Despite escalating tensions following House Speaker Nancy Pelosi's visit to Taiwan and the downed Chinese surveillance balloon, trade between the US and China has skyrocketed with a total of $690.6 billion in imports and exports in 2022. 

However, diplomatic relations have declined for the past week since the balloon incident, which caused a row, with the US claiming it was a 'spy' balloon and China stating it was for research purposes.

Official figures demonstrate that American imports from China jumped to $536.8 billion last year since Americans splurged on Chinese goods such as toys and phones, while US exports to China increased to $153.8 billion.

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Deborah Elms, the founder of the Asian Trade Centre, relayed to the BBC: "I think it's an important indication of the difficulties of actually decoupling," as she added: "Even if governments, firms and consumers wanted to separate, the economics make it difficult to deliver products in a decoupled world at a price that firms and consumers are willing to pay," 

No need to panic

The trade wars began in 2018 when the Trump administration imposed tariffs on a massive $300 billion worth of Chinese products after China retaliated by setting import levies on approximately $100 billion of US goods.

Talks have been proceeding back and forth, and US Secretary of State Antony Blinken was due to visit China from February 5 to 6 in an attempt to mark the dissolution of tensions in a way between both countries.  

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He was due to discuss a broad selection of issues ranging from Taiwan, Covid-19, and security. However, his trip go postponed after the US sot-down the Chinese balloon, which sent the US into panic mode. 

The balloon was located over the North American Aerospace Defense Command on January 28 over Alaska before it got detected over missile sites in Montana. Days later, after tracking, the US decided to shoot it down over the South Carolina coast. 

The Chinese Foreign Ministry stated on Saturday that "China... never violated the territory and airspace of any sovereign country," adding that "some politicians and media in the United States used the (balloon) incident as a pretext to attack and smear China."

In light of the balloon shoot-down and the Chinese response of possible retaliation, Kirby assured that no reason exists to escalate tensions between the US and China over the balloon and that Secretary of State Antony Blinken's trip to China "was postponed, it was not canceled.” 

Trade wars to tech wars 

During the State of the Union speech on Tuesday, US President Joe Biden did not discuss the recent balloon matter but emphasized his commitment to protect American interests.

"I am committed to work with China where it can advance American interests and benefit the world. But make no mistake: as we made clear last week, if China threatens our sovereignty, we will act to protect our country. And we did," he said.

But trade is not the only battlefield between them. 

China has filed a case with the World Trade Organization, pushing back against US export sanctions on microchips, further fueling the tech war between Washington and Beijing. In December, China's ministry of commerce said that its WTO complaint was a legal and necessary measure to defend its "legitimate rights and interests."

For context, in October, the US Department of Commerce introduced sanctions on China, putting hurdles in Beijing's way to buy or develop advanced semiconductors.