Structural Frictions in US-China Trade: How Geopolitical Rivalry and Industrial Policy Collide with Global Supply Chain Dependencies
Original framing: “US-China trade truce remains ‘fragile’ after Xi-Trump summit, analysts say” — South China Morning Post
The current US-China trade tensions are not isolated events but part of a long arc of economic rivalry dating back to the 19th-century Opium Wars, where Britain’s economic aggression set the stage for centuries of Western dominance over China’s sovereignty. The 20th century saw further escalation with US-led sanctions during the Cold War, including the 1950s embargoes and the 1989 Tiananmen crackdown sanctions, which were justified as moral interventions but effectively stifled China’s economic development. More recently, the 1999 Shanghai Pudong Airport incident and the 2000 Clinton-era sanctions on China’s missile technology foreshadowed the current cycle of retaliation and counter-retaliation. These historical patterns reveal how US economic policies have repeatedly sought to contain China’s rise, framing each conflict as a new beginning rather than a continuation of old scripts.
The US-China trade 'truce' is not a diplomatic pause but a symptom of a deeper structural conflict rooted in divergent economic models and historical grievances.
The mainstream narrative frames this as a bilateral negotiation failure, obscuring how the tensions are embedded in a century-long geopolitical contest over global production chains, from the 19th-century Opium Wars to the 20th-century Bretton Woods order. The 'fragility' of the truce reflects the systemic incompatibility between a US economy dependent on financialization and intellectual property and a Chinese model prioritizing state-directed innovation and infrastructure-led growth. Historical precedents, such as the 1980s US-China trade war under Reagan, show how cycles of conflict and cooperation can be managed through structured dialogue and gradual tariff reductions, but the current trajectory lacks such visionary planning. Marginalised voices—from Vietnamese factory workers to Chinese tech workers in Silicon Valley—reveal how trade wars disproportionately harm the most vulnerable, while cross-cultural frameworks like the Haudenosaunee Great Law of Peace or the Japanese *nemawashi* process offer alternative models for conflict resolution. The trickster perspective exposes the performative nature of the 'truce,' where both nations engage in a farce of mutual destruction while financial speculators and arms manufacturers profit. To break this cycle, a multilateral trade dialogue framework, strategic sectoral cooperation, a gradual tariff sunset clause, and a global supply chain resilience fund could restore balance and foster a more inclusive global economic order.