US and China accelerate 'stormy divorce' in strategic sectors

Yesterday 16:50

By: Dakir Madiha

US and China accelerate 'stormy divorce' in strategic sectors

The United States and China are methodically untangling economic ties in strategic sectors like semiconductors, food, and energy, in what the Wall Street Journal calls a "stormy divorce" between the world's two largest economies.

China has committed about $1 trillion since early 2024 toward economic self-reliance, funneling funds to northeastern grain belt soybean producers, semiconductor makers seeking to escape Western technology, and renewable energy infrastructure, per analysis by Journal reporters Lingling Wei and Jeanne Whalen.

Bilateral trade volumes have plunged to pre-WTO levels. U.S. imports from China dropped 28 percent year-over-year in 2025, while exports to China fell 38 percent, according to project44's annual tariff report, marking one of recent history's sharpest bilateral trade contractions. China's share of U.S. imports collapsed from 21 percent in 2017 to about 9 percent by mid-2025, effectively reversing two decades of commercial integration and returning to 2001 levels when China joined the World Trade Organization, per National Bureau of Economic Research analysis.

That share hit 7.1 percent in May 2025, the lowest since 2001, according to China Briefing. A Chinese official stated the country's food and energy supplies remain secure without U.S. imports: "The Chinese people's rice bowl is firmly held in their own hands," said Zhao Chenxin, deputy director of the National Development and Reform Commission.

U.S. manufacturers race to adapt. Waukesha, Wisconsin-based hydraulic systems maker Husco slashed China imports by about 80 percent, though none shifted back to the U.S., per CEO Austin Ramirez. The firm previously sourced roughly one-third of North American plant components from China.

Ramirez said customers pressure for minimal Chinese content amid uncertainty over Trump administration tariffs. By end-2025, tech giant HP announced over 90 percent of North American-sold products would be made outside China.

Despite a November 2025 truce cutting some tariff rates, analysts say decoupling continues. The deal dropped U.S. duties on Chinese goods from 145 percent to a combined about 30 percent, while China lowered import duties on U.S. goods to 10 percent. Still, TD Bank forecasts bilateral trade will shrink to less than half pre-2017 levels.

China poured tens of billions into its semiconductor "Big Fund," launching a third phase in May 2024 worth $47.5 billion, more than the prior two phases combined. Leaders brace for what officials internally call "dangerous storms" from ongoing U.S. pressure.

Both nations acknowledge the decoupling targets national security rather than total trade severance. "It's not pleasant to watch," economist Ed Yardeni told CNN. "It tries to leverage American economic power to intimidate other nations. But intimidating China will prove very difficult."