Recently a picture has gone viral Reflects the current popular mood among Americans in the United States: a clear plastic bag bearing the American flag, labeled “Made in China”.
For supporters of US President Donald Trump, this is proof that there is something deeply wrong with the American economy. He has called on “patriots” to boycott Chinese goods.
But can the US really afford to cut ties? Is the free flow of mutually traded goods like rare earths, smartphones, soybeans and superchips in danger of becoming a casualty of the battle for geopolitical dominance?
deep economic ties
Experts say the US economy would struggle more than the Chinese economy if all trade between world powers stopped. Scott Kennedy of the Center for Strategic and International Studies (CSIS) in Washington, DC, says the two sides’ interdependence “remains very high.”
“Despite economic security concerns, both sides are still benefiting significantly from trade,” he told DW.
However, the US-China trade gap is quite significant. Over the past decade, the US trade deficit with China has increased from $295 billion (€252 billion) to $382 billion. In 2024, China is projected to export $526 billion worth of goods to the US – more than three times its imports.
Chinese products are part of everyday life in America. Of those imports, $127 billion were smartphones and computers. Any new tariffs will have a direct impact on American consumers.
Tariff and countertariff
Trump’s tariffs have angered Beijing, but unlike Europe, China is responding with defiance. Government officials in Beijing have vowed to “fight to the end” and urged Washington to “correct its approach,” warning in an Oct. 13 statement on messenger service X that “threatening higher tariffs is not the right way to deal with China.”
Beijing has already retaliated by imposing counter-tariffs and export restrictions, including on rare-earth minerals critical to electric vehicles, semiconductors and defense technology. The US depends on imports for more than 90% of its rare earth supply – more than 80% of which comes from China. Beijing controls about 60% of global rare-earth production and about 90% of refining capacity.
The US-China rift extends beyond minerals. According to the US Department of Agriculture, China has not purchased a single soybean from the US since May. Last year, those exports were valued at about $13 billion. Now, China buys from Brazil and Argentina instead.
The soybean boycott and rare-earth ban are Beijing’s response to Washington’s tougher chip export controls, first imposed in 2022 to curb China’s access to advanced technology and artificial intelligence (AI).
Christina Otte of Germany Trade & Invest (GTAI), the German state-run foreign investment agency, argues that the US is more dependent on China than the other way around.
“Although the US remains a major market for Chinese goods, its importance has steadily declined since Trump’s first term,” he told DW.
New markets, new strategy
According to news agency Bloomberg, China has successfully redirected exports once destined for the US to other sectors.
The agency reported that between September 2024 and September 2025, shipments to Africa increased by 56% – followed by 16% to Southeast Asia, 14% to the EU and 15% to Latin America.
“US now lags behind ASEAN [Southeast Asian trade bloc] And roughly equal to the EU,” Otte said. “In the first half of 2025, bilateral trade fell by more than 10% year on year.”
“Chinese companies are expanding production in countries like Vietnam and Malaysia to continue supplying the US market indirectly,” he said.
Apart from this, China is also breaking financial relations with America which is deeply in debt. Its holdings in US Treasury securities have fallen from $1.3 trillion in 2013 to $765 billion this year. According to US Federal Reserve dataChina now trails Japan and Britain among foreign holders of US debt.
‘Chimerica’ is still standing
Despite this slow recovery, trade remains important for both superpowers.
“China is still dependent on U.S. supplies in aerospace, high-performance chips and semiconductors,” Kennedy said. Chinese products, in turn, are deeply embedded in U.S. supply chains, he said.
Chinese President Xi Jinping and Donald Trump are expected to meet at the APEC summit in Gyeongju, South Korea later this month. Both sides hope tensions will ease before the tariffs spiral further out of control.
Kennedy is optimistic and emphasizes that US-China relations are “still quite resilient.”
“Chimerica” is the term he uses to describe US-Chinese interdependence, which “may be hurt, but it’s not dead – and it won’t easily disappear.”
This article was originally written in German.