The US–China trade war of 2018–19: who paid, and who won

On 6 July 2018, the United States put a 25% tariff on about $34 billion of goods from China. China hit back the same day with 25% tariffs on $34 billion of American goods. The biggest trade war in modern times had begun.

How it escalated

• Jul 201825% on $34bn. China matches it, targeting 545 US products including soybeans and cars.
• Aug 201825% on another $16bn. China matches again.
• Sep 201810% on $200bn more. China retaliates on $60bn of US goods.
• May 2019The US raises that 10% to 25% after talks stall.
• Sep 2019Tariffs on more than $125bn of further Chinese goods. By now, the two sides' tariffs cover over $450bn of trade between them.
• Jan 2020The "Phase One" deal is signed. Tariffs stay mostly in place; China promises to buy more.

Who actually paid?

The political promise was that China would pay. Economists checked.

A study by Mary Amiti, Stephen Redding and David Weinstein found the tariffs were "largely passed through" to US prices, meaning American companies and households paid them. They estimated the cost to US real incomes at about $1.4 billion a month by the end of 2018. A second study, by Pablo Fajgelbaum and colleagues, found the pass-through was complete.

Trade didn't stop; it moved. The researchers estimated about $165 billion of trade was rerouted to avoid the tariffs, as buyers switched to suppliers in other countries.

The deal that fell short

Under Phase One, China committed to buy an extra $200 billion of US goods and services over 2020 and 2021, on top of 2017 levels. The Peterson Institute tracked it: by September 2020, China had bought only 53% of what it should have by then, and Chinese imports from the US were still 16% below 2017. Covid made targets harder, but the gap was large in almost every category, from aircraft to soybeans.

So who won?

By most measures, neither side got what it wanted. The US trade deficit with China narrowed for a while, but much of that trade moved to other countries rather than back to America. US farmers lost their biggest soybean customer and needed government support. Chinese exporters lost market share in the US and began moving some production abroad.

Supporters argue the tariffs succeeded in a different way: they forced the world to take China's trade practices seriously, and started the shift of supply chains away from China that India has been trying to capitalise on.

Why it matters now

The 2018 playbook, tariffs announced by presidential action, quick retaliation and purchase-commitment deals, is exactly what India has faced since 2025. Read how US tariffs on India went from 50% to 18% to 10%.