The Rise and Fall of U.S. Trade Liberalism with China

The U.S. trade deficit with China as a percentage of GDP Rise from 1980s, matured in the mid-2010s to 2018, and declined since 2018.

Key events mark shifts in U.S.-China trade relations:

·      1980s Trade Liberalization: A gradual increase in trade deficits began during this period of open trade policies.

·      2001 (China's WTO Accession): China's entry into the World Trade Organization triggered a sharp rise in the U.S.-China trade deficit.

·      2008 (Global Financial Crisis): The deficit peaked just before the financial crisis, reflecting a period of economic imbalance.

·      2018 (Onset of the U.S.-China Trade War): Tariffs and tensions initiated a decline in the trade deficit.

The forecast suggests a continued narrowing of the deficit, reflecting shifts toward decoupling or restructuring trade dependencies with China, returning to 1990s levels.