US and China Face Escalating Economic Cold War

The United States and the People’s Republic of China are engaged in an intensifying economic rivalry across trade, technology, and global supply chains ^[1].

This competition matters because it reshapes the global trade order and threatens the stability of critical industries, particularly the semiconductor and artificial intelligence sectors. As both nations seek economic dominance, the friction creates volatility in international markets and strategic trade corridors in Europe and the Gulf [2, 4].

The rivalry has intensified since 2020 ^[5]. Analysts said that the friction accelerated following the recovery from the COVID-19 pandemic, as well as the onset of the Russia-Ukraine war and the conflict in Iran [5, 1].

Central to this struggle is the race for artificial intelligence and semiconductor supremacy ^[3]. Taiwan remains a critical focal point due to its dominant role in chip manufacturing. Some models suggest that a full-scale conflict over Taiwan could result in an estimated economic cost of $10 trillion ^[6].

China is also leveraging regional conflicts to challenge U.S. influence. Reports said that Beijing has used the war in Iran to challenge the position of the U.S. administration ^[7]. By securing manufacturing hubs and strategic corridors, China aims to protect its supply-chain security, and increase its leverage in the global economy [1, 4].

The U.S. continues to implement strategies to protect its own technological edge and ensure that critical supply chains remain resilient against geopolitical shocks [1, 3]. The ongoing struggle is often described as a cold war, where economic tools—rather than traditional military force—serve as the primary weapons for dominance [1, 2].