The US and China once competed fiercely but cooperated on enough fronts - climate, trade, technology flows - to keep the rivalry from spiraling. That balance is gone. Export controls, tariffs, and rare-earth restrictions have turned economic policy into a weapon, and neither side shows signs of pulling back.
Eswar Prasad, a Cornell trade policy professor and Brookings Senior Fellow, has traced the escalation in a Foreign Affairs essay, "Hvylya" reports. "Without the countervailing force of mutually beneficial economic and financial linkages to prevent the competition from spiraling out of control," Prasad wrote, the relationship "has become injurious not just to Beijing and Washington but also to the rest of the world."
The Biden administration tried to limit China's access to advanced computer chips and technology. The Trump administration intensified that effort. Then, after Trump imposed sweeping tariffs in April 2025, Beijing hit back by restricting exports of rare-earth elements - minerals that US manufacturers of advanced technology cannot do without.
Prasad called it a pattern with no natural stopping point. Each move provokes a countermove, and "with every move and countermove, the prospect of a mutually beneficial economic relationship recedes further into the background." The two superpowers are now "explicitly engaged in competition for economic and geopolitical supremacy," he wrote, and positive-sum economic forces are weaker than at any point since the 1990s.
The collateral damage extends far beyond the two countries. Without shared economic stakes to restrain the rivalry, one country's rising influence necessarily comes at the other's expense. The rest of the world is left to absorb the fallout from a fracturing relationship that once anchored the global economic order.
"Hvylya" earlier examined why a Trump-Xi summit could reshape geopolitics more than the Iran war.