On April 2, 2025, the Trump Administration announced sweeping tariffs on countries around the globe. However, it now appears that China may be the primary target of these tariffs. While the administration’s goal may be to achieve freer and fairer trade with most other countries, there are likely to be fundamental changes to the U.S./China trade relationship that are intended to be permanent. Many clients have been asking us why China is being treated as an economic adversary, and there are many important reasons for this.
Over the years, the United States has consistently expressed concerns over a variety of trade practices employed by China, which are viewed as unfair and harmful to global economic competition. These practices span intellectual property theft, government subsidies to state-owned enterprises, market access restrictions, and manipulation of currency. While the U.S. and China have engaged in trade negotiations to address these issues, these practices continue to be a point of contention in international trade relations.
Intellectual Property Theft and Forced Technology Transfer
One of the most significant concerns for the United States is the theft of intellectual property (IP) by Chinese entities. U.S. companies operating in China often face the risk of forced technology transfer, wherein they are required to share proprietary technology with local partners in exchange for market access (U.S. Trade Representative, 2018). Additionally, cyber espionage has been a prominent issue, with reports of China being involved in stealing trade secrets and sensitive data from American firms (U.S. Department of Homeland Security, 2017).
State Subsidies and Support for Chinese Firms
Another point of contention is the extensive subsidies provided by the Chinese government to its domestic industries. These subsidies disproportionately benefit state-owned enterprises (SOEs) and key sectors like steel, solar panel production, and electric vehicles. These practices not only distort the global market but also give Chinese firms a competitive edge over foreign competitors, including U.S. businesses (Li, 2021). The U.S. government has filed multiple cases at the World Trade Organization (WTO) challenging such practices, particularly the export subsidies in China’s automotive sector (Office of the U.S. Trade Representative, 2012).
Barriers to Market Access and Lack of Reciprocity
China's regulatory environment poses significant barriers to foreign firms seeking to enter its market. Despite China's membership in the WTO, foreign companies still face restrictions in critical sectors such as finance, telecommunications, and cloud computing (Foreign Affairs, 2021). In contrast, Chinese companies enjoy relatively unfettered access to the U.S. market, leading to a significant trade imbalance.
Currency Manipulation and Trade Imbalances
Historically, the U.S. has accused China of manipulating its currency, the yuan, to make Chinese exports cheaper and gain an unfair advantage in global trade (Congress.gov, 2021). Although the issue of currency manipulation is less prominent today, concerns about China’s trade practices continue to focus on its significant trade surplus with the U.S., exacerbated by the overproduction in certain sectors like solar panels (Business Insider, 2025).
Industrial Policies: "Made in China 2025"
China's industrial policy, particularly the "Made in China 2025" initiative, has also drawn criticism from the U.S. The plan aims to establish China as a global leader in high-tech industries, such as semiconductors, robotics, and artificial intelligence, through government subsidies and protectionist measures (Foreign Affairs, 2021). This strategy, which favors domestic over foreign companies, is seen as an attempt to dominate key sectors at the expense of global competitors.
Conclusion
China’s trade practices, including intellectual property theft, state subsidies, forced technology transfers, and market access restrictions, have long been a source of tension between the U.S. and China. While these practices provide Chinese companies with significant competitive advantages, they also distort global trade and hinder fair competition. Addressing these issues remains a critical aspect of U.S. foreign economic policy, as negotiations between the two countries continue.
References
Business Insider. (2025, April 10). U.S. Trade War: How China's Export Practices and Overcapacity Are Affecting Global Markets. https://www.businessinsider.com/trump-us-trade-war-tariffs-china-export-overcapacity-europe-dumping-2025-4
Congress.gov. (2021). China's Currency Manipulation: An Overview of U.S. Trade Concerns. https://www.congress.gov/crs_external_products/RL/HTML/RL33536.web.html
Foreign Affairs. (2021). The Challenges of U.S.-China Trade Relations: How to Counter China's Unfair Practices. https://www.foreignaffairs.com/united-states/better-tool-counter-chinas-unfair-trade-practices
Li, S. (2021). China's Industrial Policy and State Support for Strategic Industries. The Diplomat. https://thediplomat.com/2021/05/chinese-subsidies-a-threat-to-us-competitiveness/
Office of the U.S. Trade Representative. (2012). WTO Case Challenging Chinese Export Subsidies in the Automotive Sector. https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2012/september/wto-case-challenging-chinese-subsidies
U.S. Department of Homeland Security. (2017). Annual Report on Intellectual Property Seizures. https://www.dhs.gov/annual-report-ip-seizures
U.S. Trade Representative. (2018). Section 301 Investigation: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. https://ustr.gov/sites/default/files/files/Press/20180322/301%20Report%20Final%20Publication.pdf