The United States conducted $549.5 billion worth of trade with China in the first 10 months of 2018 alone, with America importing more than four times what it exported. In all, China represents more than 15% of America's total trade.
The history of trade with China is almost as old as America itself, and today, America and China boast the world's #1 and #2 largest economies, respectively. Trade between the two countries has been massive, yet often contentious. During more than 230 years of trade between the dominant powers in the East and West, China and the United States have witnessed a string of ups and downs, standoffs and reconciliations, trade wars and physical wars. Today, the relationship is strained, and the two countries are locked in a showdown where goods are viewed as economic weapons as much as they are merchandise to be bought and sold. Here's a look at how the two global giants got to where they are today.
Following the famous Boston Tea Party rebellion of 1773, Americans abandoned tea en masse as an unpatriotic beverage. The masses, however, still craved the caffeinated, rejuvenating drink through the Revolution and beyond. Once it was free from Great Britain and the king's monopolistic British East India Company, the newly minted United States set its sights east, toward China. On Feb. 22, 1784, the U.S. declared its economic independence when the American trade ship Empress of China set sail from New York City. Packed with 242 casks of Appalachian and New England ginseng, which the Chinese coveted, the ship was to return filled with tea. The era of American trade with China had begun.
The United States soon learned that its appetite for silk, ornate furniture, tea, and other Chinese goods far outpaced China's interest in importing American merchandise. The British had, however, discovered one product the Chinese did want from the West: smuggled opium. The Chinese government tried in vain to suppress the British and American opium trade, and in 1840, China suffered a series of devastating defeats in what came to be known as the First Opium War. In 1842, Britain forced lopsided terms of surrender that heavily favored the West, known as the Treaty of Nanjing. Two years later in 1844, America secured similarly favorable trading terms with the Treaty of Wanghia.
In 1940, the United States was not yet at war with Japan, and was overwhelmingly pro-China, which Japan had invaded and occupied. That year, President Roosevelt approved military aid to China's nationalist government, implemented a blockade of Japan and ramped up pro-China propaganda at home. Although military aid isn't the same as trade, the move codified America's support for China as a critical economic partner.
In 1949, communist Chinese forces led by Mao Zedong defeated the U.S.-backed Chinese nationalist government, which fled to Taiwan. The People's Republic of China was then established. For the next two decades, trade between the United States and communist China was frozen, diplomatic relations ceased, and virtually all travel was halted. Soldiers from the two nations clashed in the Korean War, which began the following year. America would recognize the nationalists exiled in Taiwan as the legitimate Chinese government through the 1970s.
Throughout the 1968 election campaign, Richard Nixon signaled both to China and America that he was willing to help thaw the two countries' chilly relations. In 1971, two events changed history: China invited America's ping-pong team to compete on their turf, and President Nixon's Secretary of State, Henry Kissinger, secretly visited China to discuss resuming trade.
Nixon shocked America and the world in 1972 by announcing plans for a historic trip to China while still mired in the unpopular Vietnam War. A bona fide cold warrior, Nixon's ulterior motive for the trip was to cause friction between the U.S.S.R. and China. The end result, however, was the same: the stage was set for a future of normalized relations, restored diplomacy, and trade.
In 1979, China and the United States formally resumed diplomatic relations, with each nation offering major conciliations to the other. The United States agreed to recognize the country's government, and both established most-preferred nation status in terms of trade.
Throughout much of the 1980s, trade relations were cozy between the United States and China. During President Ronald Reagan's visit, both sides reduced tariffs, eliminated penalties, and enacted reforms. By 1988, Chinese exports to the U.S. totaled $40 billion.
In June 1989, Chinese government troops brutally crushed a pro-democracy student rally in Beijing's Tiananmen Square, leaving hundreds of peaceful protestors dead while the world watched on television. The massacre prompted the United States to impose broad sanctions, and suspend military sales to China. Beijing responded by freezing all U.S relations.
After a contentious decade following Tiananmen Square, President Bill Clinton signed the United States-China Relations Act in 2000, granting permanent normal trade relations with China and removing the previous stipulation that required annual reviews of the country's trade status. The act also helped China enter the World Trade Organization.
In 2008, China surpassed Japan as America's largest foreign creditor. That year, China held $600 billion in U.S. debt, or treasuries. Two years later in 2010, China would leapfrog once more over Japan—this time to become the world's second-largest economy.
As early as 2014, Donald Trump called out China for what he deemed unfair trade practices, telling followers that China was "not a friend of the United States." When he became a full-fledged presidential candidate in 2016, Trump made claims of Chinese trade abuse, condemning previous presidents for allowing China to take advantage of America. On Jan. 22, 2018, President Trump held true to his campaign promises, and announced tariffs on washing machines and solar cells from China—the first in a series of multi-billion-dollar penalties Trump would enact throughout the year.
On April 1, 2018, China responded to the president's penalties, hitting the U.S. with tariffs on 128 products. It was the first of several counterpunches China would throw in response to what it perceived as U.S. aggression.
In Dec. 2018 at the G8 Summit in Buenos Aires, President Trump and Chinese President Xi Jinping announced a truce in the trade war. Both sides agreed to 90 days without any aggressive or retaliatory moves to allow time for negotiations.
On Jan. 7, 2019, a U.S. delegation was slated to resume trade talks in China. President Trump insists the trade war has weakened China and strengthened the position of the United States, but experts say "the measures have disrupted trade, hurt manufacturing, roiled international markets, and slowed the global economy."