Introduction
Understanding the complexities of US-China tariffs is crucial to navigating the current economic landscape. Trump’s aggressive policies tread towards economic nationalism and reverse trade openness, raising questions about the future of US-China trade relations. The neo-conservatives want the US to focus on showcasing its global power and limit the growth of China through traditional steps. Trump, on the other hand, is more prone to isolationist, transactional, and America-first policies primarily focused on “what’s in it for the US.”
Trump sees tariffs as a key negotiating tool, but they come with a high price, including high consumer prices, disrupted supply chains, and retaliation from other countries. The administration frames tariffs as a policy that can pressure US domestic producers and traders to produce more goods and commodities locally. The US and China have various longstanding disputes related to their two-way trade. China’s currency policies were another concerning issue, as it intentionally suppressed the value of its currency. Additionally, China’s industrial policies, which favor state-owned enterprises, have raised concerns about unfair trade practices. Furthermore, disagreements over World Trade Organization (WTO) agreements have contributed to tensions between the two nations.
The Never-ending US-China Tariffs War
Trump’s protectionist approach towards China aims to reduce America’s trade deficit and dependence on manufacturing imports. The Economic Times indicates that China’s trade surplus reached a record of nearly $1 trillion in 2024. The large trade deficit is attributed to two different factors; some blame China’s allegedly unfair trade tactics, while others point to China’s robust economy and efficient production system, which is heavily supported by government involvement.
On the campaign trail, the US president proposed substantial tariff hikes, potentially up to 60 percent on Chinese imports and 20 percent globally. However, the currently implemented 10 percent tariff on Chinese imports, effective February 1, 2025, falls significantly short of this proposed ceiling. The US has made an exception that allows China to send small shipments (under $800) to the US without paying tariffs. This helps online stores like Shein and Temu sell cheap goods in the US.
Trump’s economic advisor, Treasury Secretary Scott Bessent, said that border tariffs lead to inflation, higher interest rates, and a strong dollar. In response to the tariffs, Beijing announced to impose retaliatory tariffs on some American products, including 15 percent on coal and 10 percent on crude oil. According to Joseph E. Stiglitz, who was the chairman of President Clinton’s Council of Economic Advisers, “It’s inconceivable that other countries won’t retaliate. Even if some of the governments might not want to retaliate, their citizens will demand that you can’t allow yourself to be beaten up. When you make like a gorilla thumping on his chest, are countries just going to say, ‘Are we chopped liver?’ Their politics will demand that they do something.”
The US efforts to contain China’s growth begin with tariffs and some other trade policies in the Trump administration. Jeffery Sachs indicates that “Trump’s previous tenure was more inclined towards US unilateralism, bilateral relations rather than global relations, and focused on transactional policies rather than rules.” The report by Columbia Business School suggests that “Trump’s last term was marked by an aggressive trade war with China in which President Trump imposed tariffs on steel, solar panels, and medical devices, as well as hundreds of billions of dollars in other goods.
At the time, the administration promised that the burden of the tariffs would largely fall on China, but this was not the case. When Trump hit China with tariffs during his first term in office, China retaliated in particular against US agricultural exports, hurting the American farmers.” The Peterson Institute for International Economics’ executive vice president, Marcus Noland, predicted that if Trump imposes new tariffs on China, the US farmers for another time would face repercussions. White House told the American Broadcasting Company ABC, “A tariff is not akin to raising the cover charge on a bar, it’s much more like raising the prices on every drink on the menu.” As per the report of the Peterson Institute for International Economics (PIIE), the tariffs are six times more than before the trade war in 2018. These tariffs cover 66.4 percent of US imports from China.
America First
Donald Trump’s stance on the liberal international order suggests that it has hindered America’s growth since WWII, despite America’s instrumental role in its establishment. He believes that multilateral agreements and global integration have compromised America’s economic stability and independence. To counter this, Trump introduced the “America First” plan in 2016, prioritizing domestic interests over global ones. In his previous term, as soon as Trump came into power, he pulled the US out of the Trans-Pacific Trade Partnership, which is the big twelve-nation trade deal that the Obama administration had spent years negotiating and was considered the centerpiece of his Asian economic policy.
The Trump administration always believed that these big multilateral trade deals, such as the Trans-Pacific Partnership, were not good for America and that bilateral agreements were far better for America’s economy. As the US steps back from global leadership, it creates a power vacuum, allowing emerging nations like China to fill that gap and expand their international influence. China is expanding its economic footprint through initiatives like the Belt and Road Initiative (BRI). Trump’s action significantly shifted America’s stance from the leader in international cooperation to a nation prioritizing its own interests over global agreements.
Implications of the Tariffs
In his inauguration ceremony, Trump mentioned, “We will tariff and tax foreign countries to enrich our citizens.” Trump has instructed federal agencies to investigate the impact of tariff policies or, in his words, recommend appropriate measures like Imposing global tariffs could fix trade deficits. Pundits argue that Trump’s trade policies could have a huge impact on the global economy, causing shockwaves that could be felt worldwide. Even if Trump’s threats are not carried out, the mere possibility of a trade war is already affecting international relations and forcing businesses to prepare for the worst.
Eswar Prasad, a Cornell University expert on trade policy, warned that Trump’s tariffs will have several unfavorable consequences. “U.S. exporters will face a particularly tough time, as they are likely to face rising tariff barriers in their foreign markets,” said Prasad. He further remarked, “In addition, tariffs are likely to drive up the dollar and reduce the competitiveness of their exports in global markets,” adding that the uncertainty surrounding tariffs and their potential is creating a sense of unease, “fomenting enormous uncertainty in the global business environment, which is harmful to business investment and job creation.”
It is important to note that the effectiveness and impact of these tariffs are still debated among economists and policymakers. The situation could evolve further as the US and China continue to negotiate and address their trade differences. As tensions between the US and China persist, the outlook for tariffs and their impact on the global economy remains shrouded in uncertainty, underscoring the need for continued observation and analysis.
If you want to submit your articles and/or research papers, please visit the Submissions page.
To stay updated with the latest jobs, CSS news, internships, scholarships, and current affairs articles, join our Community Forum!
The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.
Urooba Safeer is pursuing a bachelor's degree in political science at the International Islamic University, Islamabad, and is a research intern at the Institute of Regional Studies (IRS).