United States-Mexico-Canada Agreement (USMCA), as well as the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). In 2023, the U.S. and Japan finalized a Critical Sector agreement on critical minerals, underscoring the strategic importance of resource security. Trade and Investment Framework Agreements (TIFAs) provide platforms for resolving trade and investment issues early and foster capacity-building initiatives in partner countries. Bilateral Investment Treaties (BITs) protect private investments, promote market-oriented reforms, and encourage U.S. exports, ensuring stable investment climates abroad.

China has rapidly expanded its network of trade agreements, emphasizing partnerships with developing countries and regional allies. China has signed over 100 Bilateral Investment Agreements (BIAs) with countries such as Austria, the Belgium-Luxembourg Economic Union, Canada, France, Germany, Italy, Japan, South Korea, Spain, Thailand, and the United Kingdom.  These agreements address key issues like expropriation, arbitration, most-favored-nation treatment, and repatriation of investment proceeds but are generally less stringent than the investment treaties the United States seeks to negotiate. China has 17 FTAs with partners such as ASEAN,Pakistan, New Zealand, Chile, Peru, Costa Rica, Iceland, Switzerland, Maldives, Mauritius, Georgia,  South Korea, Australia, Cambodia, Hong Kong, and Macao, with ongoing negotiations for an additional eight. Notably, these agreements prioritize trade facilitation and market access for Chinese goods and services. Signed in 2020 and ratified in 2021, Regional Comprehensive Economic Partnership (RCEP) unites China with 14 Asia-Pacific nations, creating the world’s largest trading bloc. The agreement reduces tariffs and strengthens regional supply chains, solidifying China’s economic leadership in the region. 

The US consistently experienced a growing trade deficit from 2012 to 2022, culminating in a peak deficit of $971.12 billion in 2022. Following the Great Recession, the trade deficit hovered between $478 billion and $543 billion until 2016. Trade wars and tariffs during 2018–2019 marginally reduced the deficit, but the relief was short-lived. The deficit surged due to increased import demand, supply chain disruptions, and higher reliance on foreign goods during the COVID-19 pandemic. China maintained a steady trade surplus throughout the period, peaking at $577.85 billion in 2022. China’s surplus remained consistent, reflecting strong export performance and controlled imports. The trade surplus dipped to its lowest in 2018 ($91.49 billion) due to U.S.-China trade tensions. From 2020 onward, China’s surplus expanded dramatically, fueled by increased demand for Chinese goods globally and recovery of its manufacturing sector.

The U.S. trade relationships reflect its reliance on both regional proximity and global economic powers for imports and exports. Sharing borders and benefiting from the United States–Mexico–Canada Agreement (USMCA), Canada and Mexico are critical to U.S. trade. In 2021, these two countries accounted for nearly one-third of U.S. merchandise exports. Key exports include machinery, vehicles, and agricultural products. Mexico and Canada rank as the second- and third-largest suppliers of U.S. imports, particularly in automobiles, energy, and machinery. China remained the top supplier of U.S. imports in 2021, exporting electronics, machinery, and consumer goods. Despite trade tensions, China is the third-largest destination for U.S. exports, importing agricultural products, semiconductors, and aircraft. Japan and South Korea ranked fourth and fifth as destinations for U.S. goods, focusing on technology and automobiles. Both nations play vital roles in integrated supply chains, particularly for electronics and automotive components. The EU is a major partner for U.S. exports and imports, trading machinery, chemicals, and aircraft. Germany, in particular, is a key supplier of high-tech goods.

China’s trade network reflects its role as a global manufacturing hub and its strategic positioning in regional trade agreements. The Regional Comprehensive Economic Partnership (RCEP) has bolstered trade with Vietnam, Malaysia, and Thailand, particularly in electronics and textiles. Integrated supply chains with ASEAN nations enhance China's position in the global manufacturing landscape. The EU imports large volumes of Chinese goods, including machinery, consumer electronics, and textiles. The EU remains one of the largest consumers of Chinese exports, despite occasional political and regulatory challenges. Despite trade disputes, the U.S. remains a critical export destination for Chinese goods. Chinese exports to the U.S. include consumer electronics, machinery, and furniture, while U.S. exports to China focus on agricultural products and technology. Close geographical proximity and shared supply chains make Japan and South Korea important trade partners. The trade focuses on semiconductors, automotive parts, and machinery.