Economic competition has always been a dimension of great-power rivalry. Today's tariff wars, sanctions, and technology bans echo patterns that preceded history's most devastating conflicts.
When Thucydides wrote that "it was the rise of Athens and the fear that this instilled in Sparta that made war inevitable," the "rise" he described was not exclusively military. Athens' power grew from its commercial empire — its control of trade routes, its silver mines, its merchant fleet, and the tribute extracted from the Delian League. Sparta feared Athens not simply because of its triremes, but because of the economic engine that built them. The Thucydides Trap has always been, at its foundation, about economic power and the military capabilities it enables.
This insight is critical for understanding the current US-China rivalry. The competition between Washington and Beijing is not primarily a military confrontation — at least not yet. It is, first and foremost, an economic struggle for dominance over the industries, technologies, supply chains, and financial systems that will determine which nation leads the 21st century. Trade wars and tariffs are not peripheral to the Thucydides Trap dynamic; they are its leading edge.
The logic is straightforward. China's economic rise is the foundational fact that creates the Thucydides Trap in the first place. In 1980, China's GDP was approximately $305 billion — roughly one-tenth of America's. By 2024, China's GDP exceeded $18 trillion in nominal terms and had already surpassed the United States in purchasing power parity. This economic ascent has funded the most rapid military modernization in modern history, fueled China's growing diplomatic influence, and challenged American primacy in virtually every domain of global affairs. For the United States, slowing or constraining China's economic growth is therefore not merely a trade policy — it is, in strategic terms, an effort to manage the very power transition that the Thucydides Trap describes.
This is what makes trade wars between the US and China fundamentally different from ordinary commercial disputes. When the US imposes tariffs on Chinese goods, it is not simply protecting domestic industries or correcting trade imbalances. It is, at a deeper level, attempting to shape the trajectory of a great-power competition. And when China retaliates, it is not simply defending its exporters — it is asserting that the existing economic order cannot be used as a tool of containment. Both sides understand the strategic dimension of their economic conflict, even when the language of trade policy obscures it.
"Trade wars are not a substitute for shooting wars. They are often a precursor. The economic grievances that tariffs embody have, throughout history, been among the most potent drivers of military conflict between great powers."
The US-China economic relationship has passed through several distinct phases, each reflecting the evolving power dynamics between the two nations. Understanding this history is essential for grasping how the current trade war fits into the broader arc of great-power competition.
The modern economic relationship began in earnest with China's "Reform and Opening Up" under Deng Xiaoping in 1978 and accelerated dramatically with China's accession to the World Trade Organization in 2001. American policymakers supported China's economic integration into the global system on the theory that trade would promote liberalization — that a richer China would inevitably become a more open, democratic, and responsible stakeholder in the international order. This was one of the most consequential strategic bets in modern history, and its outcome remains deeply contested.
For nearly two decades after WTO accession, China experienced explosive export-led growth. American consumers benefited from inexpensive manufactured goods; American corporations profited from access to China's vast labor market and growing consumer base. But the relationship was never balanced. China maintained currency manipulation, subsidized state-owned enterprises, imposed technology transfer requirements on foreign firms, restricted market access in key sectors, and engaged in what US officials characterized as systematic intellectual property theft. These practices created a growing sense in Washington that the economic relationship was not mutually beneficial but exploitative.
The turning point came in 2018, when the Trump administration launched a trade war by imposing tariffs on $250 billion worth of Chinese goods, eventually expanding to cover the majority of Chinese exports to the United States. China retaliated with tariffs on American agricultural products, energy, and manufactured goods. The trade war marked the end of the engagement era and the beginning of a new phase characterized by economic confrontation, strategic decoupling, and the weaponization of economic interdependence.
The Biden administration largely maintained the Trump-era tariffs and added new dimensions to the economic competition, particularly in the technology sphere. The CHIPS and Science Act of 2022, the expansion of the Entity List to restrict Chinese access to advanced semiconductors and semiconductor manufacturing equipment, and new executive orders screening outbound US investment in Chinese technology companies represented a comprehensive effort to constrain China's technological advancement in areas deemed critical to national security.
By 2025, the US-China economic relationship had been fundamentally restructured. Tariffs remained in place across broad categories of goods. Technology export controls had created what some analysts described as a "silicon curtain" dividing the global technology ecosystem. Supply chain diversification, driven by both government policy and corporate risk management, was steadily reducing the depth of economic integration between the two economies. The economic brake on conflict was weakening with each passing year.
The US-China economic war is fought with three principal weapons, each of which represents a distinct escalation in the weaponization of economic relations between great powers.
Tariffs are the most visible tool. The US currently maintains tariffs of 25% or more on hundreds of billions of dollars in Chinese goods, covering everything from industrial machinery and electronics to consumer products. China has imposed retaliatory tariffs on American agricultural products, automobiles, energy, and other goods. These tariffs function as a tax on bilateral trade, raising costs for businesses and consumers on both sides while generating political pressure for further escalation. While tariffs alone are unlikely to trigger military conflict, they create a climate of economic hostility that corrodes diplomatic relationships and reduces the political space for compromise.
