From Trade War to Real War? Understanding the Risks of U.S.-China Conflict…

Finley is a Slugger reader from Belfast

The relationship between the United States and China is now more strained than at any point in recent history. What began as a complex but mutually beneficial economic partnership has steadily unravelled into a high-stakes geopolitical rivalry. At the centre of this shift is the intensifying trade war—an economic conflict that has become a proxy for broader strategic tensions.

In a dramatic escalation, President Donald Trump has raised tariffs on Chinese goods to an eye-popping 145%. China has responded with 125% tariffs on U.S. exports and declares that it will “fight to the end”. At the same time, Trump has paused high general tariffs on most other countries, possibly a strategic move aimed at isolating China while shoring up economic alliances elsewhere.

These developments carry obvious economic consequences. But they also raise a far more troubling question: Could this economic conflict spill into military confrontation? To consider that danger, we can to turn to the warnings of international relations theory—particularly with regard to how rising and established powers tend to behave when their interests collide.

The U.S.-China Trade War

The U.S.-China trade war emerged from a long-simmering set of grievances, economic shifts, and strategic concerns. For decades, the United States supported China’s integration into the global economy, hoping that economic liberalization would lead to an increased democratisation and to cooperative relations. When China joined the World Trade Organization (WTO) in 2001, following 15 years of negotiations, it was seen by many in Washington as a step toward a more open and rule-abiding partner.

But by the late 2000s, frustration was building. American policymakers accused China of unfair trade practices—manipulating its currency to make exports cheaper, heavily subsidizing state-owned enterprises, stealing intellectual property, and restricting foreign access to its domestic markets. Under President Obama, these concerns were raised through multilateral institutions and diplomatic channels, and the proposed Trans-Pacific Partnership (TPP) was partly intended to contain China’s economic influence by setting higher trade standards in the Asia-Pacific region.

The confrontation escalated sharply under President Donald Trump. In 2018, he began imposing tariffs on hundreds of billions of dollars’ worth of Chinese goods, arguing that China had taken advantage of the U.S. for too long. His administration applied tariffs using Section 301 of the Trade Act of 1974, which allows retaliation against unfair foreign trade practices. China responded with its own tariffs on U.S. products, targeting politically sensitive sectors such as agriculture, aircraft, and automobiles. What followed was a tit-for-tat spiral: new rounds of tariffs, stalled negotiations, and an increasingly hostile tone on both sides.

Although President Joe Biden’s approach was less confrontational in style, he left most of Trump’s tariffs in place. His administration focused more on building alliances and addressing China through multilateral forums, while also expanding restrictions on Chinese access to cutting-edge U.S. technologies, especially in areas like semiconductors and artificial intelligence. The rhetoric softened slightly, but the strategic goals remained largely the same: countering China’s economic and technological rise.

With Trump back in the White House, the trade war has now entered a new and more aggressive phase. His administration raised tariffs on Chinese goods to an unprecedented 145%, claiming it was necessary to “bring back American manufacturing and end China’s economic assault.” In retaliation, Beijing imposed 125% tariffs on U.S. exports, warning of a “new Cold War.” Interestingly, Trump also announced a pause on general tariffs for most other countries, signalling a strategic pivot: isolating China economically while courting other trade partners.

The consequences are far-reaching. Global supply chains are once again being disrupted. Inflationary pressures are rising. American farmers, manufacturers, and consumers are caught in the crossfire. Chinese and American exporters have to adapt to the shrinking access to each other’s markets. And around the world, countries are being forced to consider their own response to the escalation.

But perhaps most worryingly, the trade war is not just about trade. It is deeply intertwined with national security concerns and military posturing. Economic decoupling is accelerating, and with it, the foundation of mutual dependence that once helped stabilize U.S.-China relations is beginning to crumble.

From Economic Tensions to Strategic Rivalry

At first glance, a trade war may seem like a contained economic dispute—an aggressive form of bargaining between nations. But in the case of the United States and China, it is increasingly clear that the trade war is not just about tariffs or trade balances. It is a symptom of something deeper: a widening strategic rivalry between the world’s two most powerful states.

For Washington, China’s rapid economic and technological rise has triggered a profound shift in thinking. No longer viewed simply as a trading partner, China is now seen by many in the U.S. policy establishment as a long-term strategic threat. The fear is not just that China will outcompete American firms, but that it will reshape global norms, institutions, and power structures in ways that weaken U.S. influence. The Biden administration’s emphasis on “strategic competition” with China captured this view in policy terms, but it has become even more pronounced under Trump’s return to power.

In Beijing, the picture looks very different. Chinese leaders view U.S. tariffs, export controls, and military presence in Asia as part of a broader effort to contain China’s rise. From this perspective, the trade war is just one front in a larger campaign to maintain American primacy. China’s leadership has responded not only with counter-tariffs, but with moves to strengthen its own industrial base, deepen ties with countries outside the Western bloc, and accelerate military modernization.

