US-China trade retreats, but much more so for sensitive sectors

Chinese President Xi Jinping’s state visit to Washington put renewed focus on high-level engagement between the world’s two largest economies. His previous US meeting with President Trump was in 2017; the nations’ bilateral #trade has changed markedly since then.

Trade between the US and #China has been shrinking – and Trump’s Section 301 tariffs, which took effect in 2018, started a divergence between sensitive sectors (including AI) and the rest. Mexico, Vietnam, Thailand and South Korea have been significant beneficiaries. Still, some imports have been difficult to dislodge due to China’s technological strengths.

We created a basket of 329 goods ranging from critical minerals to semiconductors, solar technology and electric vehicles. As of July 2026, trade in these sensitive sectors had fallen by more than 62% since 2018, compared with about 43% for all other goods.

China’s share of US imports has fallen especially sharply in AI compute and networking, as well as in semiconductors and semiconductor equipment. Yet, as it did in 2018, China still supplies roughly a quarter of US imports in our combined category of batteries, EVs, magnets and solar.