Long years of China’s excessive and systematic surpluses on its U.S. trades are part of Washington’s negligence and political miscalculations. But they are also a surprisingly blind spot of Beijing’s economic development strategy.

To his credit, President Trump warned about those trade deficits with China during his election rallies in 2015. Unfortunately, his trade officials dropped the ball and allowed China to pocket a trade surplus of $1.5 trillion on its soaring sales to the U.S. during Trump’s first term of office.

And the same story continues. Last year, China ran a $295.5 billion trade surplus with the U.S. China’s surplus in the first two months of this year came in at $52.9 billion, mapping out an annual rate of $317.4 billion – a 7.4% increase compared to last year.

Those numbers show that the U.S. trade problem with China is more acute and serious than deficits with North America (Canada and Mexico) and the European Union.

The most worrying problem, however, is China’s extremely low purchases of U.S. goods. Based on last year and this year data, China’s goods sales to the U.S. are nearly 4 times larger than what China buys from America – a sharp contrast with American neighbors and European allies who are buying 4.5 times more goods from the U.S. than China does.

U.S. says: If you don’t buy, you won’t sell

That leaves one with the impression that the U.S. has nothing to sell that China wants.

Taking a broader view of unbalanced U.S.-China trade ties, the recycling of China’s surpluses is another indication of a need for serious trade diplomacy.

China, for example, made a net trade income of $348.4 billion during the January 2024 and February 2025 interval on U.S. trades but used less that 3% of that income to increase its U.S. Treasury holdings.

And all that was happening during the time when the U.S. had to import $1.1 trillion of foreign capital to cover its deficit on international trade transactions.

There are, therefore, plenty of issues for trade diplomacy here -- such as economic management in U.S. and China, the countries’ respective trade policies and the dollar’s role in the international monetary system. But those are the issues for another occasion. This time, we shall focus on the glaring problem of extremely unbalanced U.S.-China trade relations.

To begin with, it is obvious that this excessive bilateral trade gap must be narrowed. Surprisingly, China behaved like this huge U.S. transfer of wealth and technology would continue forever.

But Washington is now repeating an old message to Japan: If you don’t buy, you won’t sell. As a result, the preferred way of closing the trade gap would be for China to step up imports of U.S. goods and services while moderating its export sales to the U.S.

Such a trade adjustment process would have to address long-standing trade frictions, economic policies and broader issues of national security.

Trade incompatible with collision course

Beijing’s complaints that Washington is narrowing the list of goods and services available for export to China merit a thorough review.

And that would have to go much beyond the U.S. penchant for “transactional diplomacy” that is unacceptable to China’s call of “win-win cooperation.” Inevitably, any compromise here would lead to problems of national security and broader issues of bilateral and multilateral relations.

China wants to be reassured that the U.S. is not out to contain and stunt its economic development by using trade and investments as an instrument of hybrid warfare.

Biden administration issued such assurances on several occasions during G20 and APEC summits. Beijing, however, deemed those gestures unsatisfactory because Washington’s statements were allegedly contradicted by repeatedly crossing China’s red lines and implementations of hostile trade measures.

The status of Taiwan as a province of China is Beijing’s most important red line. And so are China’s contested maritime borders, which raise issues of freedom of navigation and overflight in East and South China Seas, as well as overlapping territorial claims by Japan and the Philippines -- America’s military treaty allies.

So, here is the question: How likely is it that normal U.S.-China trade relations can be restored and proceed under those circumstances?

The answer is that such a relationship is impossible between adversaries positioned on a permanent collision course.

The most probable outcome of this situation is (1) a gradual reduction of U.S.-China trade, (2) the two countries’ increasingly competitive clashes on world markets and (3) fragmentation of global trade and finance along the deepening security fault lines.

And please note, all that did not start with trade tariffs of the present administration.

Events we are now witnessing are a continuation of the process that began during the closing years of the last century when it became clear that a rapidly developing China would firmly remain on its own socio-political trajectory. That ended up in President Obama’s “pivot to Asia” in November 2011. Asia-Pacific was proclaimed America’s “top priority,” with Obama pledging to seek “cooperation with Beijing,” and a “greater communication between our militaries, to promote understanding and avoid miscalculation."

That’s still the order of the day, complicated by unwinding the U.S.-China annual trade of $583 billion.