Introduction
The beginning of 2025 was marked by a sharp resurgence of trade tension between the United States and China, manifested in tariffs exceeding 100% on nearly all bilateral trade. This conflict, which began in 2018 over accusations of unfair trade practices, has escalated into a global economic confrontation.
These massive tariffs and countermeasures have paralyzed bilateral trade, shaken financial markets, and disrupted supply chains and global trade.
I – Origin and evolution of the US-China tariff policy
1 – First measures under the Trump administration (2018–2020)
US-China Trade tension emerged in 2018 when the Trump administration imposed customs tariffs on Chinese imports, accusing Beijing of unfair trade practices, including forced technology transfers and intellectual property and innovation violations, threatening American businesses and workers.
In response, China imposed tariffs on American products, targeting agriculture and automotive industries.
In January 2020, the two countries signed the so-called Phase 1 agreement, which obliges China to increase its purchases of American goods by $200 billion compared to 2017 and to strengthen intellectual property protection. In exchange, the United States reduced tariffs on $120 billion worth of consumer products from 15% to 7.5%.
2 – Renewed escalation of reciprocal tariff measures between the two countries
In May 2024, Joe Biden imposes new tariffs, marking the first major escalation since 2020, adopting a tariff plan that raises duties on key products : 100% on Chinese electric vehicles, 50% on solar panels, electronic components and critical minerals, and 25-50% on health products such as masks.
These measures, justified by the persistence of unfair Chinese practices, target green and strategic technologies in order to defend American workers and businesses.
3 – Intensification of protectionist policies in 2025
In 2025, Donald Trump will return to the presidency with a commitment to American voters to reduce inflation, create jobs and enrich the country, promising a new El Dorado the likes of which have never been seen.
Declaring a national trade emergency, the administration imposed a universal 10% tariff on all imports, followed by increases targeting China: 84% on April 9, then 125% on April 11, making Chinese exports impossible.
As it adopts non-tariff countermeasures: restrictions on rare earths, bans on US agricultural products and sanctions against companies like Tesla.
As a result, by mid-April, bilateral trade had almost come to a standstill.
II – Economic consequences of pricing policies
For the Trump administration, the initial objective was relatively clear and specific : to save jobs in declining competitive sectors and reduce the trade deficit and also sanction practices deemed unfair.
Thus, the escalation of the trade tension between the United States and China will have repercussions on both countries and the rest of the world.
1 – For the United States
Americans will not be able to completely do without the products of the world’s factories, which are omnipresent in their market, and the trade war with the Chinese could result in:
- Rising consumer prices, for example Chinese phone imports account for roughly 80% of incoming phones in the United States;
- Reduction of imports of Chinese components (electronics, equipment);
- Tensions on production costs in the manufacturing industry;
- Anticipation of inflation expected to reach according to the FED 4% in 2025 above the 2% target;
- Increased regulatory complexity and risks of double taxation (punitive customs duties) or non-tariff measures (inspections, standards) for US subsidiaries in China ;
- Disruption to supply chains that could affect key sectors such as automotive, chemicals and electronics ;
- Difficulty for American companies to move their supply chains out of China, as they have struggled to find similar infrastructure and skilled labor elsewhere;
- Unemployment rate could rise to 5-6% ;
- Risk of plunging the American economy into recession.
2 – For China
China is the world’s largest manufacturing nation, known as the world’s factory, producing far more than its population consumes domestically. It already boasts a trade surplus of nearly $1 trillion, meaning it exports more goods than it imports.
China often produces these goods at a lower cost than their actual production cost through national subsidies and to a financial support from the state, such as cheap loans granted to favored companies.
The trade tension with the USA will result in a drop in exports to the United States.
So, In 2023, the United States accounted for about 15% of total Chinese exports. In 2018 (before the escalation of the trade war), this figure was closer to 19%.
The tariff shock could be partially cushioned by measures such as:
- Acceleration of repositioning towards other markets (ASEAN, Africa, EU);
- Increased development of national value chains;
- Exploring dialogues with the European Union, Southeast Asia and the Global South;
- Reducing the dependence of companies on the United States by facilitating their establishment in Asia through regional trade agreements such as the RCEP Asian or the CPTPP transpacific;
- Support for businesses to adapt their business development in Asia and reduce their dependence on the dollar through de-dollarization;
- Devaluation of the value of the Yuan against the US Dollar;
- Concealment of the origin of the Chinese product through the partial relocation of certain production stages, or the use of third countries to adjust the transformation practice and circumvent certain surcharges;
- Intensification of subsidies and support measures for affected SMEs and exporters;
- Active promotion of foreign investment, particularly in its free trade zones;
- Strengthening its technological autonomy by investing in technology funds;
- Granting subsidies, tax breaks and even direct government investment in technology companies;
- Reviving domestic demand by making national consumption the new engine of growth.
3 – Overall impact
The macroeconomic outlook is darkening: the US Federal Reserve is warning of a risk of stagflation, while the WTO is warning of a possible decline in international trade, unprecedented since the 2008 crisis.
The IMF, for its part, lowered its global growth forecast to 2.2%, estimating that this trade tension generates:
- Disruption of supply chains;
- Slowdown in productivity growth;
- Reconfiguration of global trade flows in intra-Asia trade;
- Redeployment to emerging markets;
- Reduction in business investment.
Furthermore, this trade tension acts as a strategic indicator, encouraging companies to:
- Strengthen their resilience;
- Anticipate geopolitical ruptures;
- Revise their forecasts;
- Reduce their workforce;
- Review the structuring of their supply chains;
- Optimize their logistics flows;
- Diversify their locations, particularly towards Southeast Asia or Africa;
- Take advantage of the spaces left vacant in China by the withdrawal of certain American competitors.
It should be noted that the United States is the hub of the global economy. The current proliferation of tariff barriers therefore risks harming all players, which could force partners in both economies to review their trade policies and choose between protecting their domestic industries or aligning with American policy to benefit from a relaxation of customs duties.
This trade tension thus reveals the fragility of the global economy. Consumers are suffering price increases, exporters are losing markets, and sectors such as the automotive and agricultural industries are rethinking their strategies.