Sanctions and entity lists represent a more targeted and strategically consequential form of economic warfare. The US Commerce Department's Entity List now includes hundreds of Chinese companies, research institutions, and government-affiliated organizations that are restricted from purchasing American technology. The most consequential sanctions have targeted China's semiconductor industry, cutting off access to advanced chips, semiconductor manufacturing equipment (particularly extreme ultraviolet lithography machines from ASML), and electronic design automation software. These restrictions are not aimed at commercial competition; they are explicitly designed to degrade China's ability to develop advanced military systems, artificial intelligence capabilities, and quantum computing technologies.
From Beijing's perspective, these technology export controls are indistinguishable from a strategy of containment. Chinese officials have described them as an effort to "strangle" China's technological development and consign it to permanent subordination in the global technology hierarchy. This perception — that the United States is using its technological dominance to prevent China from ever catching up — feeds precisely the kind of fear and resentment that the Thucydides Trap framework identifies as a driver of conflict. When a rising power believes the ruling power is trying to arrest its development, the incentive to break free of those constraints — by any means necessary — increases dramatically.
Financial warfare represents the most powerful but least-used instrument. The United States' control of the global dollar-based financial system gives it extraordinary coercive leverage. Through the SWIFT messaging system and the correspondent banking network, Washington can effectively cut any entity, institution, or country off from the global financial system. The threat of "secondary sanctions" — which penalize third-party companies and countries that do business with sanctioned targets — extends American financial power far beyond its borders. China has responded by developing alternative financial infrastructure, including the Cross-Border Interbank Payment System (CIPS) and the digital yuan, to reduce its vulnerability to American financial coercion. This "de-dollarization" effort, while still in its early stages, represents a long-term strategic challenge to American financial hegemony.
"The weapons of economic warfare — tariffs, sanctions, export controls, financial exclusion — are not substitutes for military force. They are, in the context of great-power competition, precursors to it. Every historical Thucydides Trap case that ended in war passed through a phase of economic confrontation first."
The most instructive historical parallel for the current US-China economic relationship is the Anglo-German rivalry of the late 19th and early 20th centuries — a case that sits squarely within the sixteen cases of the Thucydides Trap and ended in the most devastating war the world had ever seen.
In 1914, Britain and Germany were each other's largest trading partners. German banks held British government debt; British banks financed German industry. The two economies were so deeply intertwined that Norman Angell, in his influential 1910 book The Great Illusion, argued that war between industrial powers had become economically irrational and therefore effectively impossible. The economic cost of a major European war, Angell calculated, would be so catastrophic that no rational leader would choose it. The book was a bestseller and its thesis was widely accepted in the salons and parliaments of Europe.
Angell was right about the economics. The war did prove catastrophically costly — far more so than anyone anticipated. But he was wrong about the conclusion. War happened anyway. It happened because the structural pressures of a rising Germany challenging Britain's global primacy created a security dynamic that economic rationality could not override. It happened because alliance commitments turned a regional crisis into a global conflagration. It happened because nationalist sentiment, military planning timetables, and the psychology of honor and credibility overwhelmed the cold logic of economic self-interest.
The parallels to the US-China relationship are striking. Like Britain and Germany before 1914, the US and China are deeply economically interdependent. Like Angell's contemporaries, many modern analysts argue that the depth of economic ties makes war "unthinkable." And like the pre-1914 period, the current trajectory features a steady erosion of those economic ties through tariffs, sanctions, and supply-chain restructuring — analogous to the protectionist measures and naval arms race that characterized the years before 1914.
The critical difference is that we have the benefit of hindsight. We know that economic interdependence did not prevent World War I. We know that the steady erosion of economic ties in the years before 1914 removed a potential brake on conflict. We know that structural pressures can overwhelm economic rationality. The question is whether this knowledge is sufficient to change the outcome. History does not repeat, but it does rhyme — and the rhyme between pre-1914 Europe and the contemporary US-China relationship is uncomfortably precise.
The question of whether trade wars lead to shooting wars has been debated by historians and political scientists for generations. The evidence is neither simple nor reassuring.
On one hand, economic conflicts between great powers have frequently preceded military conflicts. The Napoleonic Wars were driven in part by economic rivalry between Britain and France, particularly the competing continental and maritime trade systems. The tensions leading to the War of 1812 between the US and Britain were rooted in trade restrictions and economic coercion. The Pacific War between the United States and Japan was triggered, in its immediate cause, by the American oil embargo of 1941, which Japanese leaders considered an existential threat to their empire. And the Peloponnesian War itself — the original Thucydides Trap case — was partly provoked by economic sanctions that Athens imposed on Megara, a Spartan ally.
