In a dramatic escalation of trade tensions, Trump has raised tariffs on Chinese imports to a staggering 145% (adjusted for the reported 125% tariff yesterday), prompting an 84% retaliatory tariff from Beijing. While the U.S. has temporarily eased tariff pressure on more than 75 countries, China has been singled out for heightened penalties in a standoff that now threatens to upend global trade flows and fracture longstanding economic alliances.
What began as a battle over trade imbalances and manufacturing jobs has morphed into a high-stakes confrontation over global economic leadership.
Trump’s Tariff Doctrine: Aggression as Economic Leverage
The White House has framed its latest actions as part of a broader “reciprocal tariff” strategy aimed at rebalancing global trade. On April 9, Trump signed an executive order raising duties on Chinese goods from 104% to 125%, citing what he called China’s “lack of respect” for global markets. The rate was later revised to 145%, factoring in earlier rounds of tariffs.
While the U.S. paused planned tariff hikes for over 75 nations—dropping duties to a flat 10%—China was excluded from the reprieve. “More than 75 countries have contacted U.S. representatives to negotiate,” Trump posted on Truth Social. “Because these countries have not retaliated, I have authorised a 90-day PAUSE.”
Treasury Secretary Scott Bessent acknowledged that the abrupt shift came amid rising market unease, with stock indices surging following the announcement. However, sectoral tariffs—such as those on automobiles, steel, and aluminum—remain firmly in place.
China’s Response
Beijing has responded with a mix of retaliatory measures and strategic outreach. Chinese Premier Li Qiang initiated diplomatic conversations with European Commission President Ursula von der Leyen, pledging to deepen trade and industrial ties. The move comes as China seeks to form a multilateral response to Washington’s escalating protectionism.
Chinese Commerce Minister Wang Wentao, in talks with the EU Commissioner for Trade, denounced the U.S. tariffs as “a typical act of unilateralism, protectionism and economic bullying,” vowing that China would “fight to the end” if necessary. Simultaneously, China has held discussions with the ASEAN bloc, while also implementing export restrictions on critical rare earth minerals and blacklisting U.S. companies involved in military cooperation with Taiwan.
Despite these efforts, China has found limited enthusiasm from potential allies. Australia and India have rebuffed overtures, and even Russia has remained on the sidelines of the tariff drama.
Economic Fallout Spreads on Both Sides
The economic consequences of the escalating trade war are already materialising. In the U.S., analysts warn that consumers should brace for higher prices on a broad range of goods, from electronics and smartphones to toys and clothing. China supplies 73% of smartphones, 78% of laptops, and 87% of video game consoles to the U.S. market, according to Cornell’s Wendong Zhang.
Discount retailers such as Shein and Temu—heavily reliant on Chinese supply chains—will also be affected, particularly by the end of the de minimis exemption that previously allowed low-value packages to enter the U.S. without duties.
In China, the tariffs threaten to choke off vital export revenue, hitting small and medium-sized enterprises that produce consumer goods for the American market. These businesses already operate on thin margins and may struggle to redirect shipments to alternative markets. Compounding the problem is China’s sluggish domestic economy, still reeling from a prolonged property crisis and rising youth unemployment.
Global Markets Rattle Amid Uncertainty
Financial markets have responded with whiplash volatility. While the 90-day pause lifted stocks temporarily—sending the Nasdaq up 9% and the S&P 500 climbing 7%—the realisation that U.S.–China tensions are only intensifying has reintroduced investor anxiety.
Multinational corporations are now reassessing their exposure to Chinese supply chains. Some are moving operations to countries like Vietnam and Mexico, but shifting production is costly and time-consuming.
Supply chain disruptions are also being felt in critical sectors such as semiconductors and automotive manufacturing. The Trump administration’s tariff on global auto imports and key parts, implemented April 3, is already reverberating through industry operations in Mexico, Canada, and South Korea.
Competing Visions for Global Trade
At its core, the U.S.–China trade war reflects a struggle over the architecture of the global economy. The Trump administration has stated it wants to “reorder the world economy” by forcing production back to the U.S. and correcting trade imbalances. In contrast, China is leveraging diplomatic channels and regional alliances to resist pressure and maintain its economic influence.
This polarisation is pulling other nations into opposing camps. Some analysts speculate that the trade war could accelerate trends toward de-globalisation or even catalyse the formation of rival economic blocs centered around Washington and Beijing.
Steven Okun, CEO of geopolitical consulting firm APAC Advisors, framed the moment starkly: “You can’t model this. Are countries going to have to choose between the U.S. and China?”