Negotiating a win-win end to the lose-lose US-China trade war over technology and critical minerals

Chad Bown

No WP26-5, Working Paper Series from Peterson Institute for International Economics

Abstract: The United States and China put parts of the global economy at risk in 2025 through their trade war over critical minerals and technology. A series of escalatory tariffs and export restrictions led to shortages of essential inputs, nearly forcing automakers worldwide to shut down production. The costly policies reflected uncoordinated and uncommunicated efforts by both countries to reduce their mutual economic dependence. This paper explores a novel path for the United States and China to "cooperate" over how they reduce their dependence on each other in technology and critical minerals, with the aim of limiting future escalation risks and avoiding unnecessary costs. The proposal draws on a version of the reciprocal approach to negotiations developed under the General Agreement on Tariffs and Trade, modified to accommodate a mutual reduction in each country's market dominance in key sectors.

Keywords: economic security; supply chains; tariffs; export restrictions (search for similar items in EconPapers)
JEL-codes: F13 F51 F52 F53 (search for similar items in EconPapers)
Date: 2026-03
New Economics Papers: this item is included in nep-min
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