How the US and China Can Forge a Landmark Trade Deal in 2025 [Updated]

With trade tensions between the US and China at their highest point in years, both countries stand at a crossroads. The ongoing tariff battles have strained business on both sides and sent ripples through the global economy. Each move—higher tariffs, export bans, and investment restrictions—deepens the uncertainty for companies and trading partners worldwide.

A breakthrough trade deal would bring stability to two economies that together drive nearly a third of global output. For the US, expanded market access and fair competition protections are essential to maintain innovation and manufacturing jobs. For China, keeping ties with its largest export market safeguards growth, jobs, and the stability of its supply chains.

The stakes couldn’t be higher. Every delay hikes costs for consumers, distorts markets, and slows progress on key issues like clean energy and technology. Reaching common ground isn’t just about settling disputes; it’s about ensuring continued growth for both countries—and for the world.

Understanding the Roadblocks to a US-China Trade Deal

Photo by Kaboompics.com

Striking a major trade deal between the US and China means more than lowering tariffs and signing papers. The two countries face several hurdles that have deep roots—some economic, some legal, and some political. Each challenge must be tackled head-on for any agreement to last. Here’s a closer look at the major points of friction that stand in the way.

Escalating Tariffs and Trade Imbalances

Tariffs between the US and China have defined the modern trade standoff. The US has imposed steep tariffs on many Chinese goods, with China responding in kind. This tit-for-tat approach disrupts the supply chain and makes everyday products more expensive for consumers and businesses. While US leaders say tariffs are needed to protect American jobs, these measures often prompt China to retaliate, making a compromise much harder.

But tariffs are only part of the story. The US runs a large trade deficit with China, meaning it buys much more from China than it sells there. This deficit reached $295 billion in 2023, the largest with any country. Many US policymakers see this as a sign that trade is unfair, but experts argue that much of the imbalance is shaped by internal economic factors in both countries, such as consumer preferences and savings rates. Still, politicians look at the raw numbers and see a problem that needs fixing.

• Tariffs have climbed to historic highs, affecting products from electronics to food.
• Trade imbalances drive political pressure on US officials to get tougher on China.
• Both countries use tariffs as bargaining chips, making negotiations unpredictable.

For more on how tariffs are shaping the dispute, read US says tariffs on China will drop 'substantially' and a deeper background from the Council on Foreign Relations.

Intellectual Property and Technology Transfer Issues

Intellectual property (IP) is another flashpoint. US firms have long argued that Chinese companies benefit from the theft or forced transfer of American technology. Many say they must hand over blueprints, source code, or technical secrets to do business in China. This is deeply controversial and has led to complaints at the highest levels.

China has taken steps in recent years to strengthen its IP laws, but critics contend enforcement is uneven. US companies want clear rules and proper penalties for violations. Without trust on this issue, American businesses risk losing their competitive edge.

• Forced technology transfers and IP theft remain central complaints from US firms.
• China has improved its IP system, but many say the progress isn't fast or wide enough.
• Disputes over innovation and tech access affect everything from phones to medical devices.

For more insights, see Intellectual Property Rights in the U.S.-China Innovation Competition and details on US demands in the United States Trade Representative report.

Barriers to Market Access

US companies want to sell more goods and services inside China, but they often face obstacles that make it hard to compete. These barriers include strict regulations, vague rules, and hidden quotas. For some industries, like finance and cloud computing, opening shop in China means navigating a maze of restrictions or working with a local partner.

Market access is not just about selling products. It's about investing, moving money, and hiring workers without unfair limits. Chinese businesses in the US face fewer hurdles, but many US firms say they still feel shut out of China’s markets.

• Non-tariff barriers—like licensing requirements and ownership limits—keep US goods and services from reaching Chinese customers.
• Government procurement policies often favor domestic firms, leaving outsiders at a disadvantage.
• Access issues stifle competition, investment, and the exchange of ideas.

For more about these challenges, read China's Use of Unofficial Trade Barriers in the U.S.-China Trade War and recent coverage from CNBC on services and barriers.

Each of these obstacles will need practical, actionable fixes for a US-China trade deal to succeed. The road is long, but recognizing these core problems is the first step towards any real progress.

Opportunities for Cooperation and Mutual Benefit

The US and China have more to gain together than apart. Both economies depend on stable trade ties and healthy competition. There are real chances to build trust and mutual gain if leaders focus on practical areas of alignment. When the two sides reduce trade barriers and find common ground on rules, the benefits ripple outwards—to manufacturers, farmers, tech innovators, and everyday consumers.

Photo by Kaboompics.com

Shared interests exist in cutting tariffs, streamlining regulations, protecting new ideas, and giving each other’s companies a fair shot in both markets. By working together, both countries can anchor a more reliable and forward-looking trade system.

Reducing and Harmonizing Tariffs

High tariffs continue to hurt business on both sides of the Pacific. US importers pay more for Chinese parts and finished goods. Chinese exporters lose access to American consumers and face profit drops. While tariffs may serve as a negotiating lever, they are also a drag on long-term growth.

Lowering tariffs helps both sides:

• US companies can source supplies more cheaply, lowering costs for consumers.
• Chinese firms restore sales in one of their biggest markets.
• Global supply chains become more regular and less risky.

Setting more predictable and transparent tariff levels would remove a lot of guesswork. Harmonizing tariff schedules on key products reduces friction and supports global standards. According to the Council on Foreign Relations, both countries rely on each other for critical imports and exports, underlining the need for stability.

Strengthening Intellectual Property Protections

Inventors, artists, and tech companies all benefit when their creations are respected and safeguarded. Stronger intellectual property (IP) rules also attract outside investment—companies want to know their ideas won’t be stolen or copied without fair process.

Steps for deeper IP cooperation include:

• Making copyright, patent, and trade secret laws clear and enforceable.
• Setting up joint review boards to handle disputes quickly and fairly.
• Sharing best practices on prosecution and penalties for IP infringement.

Recent years have brought forward reforms in China’s IP system, but more trust is needed through even enforcement and transparent legal processes. If both sides agree to hold each other to high standards, innovation won’t be slowed by fear of unfair competition. The US State Department outlines how investment and technology flow benefit when IP is honored, building confidence in trade partnerships (U.S. Relations With China).

Expanding Market Access and Fair Competition

Open markets mean more choices for buyers and sellers alike. When US companies get a fair shot in China, and Chinese firms thrive in the US, it drives better products at better prices.

Key ways to boost access and fairness:

• Relaxing or eliminating forced joint venture and local partnership rules.
• Making licensing and regulatory requirements transparent and consistent.
• Removing “buy local” procurement policies that lock out foreign competition.

Fair competition is not just good for business—it rewards efficiency and signals to the world that trade disputes won’t block shared growth. A study by Oxford Economics shows that trade between the two is not as one-sided as it first appears, and both depend heavily on mutual access (US-China trade relationship not as one sided as it appears). When barriers fall, true partnerships have room to grow.

Both Washington and Beijing face pressure at home to put their own businesses first. But a lasting deal means both must also recognize the value of a level playing field—one where friendship and competition work side by side for shared rewards.