Tariffs, Trade Wars, and Truces: The Future of US-China Economic Policy

As Donald Trump prepares to step into his second term as President of the United States, the stage is set for a new chapter in trade relations, particularly with China. While the specifics remain unclear—ranging from the scale and timing of tariffs to the strategic objectives behind them—three distinct paths appear plausible. These range from a full-blown trade war that accelerates economic decoupling to a temporary truce that stalls further escalation, or even a transformative deal that reshapes the bilateral relationship. T

The trajectory of these developments will profoundly influence not only US-China relations but also the broader dynamics of global trade. Let’s assess each hypothesis in its potential scope and in its likeliness.