The mechanism by which economic warfare escalates to military conflict operates through several channels. First, economic sanctions and trade restrictions create real economic pain, which generates domestic political pressure for a forceful response. Leaders who appear to be "losing" an economic war face accusations of weakness and demands for escalation. Second, when a state perceives that economic warfare is designed to strangle its development or undermine its regime, the economic measures are experienced not as commercial disputes but as existential threats — which can justify military responses that would otherwise seem disproportionate. Third, the tools of economic warfare can cross the threshold into acts of war: a blockade of shipping lanes, the seizure of financial assets, or the disruption of critical supply chains can inflict damage comparable to a military attack, and the targeted state may respond in kind.
The US-China case exhibits all three of these escalatory dynamics. The trade war has created real economic pain on both sides, generating domestic political pressure for tougher measures. China's leadership perceives technology export controls as an existential containment strategy. And the escalation of economic measures — from tariffs to sanctions to investment restrictions to potential seizure of sovereign assets — is following a trajectory that mirrors historical patterns preceding military conflict.
This does not mean that the US-China trade war will inevitably produce a military conflict. But it does mean that treating economic competition as a separate, less dangerous arena from military competition is a dangerous illusion. In the context of a Thucydides Trap dynamic, economic warfare and military confrontation are points on a single escalation spectrum, not independent phenomena. The line between economic coercion and acts of war is far thinner than most policymakers acknowledge, and crossing it can happen quickly, through miscalculation rather than deliberate choice.
"History's lesson is clear: economic warfare does not prevent military conflict. It prepares the ground for it. Every major power transition that ended in war passed through a phase of intensifying economic competition first."
If economic warfare can drive great powers toward military conflict, can economic interdependence pull them back? The answer is nuanced. Economic interdependence is neither an automatic guarantee of peace nor irrelevant to the calculus of war. It is a variable whose effect depends on how it is managed, how deep it runs, and whether political leaders choose to preserve or dismantle it.
The theoretical case for economic interdependence as a brake on war is powerful. When two economies are deeply integrated, the costs of military conflict extend far beyond the battlefield. A US-China war would disrupt supply chains that span the planet, crash global financial markets, trigger energy and food crises in dozens of countries, and inflict trillions of dollars in economic damage on both belligerents. These costs create powerful domestic constituencies — businesses, financial institutions, consumers, workers in export industries — that have strong incentives to resist policies that risk war. In democratic and authoritarian systems alike, these constituencies can exert significant pressure on leaders to find alternatives to military confrontation.
The empirical evidence offers qualified support. The four Thucydides Trap cases that avoided war share a common feature: the rising and ruling powers maintained significant economic relationships that gave both sides material incentives to manage their rivalry peacefully. The US-UK power transition of the late 19th and early 20th centuries — the most successful peaceful transition in the historical record — was accompanied by deepening economic integration, shared financial markets, and growing investment flows. Economic ties did not single-handedly prevent war, but they created a structural foundation for the diplomatic accommodations that did.
The danger in the current US-China relationship is that economic interdependence is being systematically dismantled at precisely the moment it is most needed. The trend toward decoupling — driven by tariffs, export controls, investment screening, supply-chain diversification, and mutual suspicion — is progressively reducing the economic costs of conflict. Each year that decoupling continues, the economic brake on war weakens. If the US and China succeed in fully separating their economies, they will have removed one of the most powerful structural barriers to military conflict while leaving all of the structural pressures driving confrontation fully intact.
This does not mean that decoupling should be reversed wholesale. There are legitimate security reasons to reduce dependence on a strategic rival for critical technologies and essential supplies. The goal should be "de-risking" rather than decoupling — reducing vulnerability in specific strategic sectors while preserving the broad economic integration that raises the cost of war and sustains constituencies for peace. The distinction matters enormously. De-risking is a targeted security measure; decoupling is a strategic choice that moves the world closer to the conditions under which great-power wars have historically occurred.
Ultimately, the relationship between economic interdependence and war prevention is not automatic. It requires active management, institutional support, and political will. Economic ties must be perceived as mutually beneficial — not exploitative or coercive — to function as a constraint on conflict. When economic interdependence is weaponized — when trade relationships are used as tools of coercion rather than mutual benefit — they cease to be stabilizing and become another source of friction. The challenge for US and Chinese policymakers is to maintain the kind of economic engagement that makes war costly while addressing the legitimate grievances that fuel economic nationalism on both sides.
"Economic interdependence is not a peace guarantee. It is a peace enabler — one that works only when both sides have a stake in its preservation. Dismantle it, and you remove the floor beneath the tightrope."
Trade wars, tariffs, and economic competition are not separate from the Thucydides Trap. They are central to it. Every historical case of a rising power challenging a ruling one has featured economic competition as a primary arena of rivalry. In some cases, economic interdependence helped prevent that rivalry from becoming military conflict. In others, economic warfare intensified the structural pressures driving toward war. The US-China trade war is following the latter trajectory, and reversing course will require deliberate policy choices that prioritize long-term strategic stability over short-term political gains.
The lessons of history are available to us. Whether we choose to learn from them — or repeat them — remains the defining question of this era of great-power competition.