Why It Matters

U.S.-China economic ties have weakened sharply even as the Trump administration has emphasized stability rather than explicitly framing Beijing as a strategic competitor, according to an updated Congressional Research Service report. Trade and investment have declined while tariffs, export controls and other restrictions continue to reshape the bilateral relationship.

From 2017 through 2024, U.S. national security policy explicitly characterized China as a strategic competitor. The Trump administration’s November 2025 National Security Strategy does not use that description, instead emphasizing the need to rebalance trade, counter state-directed subsidies and unfair trade practices, and maintain a mutually advantageous economic relationship with Beijing. In April, U.S. Trade Representative Jamieson Greer said President Donald Trump seeks stability in the relationship and does not want a major confrontation with China.

Trade flows nevertheless contracted sharply. U.S. goods exports to China fell 25.8% in 2025 to $106.3 billion, while imports fell 29.7% to $308.4 billion. The U.S. goods trade deficit with China declined 31.6% to $202.1 billion. Through the first half of this year, U.S. imports from China fell another 23% compared with the same period a year earlier, while exports declined about 1%.

Investment has also declined. China’s foreign direct investment stock in the United States fell to $19 billion in 2025, down 41.4% from the prior year. U.S. FDI stock in China stood at $120.5 billion. U.S. private equity investment in China fell from $140 billion in 2019 to less than $1 billion in 2024.

The Big Picture

The report identifies longstanding structural concerns in China’s economic model, including technology transfer requirements, industrial policies designed to develop domestic competitors to foreign firms, intellectual property theft and government policies that influence pricing and market access. In sectors including aerospace, semiconductors, electric vehicles, pharmaceuticals and medical devices, CRS says Chinese policies can pressure foreign companies to transfer technology, localize production or compete with state-supported Chinese firms.

These concerns have prompted both Congress and successive administrations to impose tariffs, export controls, investment restrictions and other limits on economic ties with China. Tariffs imposed under Section 301 beginning in 2018 remain in effect on hundreds of billions of dollars in Chinese imports and continue to target practices involving technology transfer, intellectual property and innovation.

U.S. and Chinese officials have held negotiations since 2025, but the talks have not resolved many of the underlying U.S. concerns. A tariff truce reached in fall 2025 paused some tariff increases and export-control measures for one year. China has also used non-tariff measures in response to U.S. actions, including export controls on critical production inputs, restrictions on U.S. companies and changes to purchases of American goods.

China’s ability to restrict exports of critical minerals and other inputs has become an important source of leverage. CRS notes that Chinese export controls can affect U.S. supply chains while expanded end-use and end-user requirements can give Beijing greater visibility into how Chinese-origin inputs are used overseas.

The administration has also adjusted some technology restrictions. It delayed implementation of a Commerce Department rule that would extend certain export-control restrictions to foreign affiliates of listed Chinese entities. Administration decisions involving sales of advanced Nvidia chips to China have also generated congressional scrutiny over whether expanded technology exports could undermine national security controls.

The Supreme Court’s February ruling limiting presidential tariff authority under the International Emergency Economic Powers Act did not affect the Section 301 tariffs on China. Those duties were imposed under separate statutory authority and remain in force.

Congress continues considering legislation that would further restrict economic ties with China. Proposals include revoking China’s permanent normal trade relations status, codifying restrictions on Chinese connected-vehicle technologies and imposing additional limits involving biotechnology equipment, digital platforms and investments tied to Beijing. CRS notes that Congress may also consider whether existing trade and investment restrictions adequately address Chinese economic practices without imposing excessive costs on U.S. companies and consumers.

The Bottom Line

U.S.-China economic ties remain substantial but are shrinking in several important areas. Bilateral goods trade totaled $414.7 billion in 2025, yet both exports and imports fell sharply, China’s share of U.S. trade declined and bilateral investment continued to contract.

The Trump administration has emphasized stability and a mutually advantageous relationship while continuing tariffs, export controls and other restrictions designed to address Chinese economic practices. Congress faces decisions over whether to deepen those restrictions, preserve existing measures or pursue policies that maintain greater commercial access for U.S. exporters and investors.

The fall 2025 truce reduced some immediate trade tensions, but disputes over technology, supply chains, industrial policy and market access remain unresolved.

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