The US-China trade war has gained intensity in the past years, and even more so in 2025. The word “trade war” may stir up images of container ships, factories, and raw materials like metals, cement, or computer chips. And yes, tariffs and taxes are primarily tools to regulate tangible goods.
But what about services offered by US-companies in China or vice versa? If my business is in the education, hospitality, real estate, IT, or consulting sector – what do US-China service industry tensions mean for me?
So far, the service sector has dodged the tariff bullet, but is that going to last? In this article, we will examine this question, drawing from more than 10 years of inbound and outbound China marketing experience!
Table of Contents
- US-China Trade Relationship
- Why Services Have Been Spared (So Far)
- How Services Are Affected by US-China Relations
- Service Sector Snapshots: What’s at Risk?
- How Can You Prepare?
- The Takeaway: US-China Trade War
Let’s take a closer look.
US-China Trade Relationship
The United States and China have long been central players in the global trade ecosystem. For decades, their economic relationship was characterized by mutual benefit, with relatively low tariffs and increasing interdependence. However, since 2018, this dynamic has shifted dramatically.
What began as a tariff-focused dispute during the first Trump administration has now evolved into a prolonged strategic rivalry spanning multiple sectors under subsequent leadership.
As of 2025, tensions have reached new highs, with sweeping tariffs up to 145% – reshaping global trade. Read up more on the current trade affairs (US-China) in our article to build strategic business partnerships.
Why Services Have Been Spared (So Far)
You may rightfully ask yourself why only physical products have been the target of increased US-tariffs to-date. And what the impact of tariffs on services and service-based businesses is. Here are some insights:
Tariffs Are Built for Physical Things
Tariffs work because customs can count, weigh, and tax physical goods. Services, on the other hand, flow through the cloud, conversations, or even human movement – making them much harder to monitor or tax the same way.
Interdependence Runs Deep
The US and China are tightly intertwined when it comes to services – especially in sectors like finance, education, and tech. A sweeping policy here risks mutual damage.
Invisible Trade = Less Political Theater
You can’t take a photo of a “consulting export.” That invisibility means fewer headlines, less public outrage, and often less political pressure to retaliate.
How Services Are Affected by US-China Relations
While services may have escaped regular tariffs, they’re already being hit in subtle, strategic ways. More disruptions and cross-border services regulation may lay ahead. Here’s how it’s showing up:
Digital Barriers and Tech Nationalism
Data localization laws in China force foreign firms to store data domestically. Cybersecurity reviews are being used to block or stall foreign software platforms. App bans and platform blocks (e.g. TikTok ban in the US) reflect rising digital decoupling.
Visa & Mobility Restrictions
Consulting, education, and hospitality rely heavily on cross-border movement. Tighter visa rules and diplomatic tensions are reducing international flows of people – and the services they deliver.
Capital Controls & Real Estate Barriers
Outbound real estate investment from China faces mounting scrutiny. Countries are increasing transparency, taxation, and foreign ownership limits in response to geopolitical risk.
Digital Services Taxes & Retaliation
Some governments, primarily in Europe, are introducing Digital Services Taxes (DSTs) aimed at big tech firms. Retaliatory policies could follow if DSTs are seen as unfair or protectionist.
Service Sector Snapshots: What’s at Risk?
Looking at possible impacts for service-based industries by the US-China trade war, these are some potential shifts in the future.
| Sector | Current Status | Indirect Effects of US-China Trade War | Potential Future Shifts |
| Education | Politicized; student exchanges and partnerships increasingly restricted. | The trade war effect on the education sector is significant. Increased tariffs can affect the affordability of educational materials and technology imported from China, potentially influencing the cost structure of educational services. Increased tariffs can affect the affordability of educational materials and technology imported from China, potentially influencing the cost structure of educational services. In addition, stricter trade policies may lead to more regulations, less funding, and opportunities for Chinese students (and US-students). | Visa caps, funding cuts for international programs, limits on online education exports. |
| Real Estate | Controlled via financial restrictions and regulations. | Tariffs on construction materials and appliances may escalate operational costs for real estate developers and property managers, potentially leading to higher prices for consumers. | More disclosure requirements, foreign caps. |
| Hospitality | Via regulations and travel recommendations. | Imported goods such as furniture, kitchen equipment, and luxury items may become more expensive due to tariffs, impacting the hospitality industry’s supply chain and pricing. Besides, policy shifts could lead to increased visa and travel restrictions, reducing the number of international tourists and thus demand for hospitality services. | Soft power tactics like travel restrictions and price increases. |
| IT (Cloud/Tech) | Already in the crossfire. | Tariffs on hardware components and electronics from China may increase infrastructure costs for cloud and tech companies, potentially slowing innovation and raising prices for end-users reliant on digital services. Additionally, evolving trade and regulatory policies could introduce higher entry barriers for tech startups, including compliance burdens, restricted access to Chinese-manufactured components, and limitations on cross-border data flows. | Full digital decoupling, bands on tools and platforms. |
| Consulting | Still relatively open. | US-China consulting barriers include disruptions in global supply chains and increased business uncertainty may heighten demand for strategic advisory services, while also raising operational costs for consulting firms reliant on outsourced support or international travel. | More localization demands, IP restrictions. |
The future of trade isn’t just about goods anymore – it’s about who gets to serve whom, where, and how. And in that game, services won’t stay sheltered for long.
How Can You Prepare?
As a service-based business, preparation starts with strategic foresight and adaptive operations. While traditional tariffs may not directly apply, indirect pressures are increasing.
- Diversify your client base across multiple regions to reduce dependency
- Build local partnerships both tin the US and China to have reliable on-the-ground partners
- Establish compliance expertise, especially around data privacy, cybersecurity, and cross-border taxation
- Ensure mobility resilience by evaluating your visa, staffing, and outsourcing models in case of tighter movement controls
Read up more on how to build strategic partnerships in China, especially in the services industries.
The Takeaway: US-China Trade War
While tariffs dominate headlines, the real shift in the US-China trade war is happening in the shadows – inside digital policies, visa rules, and market access barriers that quietly reshape the service sector. The future of global service trade is up in the air.
The tariff war may have started with steel and soybeans, but as tensions deepen, services are the next frontier. The shift will likely come:
- Through policy, not price
- Gradually, not all at once
- Sector by sector, not across the board
If you’re in a service industry with global clients, it’s time to pay attention. For overseas businesses in education, real estate, hospitality, IT, and consulting, this is both a wake-up call and a golden window.
Proactive, localized partnerships in China aren’t just smart – they’re essential. The future of service exports will belong to those who act before the firewall is built. Contact us today to stay ahead of the game!