As President Donald Trump escalates the trade war with China, recent actions raise concerns about the potential fallout for both the U.S. economy and its geopolitical standing.
Trump’s administration has ramped up tariffs on Chinese goods to an unprecedented 145 percent, while China retaliated with 125 percent tariffs on American products, triggering a classic trade war defined by reciprocal trade barriers.
This eager confrontation seemingly serves to bolster China’s geopolitical influence, as well as embolden its military posture, while diminishing the economic position and international reputation of the United States.
The U.S. administration is confident, believing in its supposed upper hand in this economic conflict. Treasury Secretary Scott Bessent noted, “We export one-fifth to them of what they export to us, so that is a losing hand for them.”
However, this perspective misunderstands the complexities of the trade relationship. The American economy’s dependency on Chinese manufacturing presents a substantial vulnerability.
China maintains a dominant production capacity, supplying over 70 percent of various vital commodities, including lithium-ion batteries and air conditioners, alongside more than 80 percent of smartphones and kitchen appliances.
The urgency to pivot production back to the U.S. faces formidable hurdles that could span years or decades: establishing new companies, constructing factories, creating new supply chains, and training workers.
Unlike the U.S., which is deeply reliant on Chinese goods, China’s dependence on the U.S. accounts for only a small fraction of its imports.
Critical goods such as soybeans and sorghum can easily be sourced elsewhere, allowing China a fluidity that the U.S. lacks.
Although American businesses will certainly encounter challenges due to losing market access in China, the Chinese government arguably has more room to maneuver.
China can redirect exports to other markets in Europe and East Asia or provide financial support to its own citizens and businesses to stimulate domestic demand.
This imbalance creates what economist Adam Posen refers to as “escalation dominance,” with China able to inflict disproportionate economic pain on its adversary.
Beijing is also well-equipped with economic countermeasures, responding to the escalating conflict with bans on exports of rare earth minerals—essential for many consumer products and military applications.
Additionally, antitrust investigations have been launched against companies like DuPont and Google, while business operations have been halted with major American firms such as Boeing.
Should tensions continue to escalate, actions may include blocking prominent U.S. corporations, like Apple and Tesla, from maintaining operations in China altogether.
Moreover, a dire scenario could emerge where China sells off a portion of its significant holdings in U.S. Treasury bonds, potentially instigating a financial crisis triggered by soaring interest rates.
Experts warn that China has prepared extensively for this economic confrontation since the outset of Trump’s first trade war in 2018, significantly reducing its reliance on American imports.
With substantial investments in industries like energy and semiconductors and a strategic focus on enhancing domestic consumption, Beijing aims to ensure economic stability amid external pressures.
China’s strategy extends to preparing for long-lasting economic conflict, with officials asserting the need to “ensure the normal operation of the national economy under extreme circumstances.”
Despite these challenges facing the United States, experts believe that success in this trade conflict remains possible but requires a far more strategic approach than what the Trump administration has currently implemented.
The potential for collective action among U.S. allies—especially in Europe, North America, and East Asia—could be a secret weapon against China.
By uniting to restrict Chinese exports while fostering stronger trade relations among themselves, this coalition could exert significant pressure on China by limiting its market opportunities.
But the coordination needs careful planning, including new industry development, stringent monitoring of global supply chains, gradual tariffs to allow business adjustments, and clear conditions for ending the conflict.
Unfortunately, Trump’s current direction starkly contrasts with this strategic necessity.
Instead of focusing on developing American industries, Trump appears to seek to dismantle critical investments in semiconductor and clean energy production made under the Biden administration.
Rather than rolling out tariffs gradually, he has swiftly escalated them to unprecedented levels.
Confusion has reigned as the administration has frequently altered its stance, undermining confidence among businesses and investors.
Moreover, rather than fostering alliances, Trump has tended to alienate U.S. partners through threats and tariff disputes, potentially compromising any chance for a collective economic stance against China.
Political sentiment among citizens leans toward confronting China, with studies from Trump’s first term revealing that tariffs tended to endear him to voters, especially in regions impacted by import tariffs.
Yet as inflation emerges as a critical issue ahead of the 2024 election, voters may begin to feel the heavy costs of increased tariffs through essential goods shortages and rising prices.
Previous tariffs imposed by Trump were relatively contained, resulting in merely slight price increases; the new aggressive tariff strategy, however, promises to create substantial consumer discontent.
As economic turmoil escalates, Trump faces a challenge to maintain voter support amid chronic inflation unless corrective measures are taken swiftly.
If current grievances over tariffs extend to significant economic fallout, even Trump—typically resistant to pressures—might be unable to sustain a prolonged economic conflict.
Thus far, he has already violated a fundamental principle of trade policy: never reveal your breaking point to your adversary, having paused global tariffs amidst market turmoil.
It’s likely that, without a favorable shift in strategy, Trump may ultimately be compelled to retreat from this trade confrontation, potentially negotiating terms that offer merely cosmetic concessions from China.
In the absence of willing cooperation from Beijing, the U.S. might find itself resorting to industry-specific tariff exemptions, resulting in a situation where exemptions outweigh imposed tariffs—all at a great cost to American taxpayers and the economy.
Conversely, China stands to gain significantly from these dynamics.
Recent engagement has seen Indonesia, the EU, South Korea, Japan, and Vietnam actively pursuing stronger economic ties with China, underscoring shifting geopolitical allegiances amidst the trade turmoil.
Such a victory for China in the trade war could lead to increased confidence in taking assertive actions on non-economic fronts, including military moves that challenge U.S. influence, such as aggression in Taiwan.
If China manages to withstand the economic pressure from a U.S. trade war effectively, it risks diminishing the deterrent power the U.S. may rely on against potential military assertions.
The ability of China to demonstrate resilience could have profound consequences, potentially emboldening them in actions that do not promote global stability.
In essence, Trump’s approach to tariffs seems reminiscent of the military interventions he has criticized, yet he now finds himself leading this significant economic confrontation that could reverberate far beyond trade restrictions.
image source from：https://www.theatlantic.com/economy/archive/2025/04/china-trump-trade-war/682524/