This escalation is no longer confined to economics. The trade war has spilled into technology, where U.S. restrictions on Chinese access to semiconductors, AI, and advanced manufacturing have fuelled a tech decoupling. It has affected finance, as both countries move to limit financial dependencies and parallel systems are emerging. And it has influenced military posture, with both sides increasing defence spending, hardening positions in the South China Sea and Taiwan Strait, and testing each other’s resolve.

Strategic mistrust is now the defining feature of the U.S.-China relationship. Economic interdependence, once seen as a stabilizing force, is being rapidly unravelled. And as history shows, when two powers begin to see each other less as economic partners and more as geopolitical adversaries, the risk of conflict rises—especially when both believe they are acting defensively.

Offensive Realism and the Logic of Power

International relations theorist John Mearsheimer argues that great powers are hardwired to compete. His theory of offensive realism holds that in an anarchic international system—where no central authority can enforce rules—states must rely on their own capabilities to survive. The result is a relentless drive for power and security, where even defensive moves by one state are viewed as threats by another.

According to Mearsheimer, the rise of China was always likely to provoke a response from the United States. As China grows wealthier and more powerful, it naturally seeks to expand its influence in Asia and beyond. But the U.S., as the incumbent hegemon, is unwilling to tolerate a peer competitor, especially in a region as vital as the Indo-Pacific. This sets the stage for a classic power struggle.

Offensive realism is sceptical of the duracy of cooperation between great powers. Even if both sides prefer peace, the absence of trust and the fear of future vulnerability push them toward confrontation. What looks like economic decoupling or military posturing is, from this view, part of a larger pattern: two great powers preparing for the worst.

In this light, the trade war is more than an economic dispute—it is a manifestation of deeper structural forces. U.S. tariffs and tech restrictions are not just about fairness or reciprocity; they are attempts to slow China’s rise and preserve American dominance. Likewise, China’s push for self-reliance and regional leadership reflects a desire to break out of a U.S.-led order that it sees as increasingly hostile.

Mearsheimer has warned explicitly that the United States will do everything it can to remain the dominant power in Asia—and that conflict with China is not just possible, but probable. From his perspective, the trade war is a symptom, not the disease. The real issue is power: who has it, who wants it, and who’s willing to fight for it.

Liberal Internationalism and the Hope for Peace

While offensive realism paints a stark picture of great power conflict, liberal internationalism offers a more optimistic if cautious view. Rooted in the ideas of persons like Woodrow Wilson, this tradition holds that democracy, economic interdependence, and international institutions can reduce the risk of war—even between rivals.

From a liberal internationalist perspective, the U.S. and China are not destined to fight. Instead, peace can be preserved by strengthening global norms, encouraging cooperation, and binding both countries into a web of mutual benefit. Trade, in particular, is seen as a powerful force for peace: when nations are economically intertwined, the costs of conflict become too high to bear.

This logic helped shape U.S. policy toward China for decades. American leaders supported China’s entry into the World Trade Organization in 2001, believing that integration into the global economy would promote both prosperity and peace. The idea was that economic engagement would lead to political opening, a more cooperative foreign policy, and a stake in the rules-based international order.

Even today, some argue that decoupling—rather than reducing risk—might make war more likely. As economic ties fray and trust erodes, incentives for restraint weaken. Liberal internationalists warn that cutting off trade, technology, and financial links with China may eliminate crucial channels of communication and reduce the influence of moderating forces within both countries.

International institutions, too, have a role to play. Forums like the G20, the WTO, and regional trade groups offer platforms for dialogue and dispute resolution. While they cannot eliminate conflict, they can reduce misunderstandings, create shared expectations, and impose reputational costs on aggressive behaviour.

Liberal internationalism does not deny the dangers of great power competition. But it insists that the path to war is not inevitable. With the right choices—greater cooperation, more diplomacy, and stronger institutions—the U.S. and China might yet avoid the trap of confrontation.

The Thucydides Trap – History’s Warning

The idea of the Thucydides Trap comes from the ancient Greek historian Thucydides, who chronicled the Peloponnesian War between Athens and Sparta. “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable,” he wrote. That stark warning has echoed through history—and now, many see it as a troubling parallel for today’s world.

In recent years, Harvard scholar Graham Allison has popularized the term “Thucydides Trap” to describe the structural stress that occurs when a rising power threatens to displace a ruling one. According to his research, in 12 out of 16 historical cases where this dynamic occurred, the result was war. The comparison is not a prophecy, but a caution: when an up-and-coming power challenges an established hegemon, the risk of miscalculation skyrockets.

Applied to the U.S.-China relationship, the analogy is striking. China is the rising Athens—more assertive, ambitious, and confident in its growing capabilities. The United States plays the role of Sparta—powerful but increasingly anxious about being eclipsed. As mutual suspicion deepens, even small incidents can spiral into larger confrontations, especially in flashpoints like Taiwan, the South China Sea, or the East China Sea.

