The US foreign trade strategy is undergoing major adjustments: liberalism and openness are gradually giving way to protectionism, traditional non-trade sectors are more involved in foreign trade policy decisions, the economic benefits distribution pattern of different regions and industries is adjusted, and “security first” has become the starting point of its foreign trade strategy. Under the new situation, the US foreign trade strategy has become a geopolitical means and a tool for great power competition, which has not only impacted Sino-US economic and trade relations, but also disrupted the global trade pattern, leading to the increasing fragmentation of the world economic system.

With the profound evolution of the international order, the US foreign trade strategy has undergone major adjustments. The trade protectionism promoted by the Trump administration did not dissipate with his departure, but has increasingly become the core content of the US government’s foreign trade strategy. Liberalism and openness dominated by the “Washington Consensus” have gradually given way to realism and protectionism dominated by the “New Washington Consensus”. Under the new situation, the foreign trade strategy not only serves the economic interests of the United States, but also becomes a geopolitical means and a tool for great power competition, serving to maintain the hegemonic interests of the United States. As a global trading and economic power, the adjustment of the US foreign trade strategy has not only reshaped the global economic and political landscape, but also had a profound impact on the United States itself, international trade, geopolitics and international relations.

First, it prompted the adjustment of the US domestic trade policy decision-making mechanism.

In the original US foreign trade strategy characterized by expanding trade liberalization, the US Trade Representative played an important role. Promoting bilateral or multilateral trade agreement negotiations, promoting the opening of foreign markets, and strengthening coordination with the World Trade Organization are all important tasks of the US Trade Representative. However, the WTO is increasingly marginalized by the United States. The US Trade Representative is not only unable to become a communicator between the US trade agenda and the WTO, but has become a destroyer.

In contrast to the reduction of the functions of the US Trade Representative, the US Department of Commerce has greater powers in the adjustment of its foreign trade strategy. In the field of export control review, the Department of Commerce has played a greater role because it is responsible for approving corporate export products. In the field of subsidies, the United States develops industries through government subsidies, and it is the Department of Commerce that is responsible for screening and issuing subsidies to corporate projects. During Biden’s administration, the Department of Commerce issued tens of billions of dollars in subsidies to the semiconductor industry, and the status of the Department of Commerce has also risen. At the same time, the role of the US Treasury Department in trade issues has also been enhanced. The tax relief for clean energy companies stipulated in the Inflation Reduction Act is the responsibility of the Treasury Department.

It can be seen that in the context of foreign trade strategy serving national security and great power competition, traditional non-trade sectors are more involved in the US foreign trade policy decision-making process.

Second, it promotes changes in the distribution pattern of domestic economic interests in the United States.

The US manufacturing industry is the biggest beneficiary of the adjustment of the US trade strategy. The domestic motivation for this round of US foreign trade strategy adjustment is to improve international competitiveness by revitalizing the increasingly hollowed-out manufacturing industry. Although the US manufacturing industry is far from recovering to its historical peak level, with the policy support of the US government, the decline of the manufacturing industry has been curbed to a certain extent, and it has shown a trend of stabilization and recovery, with both employment and salary levels increasing.

Some regions in the United States have also become beneficiaries by attracting a large amount of manufacturing investment. For example, the decline of the traditional “rust belt” in the Great Lakes region such as Indiana and Wisconsin has been controlled to a certain extent, and the manufacturing industry in the southern “sunshine belt” such as Texas and Louisiana has achieved better development.

In contrast, multinational corporations, especially large technology companies, are the losers of the adjustment of the US foreign trade strategy. Under the influence of trade protectionism, the US government no longer fully supports the demands of domestic high-tech companies for global expansion, resulting in a decrease in government resources obtained by US multinational corporations. At the same time, some multinational corporations have to obey the US economic sanctions against Russia and strategic competition with China, and are forced to reduce or even stop exports to relevant countries and cut their business in relevant countries, and their interests are more obviously damaged. For example, Qualcomm and Intel suffered huge economic losses because the US government canceled their export licenses to Huawei.

Third, it has led to intensified geopolitical and global economic competition and an increasingly fragmented world economic system.

The current adjustment of the US foreign trade strategy exceeds the traditional trade-off between “fairness” and “freedom” in trade policy, and “security first” has become the starting point of the US foreign trade strategy. Normal trade and economic cooperation have been interrupted by the pan-security trade strategy, and the production and trade networks at the global level have also encountered reorganization pressure. Different countries have to choose the division of labor network that is most beneficial to their own country.

The US foreign trade strategy attempts to isolate China and allow more countries to join the trade and economic system of the United States and its allies. However, since the United States cannot provide more public goods for the new allies’ economic and trade system, the relevant countries and regions not only cannot increase their benefits, but must pay additional economic costs in order to make adjustments and shifts.

The destructive rather than constructive adjustments of the United States’ foreign trade strategy have a huge negative impact on the healthy development of the global economic system. According to data from the International Monetary Fund, the world is forming three major trade groups centered on the United States and its allies, centered on BRICS countries such as China, and centered on non-aligned countries. The trade volume between countries in different groups is 12% lower than the trade volume between countries in the same group, and the rate of decline in trade volume has even exceeded the level at the beginning of the Cold War.

Fourth, Sino-US economic and trade relations have suffered shocks and are facing pressure for systemic reconstruction.

Since the Biden administration took office, the proportion of US imports from China in its total imports has fallen by 4%. In 2023, the total trade volume between China and the United States was US$664.5 billion, a year-on-year decrease of 11.6%, setting the largest decline in trade volume since the two countries formally established diplomatic relations. Although the US government has replaced the original “decoupling and chain breaking” with the so-called “de-risking”, its trade with China is still mainly based on containment and suppression. Not only will it be difficult for Sino-US bilateral trade to maintain its original scale, but it will also face systematic reconstruction in the downward trend.

First, there is the reconstruction of interests. The economic interests formed by China and the United States in the original trade relationship will be redistributed as the US trade strategy is adjusted. Whether a new balance of interests can be formed depends on the future strategic direction of China and the United States.

Secondly, there is the reconstruction of rules. The US government seeks legitimacy for its reconstruction of foreign trade strategy by adjusting domestic and foreign policies. China and the United States will engage in a game over new economic and trade rules. As for whether the reconstruction of rules will be achieved in a way that is mutually recognized by China and the United States, it is still difficult to determine.

Finally, there is the reconstruction of space. The geographical division of production formed by previous trade has undergone new major changes due to the adjustment of the foreign trade strategies of major powers. The United States, China, etc. will plan a new geopolitical production pattern, and the reconstruction of the industrial chain space is inevitable.

Trade interdependence is an important cornerstone for the long-term stability of Sino-US relations. However, due to the continuous restrictions and suppression of China by the United States in related fields, Sino-US trade is degenerating from the original “anchor of stability” in Sino-US relations to the “source of turbulence.” The containment strategy launched by the United States against China in the context of trade and related fields will not only inevitably damage the overall Sino-US relations, but also disrupt the global trade pattern and bring many uncertainties to the development of the world economy.

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