U.S.-China Trade Relations

Updated March 4August 17, 2026 (IF11284)

The People's Republic of China (PRC or China) is the world's second-largest global economy and has been a top U.S. trading partner since China joined the World Trade Organization (WTO) in 2001. China is a major export market for U.S. aircraft, agriculture, semiconductor equipment/chips, gas turbines, and medical devices, and a top source of U.S. consumer goods and manufacturing inputs. At the same time, challenges that U.S. firms face from China include a lack of market access reciprocityreciprocal access to the PRC market, trade barriers in key areas, a strong PRC state role in commercial activity, and expanding PRC industrial policies, export controls, and economic security and data rules. Trade issues raised by U.S. officials and executives have raised since the 1990s have broadened into a U.S. government focus on strategic competition with the PRC. The executive branch and Congress have debated and adopted approaches, such as tariffs and restrictions on investment and market accessrestrictions, to counter PRC practices they say distort markets, hinder fair competition, and challenge U.S. economic leadership.

PRC Trade and Investment Terms

The PRC government controls or influences the purchase, financing, and price of top U.S. exports to China—aircraft, semiconductors, medical equipment, agriculture, and energy. It has sought to increase control of this trade and reduce itsChina's reliance on U.S. imports by diversifying trade with other countries and advancing industrial policies that exploit foreign commercial ties to develop PRC capabilities in top import sectors. For example, in aerospace, to meet PRC terms, some U.S. firms have partnered with and transferred advanced U.S. technology to PRC state firms to jointly develop a PRC single-aisle aircraft (C-919). The PRC government funds imports of U.S. semiconductor manufacturing equipment to support the development of China's semiconductor industry. PRC policies have required firms to localize supply chains. PRC procurement rules in pharmaceuticals and medical devices have set fixed prices, which has increased cost pressures for U.S. firms and encouraged firms in these sectors to produce in China.

The PRC has selectively opened its market and controlled foreign firms' participation in ways that have capped the ability of such firms to compete. Foreign firms may initially fill PRC gaps with their products, services, and capabilities, but PRC plans set targets to displace such firms once China gains competencies. The PRC's economic system integrates state and corporate interests, enabling the government to use trade tools (e.g., antidumping, antitrust, export controls, market approvals, technical standards, and procurement) as well asand economic coercion and IPintellectual property (IP) theft to advantage PRC firms and economic goals. In strategic sectors, PRC policies have required foreign firms to set up joint ventures and transfer technology. The PRC government has supported some PRC firms in strategic areas, and funded overseas investment (including acquisitions of foreign firms)has funded investment abroad in priority areas—such as agriculture, biotechnology, critical minerals, and semiconductors—to gain capabilities, support PRC manufacturing, and expand in global markets.

Figure 1. U.S.-China Goods Trade (2001-2025)

Source: CRS with data from the U.S. Bureau of Economic Analysis.

Figure 2. U.S.-China Services Trade (2001-20242025)

Source: CRS with data from the U.S. Bureau of Economic Analysis.

Figure 3. U.S.-China FDI Position (2013-20242025)

Source: CRS with data from the U.S. Bureau of Economic Analysis.

Key Issues Facing Congress

Since 2017From 2017-2024, U.S. national security policy has defined the PRC as a strategic competitor and U.S. economic policies have focused on reducing U.S. dependence on China. The Trump Administration's national security strategy, issued in November 2025, does not name China as a competitor. It discusses "win[ning] the economic future" in Asia by rebalancing trade and countering "[p]redatory, state-directed subsidies and industrial strategies" and "[u]nfair trading practices" while "maintaining a genuinely mutually advantageous economic relationship with Beijing."

Tariffs: The executive branch's use of tariffs as a tool to advance trade, foreign policy, and economic goals has prompted debates about congressional trade authorities and oversight over U.S. trade policy and the costs and benefits of using tariffs to address PRC practices of concern. Since spring 2025, U.S. and PRC officials have engaged in talks but have not reached a deal over tariffs related to the U.S. trade deficit and illicit fentanyl flows that President Trump imposed on China in February and March of 2025 under the International Emergency Economic Powers Act (IEEPA, 50 U.S.C. §§1701 et seq.). On February 20, 2026, the Supreme Court ruled that the President cannot use IEEPA to impose tariffs. President Trump lifted such tariffs and imposed a 10% global tariff for 150 days under Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132). Tariffs that the United States has imposed on China since 2018 under other authorities remain in effect. In October 2025, the U.S. Trade Representative (USTR) initiated a Section 301 investigation of China's implementation of the 2020 U.S.-China Phase One deal. See CRS In Focus IF12990, U.S.-China Tariff Actions Since 2018: An Overview; In April 2026, U.S. Trade Representative (USTR) Jamieson Greer said the President seeks stability and is not looking for a "massive confrontation" or "full-on conflict" with China, suggesting limits to the Trump Administration's willingness to pressure China given deep economic ties and the PRC's tendency to retaliate. For example, USTR has pressed the PRC to ease controls on rare earth exports with limited results. In May 2026, the two sides agreed to set up trade and investment boards to identify tariffs to be lifted and possible areas for PRC investment in the U.S. market. Tariffs. The executive branch's use of tariffs to advance trade, foreign policy, and economic goals has prompted debates about congressional trade authorities and oversight over U.S. trade policy and the costs and benefits of using tariffs to address PRC practices of concern. Meanwhile, industrial policies are driving PRC overcapacity, exports, and global investment in sectors such as electric vehicles, prompting U.S. debates about whether and, if so, how to protect the U.S. market. Since spring 2025, U.S. and PRC officials have engaged in tariff talks that have widened into other trade issues but have not resolved U.S. concerns. See CRS In Focus IF12990, U.S.-China Tariff Actions Since 2018: An Overview; and CRS In Focus IF12125, Section 301 and China: The U.S.-China Phase One Trade DealCRS In Focus IF12125, Section 301 and China: The U.S.-China Phase One Trade Deal; CRS In Focus IF12666, Section 301 and China: Shipping and Shipbuilding Issues; and CRS In Focus IF12958, Section 301 and China: Mature-Node Semiconductors.

