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As US President Donald Trump ramps up his trade war with China, imposing tariffs of up to 145 percent on most Chinese imports, early signals suggest the fallout may harm the US economy more than it helps. In response, China has hit back with its 125 percent duties on US goods, creating an escalating cycle of retaliation between the world’s two largest economies.
Trump has long accused China of exploiting the US through unfair trade practices, framing his tariffs as a tool to revive domestic manufacturing, bring jobs back to American soil, and finance new tax cuts. Yet, economists remain deeply skeptical. Instead of strengthening the US economy, early data show growing economic strain, particularly in the agriculture and retail sectors.
Negotiations between the two countries appear stalled. Although Trump recently hinted that tariffs could soon “come down substantially” and claimed that talks were ongoing, China’s Ministry of Commerce denied these claims, stating there were no discussions. While Beijing has left the door open for future negotiations, it has made no concessions publicly.
Meanwhile, the initial effects of the trade war are becoming visible. US Department of Agriculture data show a sharp 50 percent decline in net sales of soybeans, America’s top agricultural export, during the first full reporting week following Trump’s tariff announcement. Exports to China specifically plummeted by 67 percent, endangering the livelihoods of many American farmers who rely heavily on Chinese markets.
The broader export picture also looks grim. In 2023 alone, the US exported about $15 billion in oil, gas, and coal to China. Losing that demand would deliver a heavy blow to American energy companies, already navigating a volatile global energy market.
Imports into the US are similarly affected. According to shipping data from Linerlytica, Chinese freight bookings bound for the US dropped by 30 to 60 percent in April. Although the immediate effects have yet to be fully felt, US companies such as Walmart and Target have warned of looming inventory shortages and price hikes starting in early May. Key consumer goods such as electronics, clothing, and pharmaceutical ingredients are particularly at risk, which could drive a noticeable uptick in US inflation rates.
Reflecting these trends, the International Monetary Fund recently raised its US inflation forecast for 2025 to 3 percent, a percentage point higher than its earlier estimate, while simultaneously lowering its growth forecast and warning of heightened recession risk.
On the Chinese side, while Trump’s tariffs are expected to slow GDP growth, Beijing has moved swiftly to mitigate the damage. Officials have emphasized that China’s domestic production and diversified import strategies can cushion much of the blow. China has quietly shifted its reliance away from US agricultural and energy imports since the Trump trade war erupted in 2018.
Goldman Sachs estimates that US tariffs could shave as much as 2.4 percentage points off China’s GDP growth. Nevertheless, Chinese policymakers remain confident in achieving their 5 percent growth target for 2025, asserting they can substitute US products with domestic production or imports from other partners.
Critically, China holds a significant strategic advantage: the US depends on Chinese critical minerals vital for clean energy technologies and military hardware far more than China depends on American imports. According to economist Piergiuseppe Fortunato, this structural imbalance leaves the US more vulnerable to a prolonged trade conflict.
The tariff battle also risks weakening America’s geopolitical standing. While Trump has pushed for free-trade agreements with allies like the European Union, Great Britain, and Japan, he has struggled to rally them behind an anti-China economic strategy. European officials have publicly rejected calls for “decoupling” from China, emphasizing the importance of maintaining commercial ties with Beijing. Developing economies, highly dependent on Chinese imports, are even less likely to back Washington’s efforts.
Domestically, Trump faces mounting political pressure. Polling suggests that Americans believe his trade policies have hurt them more than helped, with his economic approval rating sliding to a new low of 37 percent. If economic conditions worsen, Republicans could risk losing their narrow control of Congress in the upcoming elections.
Beijing appears content to let time work in its favor. Without the pressures of an election cycle, China can wait out Trump’s strategy, hoping that mounting economic pain and political backlash in the US will eventually force Washington to soften its stance.
While Trump remains determined to claim victory in his tariff fight with China, the early signs indicate that the costs for the United States may far outweigh any potential benefits economically, diplomatically, and politically.
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