The U.S.-China Trade War

For much of my professional life, the U.S.-China trade war has been one of those ongoing stories that seem to shape everything from global markets to international business strategies. Now, having lived abroad since 2023, this trade war has given me a new perspective on how these issues affect not just the two countries involved but the entire world economy.

Background of the Trade War
The U.S.-China trade war officially began in 2018 under U.S. President Donald Trump, and it all started after the U.S. became frustrated with what it saw as unfair trade practices by China. There were complaints about a massive trade imbalance, intellectual property theft, and the way U.S. companies had to hand over their technology to do business in China. Add to that some political and economic competition for global influence, and it didn’t take long for the U.S. to start imposing tariffs on billions of dollars’ worth of Chinese imports. That kicked off a back-and-forth battle with China, who retaliated with tariffs of their own. The whole thing shook up global trade in a way we’re still feeling today.

The Geofragmentation of Nations
In my current Global Economics class at ISM, we’re talking about geofragmentation – the idea that the world is breaking up into regional trade and political blocs after so many centuries of globalization. The trade war is a perfect example of this concept. For example, China has been strengthening ties within Asia, particularly through the Regional Comprehensive Economic Partnership (RCEP), a massive free-trade agreement that includes 15 countries but not the U.S. At the same time, the U.S. is rethinking its own global alliances and trade policies. All this is fueling what some call deglobalization, where countries are pulling back from interconnected global supply chains and focusing more on self-reliance or regional partnerships.

TikTok and the Tech War
Another layer of the U.S.-China trade conflict is the ongoing tech battle, with TikTok often taking center stage. The debate around TikTok’s presence in the U.S. has resurfaced with fresh urgency, tied to national security concerns. Critics argue that TikTok’s ownership by the Chinese company ByteDance could open the door to data access by the Chinese government or allow subtle content manipulation, raising significant red flags.

To address these worries, legislation has been passed requiring ByteDance to sell its TikTok operations in the U.S. by January 19, 2025, or face a nationwide ban. This “divest-or-ban” demand has sparked resistance from ByteDance, setting off a series of legal battles. The U.S. Supreme Court is currently reviewing the case, with a final decision expected this Sunday, January 19^th. Amid this uncertainty, President-elect Donald Trump, who had attempted to ban TikTok during his previous term, has signaled interest in finding a middle ground – one that ensures national security while keeping the app accessible to U.S. users.

If the ban is enforced, it would not only shift the tides of a broader social media ecosystem but would show solid evidence that the U.S. is not bluffing when it comes to decreasing Chinese influence. If the ban goes through this weekend, American-owned platforms like Meta and Alphabet will likely seize the opportunity to capture the displaced user base and benefit from the resulting surge in advertising revenue.

What This Means for International Business
For MBA students like me, the big question is: How does all this affect international business? The rise of geofragmentation, like in the case of the U.S.-China trade war, means companies need to rethink their strategies for global expansion. Supply chains are becoming less about efficiency and more about resilience, like finding suppliers closer to home or in politically stable regions. Businesses might also face higher costs as tariffs and trade barriers make goods more expensive to produce and move around the world.

Final Thoughts
While our world has become more interconnected than ever, that interconnectedness can sometimes be vulnerable to drastic change. The U.S.-China trade war isn’t just a story about two countries; it’s a story about how the world is evolving. Whether it’s through new trade deals, changing supply chains, or debates over the concerns for national security through apps, the ripple effects are everywhere. For future business leaders, keeping an eye on these shifts is more important now than ever.