In February 2026, the International Trade Commission (ITC)—acting under requirements in P.L. 119-74—opened an investigation to examine the impact of a revocation of China's permanent normal trade relations (PNTR) status on the U.S. economy. ThatThe same month, the ITC opened an investigation into PRC state support and pricing practices in biotechnology. H.R. 694/S. 206 would revoke PNTR tariff treatment for the PRC. See CRS In Focus IF12980, Permanent Normal Trade Relations and U.S.-China Tariffs.

PRC Approaches. Since 2025, most PRC retaliation to U.S. tariffs has involved non-tariffnontariff actions as the PRC ran out of U.S. productsitems to effectively tariff given the trade imbalance. The PRC has canceled orders, imposed market restrictions, and enacted export controls on U.S. production inputs. It has expanded export controls to cover more trade and require disclosure about the end- use of PRC inputs, likely increasing raising PRC visibility into and leverage over U.S. firmssupply chains.

Negotiations:. Such PRC actions appear to have fostered a dynamic in talks in which U.S. officials have sought to delay new PRC measures in exchange for concurrent delays in U.S. actions, potentially distracting from U.S. efforts to address systemic trade issues. The TrumpSince fall 2025, the Administration also has delayed some trade actions in fall 2025 as part of its efforts to seek a trade deal and ahead of President Trump's planned visit to China in late March 2026and national security actions to reach a trade deal and make progress on other issues ahead of leaders' meetings. Some argue that such an approach by past Administrations undercut U.S. leverage. For example, the Department of Commerce delayed for onea year a rule to expand export controls to cover foreign affiliates of PRC firms on the Bureau of Industry and Security's Entity List. USTR also delayed imposing tariffs after finding PRC semiconductor and shipping policies actionabledelayed tariff actions on PRC semiconductors and ships under Section 301 of the Trade Act of 1974. The PRC has offered to purchase items it typically buys but withheld during talks (e.g., aircraft, beef, and soybeans).

The Administration's decision to allow U.S. technology company Nvidia to export its H200 chips to the PRC (and set terms by which the U.S. government is to collect 25% of the sale's proceeds) prompted congressional debate and legislation seeking to limit the sale of advanced chips and semiconductor equipment to China. Former officials criticized the negotiating ofdebate in Congress in light of U.S. policies to restrict semiconductor trade with China. Former U.S. officials criticized negotiating national security decisions in exchange for trade concessions, saying that such actions contradict past U.S. practice. See CRS Report R48642, U.S. Export Controls and China: Advanced Semiconductors.

Other Actions. . PRC industrial policies are driving China's overcapacity, exports, and overseas investment in sectors such as electric vehicles. To address concerns about data security, technology competition, and the PRC state's ties to PRC firms, insince 2025, the Commerce Department issued rules that restrict the use of PRC connected technology in vehicles. Provisions in the National Defense Authorization Act for Fiscal Year 2026 (P.L. 119-60) restrict some U.S. technology investment in China, codifying provisions in President Biden's Executive Order 14105. President Trump announced in 2025 that TikTok's U.S. operations are to be run by a joint venture majority-owned and -controlled by U.S. persons in which TikTok's parent, ByteDance, and its affiliates have up to a 20% stake. P.L. 118-50 (Div. H and Div. I) restricts TikTok and other PRC-tied digital platforms in the U.S. market the U.S. government has restricted PRC connected vehicle technology, robots, solar inverters, and drones in the U.S. market and has proposed restricting U.S.-PRC research ties. S. 4429/H.R. 8730 would put vehicle restrictions in statute. P.L. 119-60 restricts some U.S. investment in China and prohibits U.S. federal agencies and recipients of federal funds from using biotechnology equipment/services from named PRC firms. P.L. 118-50 (Div. H and Div. I) imposes ownership and data transfer restrictions on TikTok and other PRC-tied digital platforms in the U.S. market. In 2025, President Trump stated that TikTok's parent, ByteDance, and its affiliates would own up to 20% of the joint venture that runs TikTok's U.S. operations, raising questions about continued PRC ties.