As Chinese President Xi Jinping meets US President Donald Trump in New York, the economic relationship between the world’s two largest economies is increasingly a contest over which has more leverage – and where each remains vulnerable.
Years of tariffs and efforts to reduce dependence have reshaped US-China trade. Washington is seeking greater leverage over Beijing’s access to energy, while China retains a powerful hand in rare earths and critical minerals. Meanwhile, the US trade deficit with China has narrowed sharply, with some of the imbalance shifting towards other trading partners.
From oil and rare earths to trade and military spending, these five charts show where the dependencies remain and how the balance has changed.
What do they trade in?
Despite a tit-for-tat trade war during Mr Trump’s first term in office from 2017 to 2021, the US and China maintain a strong trade relationship. According to information from the Baci data set, both economies ranked second in each other’s total imports in 2024, though not at the same scale. China accounted for 14.1 per cent of US imports, while the US accounted for 7.18 per cent of China’s. Most US purchases from China are on machinery and electronics, textiles and plastics – in contrast, China relies on its partner for vegetable and chemical products, as well as machinery.
The deficit question
The US trade deficit with China has more than halved from its peak, with the imbalance increasingly shifting towards other Asian economies and Mexico. The deficit with China reached a record $418 billion in 2018 but has since trended lower, falling 52 per cent to $203 billion in 2025. The US now runs larger deficits with other major trading partners, including Mexico, Taiwan and Vietnam.
China’s oil trade
China’s reliance on imported oil has become more exposed as the Iran war disrupts supplies from the Middle East. Before the Iran war, Beijing imported an average of 13.2 million barrels per day of crude, Kpler data shows. However, since April, when Middle East supply, including Iran’s, became severely restricted, China’s oil imports have fallen 38 per cent to about 8.2 million bpd.
Beijing weathered the early months of the Iran war thanks to strategic reserves of around one billion barrels, supplemented by discounted Iranian and Russian oil. Washington has sought to tighten pressure on China’s freewheeling purchases of sanctioned oil. While the Trump administration has shied away from imposing secondary sanctions on Beijing, the Lindsay O Graham Sanctioning Russia Act passed last week will give Mr Trump authority to impose 100 per cent tariffs on major buyers that “knowingly” purchase oil or gas from Russia. Beijing does not recognise unilateral sanctions and has criticised the new law, widely seen as giving Washington more leverage in talks.
Rare earths: China’s new leverage
But China has economic leverage of its own. Beijing dominates the global rare-earth industry, with the world’s largest reserves, and holds an even stronger position in processing and magnet manufacturing. These materials are critical to industries ranging from electric vehicles and renewable energy to electronics and defence, giving China considerable influence over supply chains the US is seeking to diversify.
Biggest militaries in the world
The scale of US-China rivalry is also reflected in military spending. According to the Stockholm International Peace Research Institute's (Sipri) latest report, in 2025 the world’s military expenditure was $2.87 trillion, with the US and China accounting for 44 per cent of that sum. Both countries’ military goals include modernising their forces. Although the US recorded a decrease, it still ranks as the top spender and is still billions of dollars ahead of China. However, the Asian country’s military expenditure has increased each year since 2000. The trend of increasing military expenditure is expected to continue, driven by geopolitical tension and states’ long-term military spending goals.
