Americans were told that the trade wars launched in 2018 would be a short, sharp economic correction. However, what they got instead may be the first battle in a generational conflict.
When the U.S. launched a wave of tariffs on Chinese imports in 2018, it was sold as a tactical move: a reset to address unfair trade, shrink the deficit, and revive American industry. But seven years later, those tariffs are just one chapter in a much deeper battle. Controls on exports and investments, as well as the slow uncoupling of the world’s two biggest economies, all point to a bigger issue.
This was never just about trade. The real stakes are strategic: who sets the rules of global commerce, who controls tomorrow’s technologies, and whether a free-market system or state-driven capitalism shapes the global order. The United States may not have “won” the trade war, but it may have set the stage for a longer, colder rivalry that goes far beyond tariffs.
The evidence suggests that the trade war inflicted real damage across both economies and set the baseline for prolonged strategic decoupling.
According to Moody’s Analytics, by 2020 the trade war had cost nearly 300,000 U.S. jobs and trimmed real GDP growth by 0.3 to 0.7 percentage points. Much of the tariff burden fell on American companies, which absorbed costs through slimmer margins or higher prices for consumers. Farmers were among the hardest hit, losing key export markets in China. While the bilateral goods deficit narrowed, the overall U.S. trade deficit showed little improvement.
On the other side, China also felt the strain; however, it had more tools at its disposal to address the situation. Beijing moved aggressively on import substitution, accelerated domestic chip production, and reorganized supply chains toward Southeast Asia and Africa. Yet, models show that China may lose more GDP growth in the long term from the trade war, even though they started from a lower base. Its losses become worse than expected because its per-capita income is still smaller than the U.S.
What does this imply? While the US didn’t win the trade war, it may have repositioned itself for a longer contest. A true American “victory” would require structural changes in China’s behavior: stronger protections for intellectual property, curbs on forced technology transfer, and more openness in its state‑capitalist sectors. Tariffs and sanctions alone cannot deliver those outcomes.
A more sustainable path forward would mix smart trade pressure, international partnerships, export controls, investment in U.S. research and supply chains, and rolling back tariffs when it helps the U.S. strategically. In practice, that means engaging allies in coordinated restrictions on key technologies, offering incentives for reshoring, and sustaining diplomatic communications with Beijing.
Of course, critics will reply that this approach risks giving Beijing loopholes to take advantage: that easing some rules could weaken U.S. leverage and bargaining power, and China might not respond in kind. But there remains no guarantee that China will reciprocate. In all, prolonged tariffs carry heavy costs at home, from inflation to making industries overly dependent on tariff protections. A rigid “all or nothing” approach invites overreach.
Ultimately, the U.S. did not triumph in the 2018 trade war, but it may have opened a chapter in a deeper strategic rivalry. The real test now is whether America treats the confrontation as temporary or long-term. The pacemakers of 21st‑century competition will not be tariffs alone, they will be alliances, industrial policy, and economic resilience. That is the colder war we must prepare to fight.