Crucially, the Thucydides Trap does not assume that either side wants war. In fact, most of the time, conflict breaks out not because leaders choose it—but because they stumble into it. Fear, pride, and worst-case thinking take over. One side overreacts to the other’s defensive move. Crisis diplomacy fails. And a conflict no one truly intended becomes unavoidable.

This is what makes the current trajectory so alarming. The economic decoupling, growing nationalism, and military build-up are not just background noise—they are warning signs. They suggest that both countries are preparing for the possibility of conflict, even if they continue to insist they want peace.

History cannot predict the future, but it can illuminate the dangers of the present. The U.S. and China are not fated to repeat the Peloponnesian War. But if the lessons of the past are ignored, they may walk the same path—step by step, escalation by escalation—until the point of no return.

The Military Buildup and Rising Alarm

Amid rising economic tensions, both the U.S. and China have significantly increased their military capabilities. The Indo-Pacific region is now home to one of the most intense arms build-ups in the world. The United States has expanded its naval presence, modernized its Pacific command infrastructure, and deepened security ties with allies such as Japan, Australia, and the Philippines. Military budgets have soared and both sides say that a new generation of weapons systems—including AI-enabled platforms and hypersonic missiles—are being rapidly deployed.

China, for its part, has doubled down on its military modernization. Its navy is now the largest in the world by number of ships, and it continues to grow in sophistication. Beijing has invested heavily in anti-access/area denial (A2/AD) systems designed to keep U.S. forces at bay in the event of conflict. It has built artificial islands in the South China Sea, outfitted them with military facilities, and staged increasingly complex military exercises in and around Taiwan. Its missile arsenal includes medium- and long-range ballistic missiles capable of targeting U.S. bases across the Pacific.

This military build-up is accompanied by increasingly vocal expressions of concern on both sides. U.S. defence officials have warned that China may seek to take Taiwan by force within the next few years. In a stark statement to Congress in late 2024, the U.S. Indo-Pacific Command chief said that “deterrence is unravelling,” and urged urgent investment in forward deployment capabilities. Around the same time, China’s defence ministry described U.S. naval patrols in the Taiwan Strait and South China Sea as “provocative,” vowing that it would “no longer tolerate infringements on its core interests.”

The tension reached a new peak this year. China conducted its largest-ever live-fire military exercises near Taiwan, involving hundreds of aircraft, amphibious assault drills, and multiple naval formations. The message was unmistakable: Beijing is prepared to use force to achieve reunification if necessary. The United States responded with a show of strength of its own, sending two aircraft carrier strike groups through the Taiwan Strait and staging joint exercises with Japan and the Philippines. The risk of a direct clash has never been higher.

Both sides are also investing heavily in new domains of warfare—cyber, space, and artificial intelligence. In 2024, the U.S. accused Chinese hackers of penetrating sensitive military networks, while China charged that American satellites had interfered with its surveillance systems. These arenas lack the well-established rules of engagement that govern conventional warfare, making escalation more likely and miscalculation more dangerous.

This militarization adds yet another layer of instability to an already fraught relationship. The risk is not only of intentional conflict, but of accidental war—triggered by a misinterpreted signal, a close encounter at sea, or a misfired missile. In an atmosphere of distrust and zero-sum thinking, even small incidents can be seen as harbingers of larger intentions, pushing both sides to respond with force rather than diplomacy.

The intensifying military dimension of the U.S.-China rivalry does not exist in a vacuum. It is both a product and a driver of broader tensions, reinforcing the perception on both sides that the other is preparing for war. In such an environment, the trade war cannot be viewed as a separate economic issue—it is one piece of a much larger, and increasingly dangerous, strategic puzzle.

The Window for Peace – Not Yet Shut

The trade war between the United States and China is not just about tariffs, deficits, or even economic dominance. It is part of a deeper and more dangerous rivalry—one that spans technology, security, ideology, and global influence. As the current escalation shows, the confrontation is accelerating, and the tools of economic pressure are increasingly indistinguishable from the instruments of strategic coercion.

Offensive realism helps us understand why. In a world where power decides security, rising states like China and dominant powers like the U.S. are driven into confrontation by the very structure of the international system. From this view, the conflict was not so much a matter of if, but likely when.

Yet liberal internationalism offers an important counterpoint. For decades, economic interdependence and global institutions helped stabilize the relationship, even as tensions grew. Cutting those ties too quickly or too completely may strip away the very mechanisms that have kept the peace thus far.

The Thucydides Trap reminds us that history is littered with examples of powers that stumbled into war—not because they wanted to, but because they believed they had no choice. That pattern is not inevitable, but it is deeply ingrained. And in today’s climate of mistrust, fear, and nationalist rhetoric, the margin for error is shrinking.

Avoiding conflict will require more than strategy. It will require restraint. It will mean resisting the reflex to escalate, to decouple completely, or to treat each move by the other as an existential threat. The window for diplomacy remains open.

Whether the trade war marks the start of a new cold war or the prelude to something worse depends on what comes next. The risks are real. The history is instructive. And the choices made now will shape not just bilateral relations, but the future of global peace.