In a sweeping move which displayed a mounting trade rift, Donald Trump famously reneged on a significant part of his plans to raise tariffs on trading partners worldwide. One major exclusion to this rule was China. While global trade stakeholders were handed a 90-day period of grace from impending duties exceeding the new benchmark of 10% tariffs, China was subjected to ever-intensifying economic pressure. As of April 9, 2025, Trump inflated the tariffs on Chinese merchandise skywards to 125%, pushing the collective U.S. levy on some Chinese imports to a staggering 145%.
This drastic step was demanded, according to Trump, by China’s perceived disregard for global market norms. It’s possible, though, that the arguably aggressive stance Beijing took towards the US tariffs inflicted a wound on Trump’s pride. Many nations chose a path of negotiation and discourse instead of retaliating against Trump’s mutually deferred tariff hikes. Yet, Beijing reacted decisively and rapidly with countermeasures of its own.
On April 11, China shrugged off Trump’s actions, categorizing them as ‘comical’, and in a tit-for-tat response, elevated its own tariffs against the U.S. to 125%. Thereupon began a full-blown, intensely heated, trade feud between the two economic powerhouses, with China showing no hint of stepping down. Presently, China wields more leverage and is confident that it can wreak just as much havoc on the U.S. economy as the U.S. could on China, while concurrently broadening its global influence.
Certainly, the tariffs carry serious implications for China’s manufacturers who are primarily export-oriented, especially those located in the coastal areas who make furniture, clothes, toys and home appliances for the U.S. market. Ever since Trump initiated a tariff hike on Chinese goods in 2018, numerous fundamental economic variables have drastically altered Beijing’s decision making.
Mainly, the U.S. market’s significance to China’s export-heavy economy has seen a marked decline. Back in 2018, when the initial trade conflict began, U.S.-destined exports comprised nearly 20% of China’s total exports. By 2023, this figure dwindled to approximately 13%. The ongoing tariff situation could further coax China into reinforcing its ‘domestic demand expansion’ strategy, hence unleashing the purchasing capacity of its consumers, thereby strengthening domestic economic resilience.
On the other hand, China entered the 2018 trade dispute during a phase of robust economic growth, however, the current scenario tells a different tale. A lethargic real estate market, capital exodus and Western nations ‘decoupling’ from China, have nudged the Chinese economy into a period of continual slowdown. Unintuitively, this prolonged downturn may have bolstered the Chinese economy’s resistance to abrupt disruptions.
In fact, this challenging economic climate obliges businesses and policymakers to take cognizance of the harsh realities even before incorporating the effects of Trump’s tariffs. Furthermore, Trump’s aggressive tariff strategy against China provides Beijing with an easy deflection target, enabling them to gather public support and lay blame for the economic decline squarely on U.S. belligerence.
Also, China realizes that the U.S. is left with no simple alternatives to its reliance on Chinese-made goods, particularly within its supply chains. Although direct U.S. imports from China have lessened, many items now being brought in from other countries carry a dependence on raw materials or components originating from China.
In the year 2022, the U.S. relied on China for a significant 532 key product categories. This was nearly four times the dependency level in 2000, whereas, China had managed to cut its reliance on U.S. products by half within the same span of time. Another factor hinging on public opinion comes into play: escalating tariffs are predicted to inflate prices—a development that could agitate American shoppers, particularly those belonging to the working class.
Firmly believing that Trump’s tariffs might nudge a once flourishing U.S. economy toward a recession, Beijing is leveraging the changed economic contexts, and has at its disposal a set of tactical retaliatory weapons against the U.S.
Chiefly among these is its dominance over the global supply chain of rare earth elements, a critical resource for military and high-tech industries. As per certain projections, China is responsible for an overwhelming 72% of U.S. rare earth imports. On March 4, China listed 15 American entities on its export control list, supplemented by an additional 12 on April 9. Many of these were either U.S. defense contractors or technologically advanced firms that depend on rare earth elements for their products.
Moreover, China retains the capability to target critical U.S. agricultural export sectors like poultry and soybeans – sectors that are heavily reliant on Chinese demand and primarily located in Republican-leaning states. China constitutes about half of U.S. soybean exports and nearly one-tenth of American poultry exports. On March 4, Beijing revoked import approvals for three prominent U.S. soybean exporters.
From a technology perspective, numerous U.S. corporations are still deeply integrated with Chinese manufacturing. Tariffs pose a threat to significantly downsize their profit margins, something Beijing thinks can be capitalized as a source of leverage against the Trump government.
Beijing, while confident of enduring Trump’s widespread tariffs on a bilateral basis, forms the belief that the U.S. trade offensive against its own partners has paved the way for a strategic opportunity to challenge American supremacy. This shift could notably transform the geopolitical landscape, particularly close to home in East Asia.
In fact, following Trump’s initial tariff increases on Beijing on March 30, China joined hands with Japan and South Korea to conduct their first economic dialogue in five years, vowing to propel a trilateral free trade agreement. Trump’s hefty tariffs on Southeast Asian countries too, may drive these nations towards China.
Lastly, China perceives in the U.S.’s tariff policy a potential weakening of the international standing of the U.S. dollar. A wave of tariffs imposed on multiple countries have rattled faith in the U.S. economy, leading to a decrease in the dollar’s value. Traditionally viewed as haven assets, the dollar and U.S. treasury bonds have recently undergone scrutiny due to market instability.
The post Trump Increases Tariffs on China, Igniting Trade War appeared first on Real News Now.
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