Nancy Pelosi’s trip to Taiwan is the latest sign that the United States is taking a harder line against China. If confrontation leads to conflict, the pain of economic sanctions will fall particularly hard on the United States. By any measure, the American economy is heavily reliant on China. In 2021, America imported around $526 billion worth of goods from China, nearly 10 percent of the $5.48 trillion worth of goods consumed by American households that year.

Another way of measuring China’s importance is by comparing American imports from China to domestic manufacturing output. In 2020, manufactured goods imports from China were around 2.1 percent of total American GDP while domestic manufacturing accounted for around 10.8 percent of GDP (though if we account for direct and indirect value added—that is, one industry purchasing inputs from another—that number rises to 24 percent of GDP). What this tells us is that Chinese goods imports are between one tenth and one fifth the size of domestic manufacturing production in the United States.

The largest categories of goods being imported from China are cell phones, computer products, toys, and furniture. But the diversity of the goods being imported in large quantities is striking—everything from central heating boilers, to milking machines for dairy farms, to ball bearings.

China also holds enormous leverage over the United States in the realm of finance. The US has been running large trade deficits with China for years. In exchange for goods, China receives US dollars which are then converted into US government debt. China currently holds around $980 billion of US government debt, 3.5 percent of the total and 26 percent of the total held by foreigners. Chinese foreign reserve holdings are classified, but it is thought around half of its $3.1 trillion are held in US currency.