One of the biggest economic fights is US-China trade war, under The US President Donald J. Trump, this trade war began in 2018, during his first term in office. U.S. taxes on Chinese imports were the initial cause of the conflict.
Trump made the decision due to the unfair practices of American Industry. It created a trade deficit and raised an alarm against national security. The U.S. was losing the capacity to make critical manufacturing, and there was a need for reshoring.
China responded with its tariffs, saying the U.S. was trying to hold it back as a rising tech and economic power. Both sides have a case—China has bent the trade rules at times established by the WTO, and the U.S. has used tough tactics to slow China down. What began as a trade spat has grown into a war over tech, economy, and influence. At first glance, it revolved around trade imbalances and tariffs. But underneath, it exposed a much bigger rivalry. The U.S. and China aren’t just fighting over goods and services — they’re competing for long-term global power in technology, economics, and security. Thereafter, the trade war came to represent something much more significant: the contest for control of the world order.
U.S.-China Tariff Battle:
In 2025, the United States under 2nd Trump administration took several actions that led to China increasing tariffs. The Key Events………
- On February 4, 2025, the US imposed additional 10% tariffs on Chinese imported goods, which were later increased to 20% on March 4, 2025.
- On April 2, Trump, on “Liberation Day,” slapped a 10% tariff on U.S. imports. Among some severely affected countries some were: the EU (20%), Japan (24%), South Korea (25%), India (26%), and Vietnam (46%). With a 34% tariff, increased fentanyl taxes, and tariffs that al ready exceeded 100% in industries like solar panels, electronics, and EVs, China was hurt the worst.
- As of April 2025, the US and China have been engaging in a tit-for-tat tariff war, with both countries imposing significant tariffs on each other’s goods.
- China creates the pressure on US by increasing the tariffs to 34% on April 4.
- US President steps back from country-specific tariffs globally exception of China, on April 9. The following day, Trump increased duties on China to 125%, bringing the total to 145%.
- China hits back at America by increasing its tariffs on American goods to 125% from 84%.
The US and China have been engaging in a tit-for-tat tariff war, with both countries imposing significant tariffs on each other’s goods. Furthermore, the export of some crucial components required for semiconductor manufacturing has been restricted by the Chinese government.
Impacts:
- Due to this US stock index turned lower after China announced additional tariffs on US goods. Following the hike, S&P 500 e-mini futures were flat, NASDAQ futures up 0.2%, and DOW futures down 0.2%.
- Where China lost momentum in the first quarter of 2025, growth is expected to lag last year’s rhythm. While the last quarter of 2024 GDP growth marked at 5.4%, in 1st quarter of 2025, it dropped to 5.1%.
- The Share market jumped high due to the trade war between the US and China. Companies such as Nike, Target, and Home Depot experienced an enormous rise in share price on Wall Street as a result of the news. Tech companies including Amazon, Apple, Nvidia, and Meta, the owner of Facebook, all saw significant increases. On Monday, Hong Kong’s core Hang Seng Index closed the day up 3%, with a rise in European markets. Shipping business shares have risen as a result of the purchase; Germany’s Hapag-Lloyd grew by 14%, and Denmark’s Maersk has climbed by more than 12%.
- Asia’s factory activity shrinks in May. Japan’s Final au Jiban Bank Manufacturing PMI stood at 49.4, where in April it was 50.0. The PMI of the World’s 4th largest economy- Korea, was down to 47.7 & its exports in May also down by 1.3%. A demand crisis from pricing and geopolitical pressures caused India’s manufacturing growth to slow, to the lowest level in 3 months in May.
- This tariff increase became the reason for a rise in consumers’ prices, and the result is a demand.
What lies ahead for US-China trade?
As China still holds approximately 30% of the world’s logistics, the trade war can disrupt the world’s supply chain. Economic slowdown due to high cost and inflation is a possibility.
Henry Gao, Professor at Singapore Management University and an expert in international trade, says that the use of unilateral tariffs disrupts the US’s image as a champion of free trade.
Meanwhile, Jamieson Greer, the US trade representative (USTR), backed the president’s sweeping tariffs, as, according to him, it will lower the US trade deficit.
Recently, the Washington-Beijing agreement to reduce the triple-digit tariffs for 90 days blew oxygen into the global market. U.S. seems like President Trump and Xi Jinping- his counterpart from China; are set to have a conversation this week amid the ongoing trade tensions. Hopefully, things will turn out well.
References:
https://www.britannica.com/money/US-China-trade-war
https://www.bbc.com/news/articles/czx0ry7kdk5o
https://www.reuters.com/world/china/asias-factory-activity-shrinks-may-us-tariffs-bite-2025-06-02/
https://www.cfr.org/backgrounder/contentious-us-china-trade-relationship