Trade disputes are nothing new. Generally, economic issues are the root cause of such disputes between allies, such as the trade war between the United States and Japan in the late 1980s. Nevertheless, the situation can be much more complicated if such conflict happens between strategic competitors, such as the current one between the United States and China.

Sino-U.S. relations have witnessed dramatic changes in the past five years. First, China has promoted its national industrial policy, particularly the Made in China 2025 plan.

In addition, China continues to build islands in the South China Sea for civilian purposes, and to boost safety for its fishing and maritime trade. It also vigorously promotes the Belt and Road Initiative, an obvious move challenging the global dominance by the United States. As a result, the United States has concluded that all its efforts of engaging with China has turned out to be in vain.

The United States has its clear strategy toward China although any of its new policies toward China is not yet available. Both a National Security Strategy Report published in December 2017 and a National Defense Strategy Report published in January 2018 showed that the United States regards China as a revisionist power and has determined to undermine China's efforts of "replacing the United States’ leadership in the Indo-Pacific region."

It is the strategic goal that determines recent economic moves by the United States, including President Trump's hope that China will be forced to reduce its trade surplus with the United States by $200 billion USD within two years. In addition, U.S. Congress will pass a bill designed to restrict Chinese investment in the United States. Meanwhile, plans are in action to restrict visas issued to Chinese students applying to study cutting-edge technology at U.S. universities.

Given the fact that current trade disputes are not limited to economic issues, it will be more difficult to manage potential disputes. China may be fortunate enough to avoid a devastating trade war in the short term by making substantial concessions. However, in the long run, the U.S.-China relationship is almost destined to escalate strategic conflicts, and even the breakout of a cold war.

Under such a situation, containing China will inevitably become the core principle of U.S. foreign policy, and both China and the United States will regard their economic interdependence as an unacceptable strategic burden. For the United States, if China is granted access to its market and advanced technology, then China will find opportunities to defeat the United States economically and geopolitically. The same is true for China. Although economic decoupling from the United States and technological independence have to be made at rather high cost, they will be regarded as the key to stabilizing and achieving national strategic goals.

Once their economic relationship is decoupled, there will be much fewer factors that can restrain the conflict between the United States and China, and keep their geopolitical competition from escalating. It is true that a war is unlikely to break out between these two nuclear powers; however, they will certainly launch an arms race that may trigger global risks. They may even expand their strategic conflicts to the most unstable regions in the world in the form of proxy wars.

Fortunately, neither the United States nor China wants to fall into a dangerous cold war that is likely to last for decades. Therefore, their conflicts are more likely to happen in a different form – that is, a strategic conflict that’s under control.

If so, their economic relationships will be decoupled gradually, but not completely. Although their relationship is hostile, both parties have economic incentives to keep their relationship under control. Similarly, although both parties will actively seek military superiority and support from their allies, they will neither participate in an agent war nor provide direct military assistance to the armies or organizations fighting against the other party, such as the Taliban in Afghanistan or Uighur militants in Xinjiang, China.

While such conflicts are risky, they are controllable, as long as both countries are led by well-organized, well-informed and strategically minded leaders. But such leadership is not available in the United States. President Trump’s capricious policy toward China shows that he has neither a strategic vision nor diplomatic training necessary for managing strategic conflict policies, let alone to create a set of doctrine for a Cold War like President Harry S. Truman did in 1947.

This indicates that at least in the short term, transactional conflicts are mostly likely happen in Sino-U.S. relations, characterized by frequent economic and diplomatic disputes, and occasional cooperation. In this case, tense bilateral relations are likely to deteriorate continuously because individual disputes are resolved in isolation under specific exchange conditions; thus lack strategic coherence.

Regardless of the current trade disputes’ outcome, long-term conflicts seem inevitable for the two countries. If so, the United States and China -- even Asia and the whole world – have to pay high cost for such conflicts, no matter in what form.