Background Introduction

In the current tightly intertwined global economy, any movement in trade policy may cause dramatic fluctuations in the economic landscape. Recently, the friction between China and the United States over tariff issues has escalated again, becoming the focus of global attention. On April 2, 2025, the U.S. government officially implemented the ‘equal tariff’ policy based on the ‘International Emergency Economic Powers Act,’ which is like a heavy bomb thrown into the already turbulent international trade arena.

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According to the policy, the United States, on the one hand, imposes a 10% basic tariff on all imported goods, which took effect on April 5; on the other hand, it imposes a higher tax rate on specific economies, with China being levied an additional 34%, which took effect on April 9, on top of the previous 20% tariff, resulting in a comprehensive tax rate as high as 54%—66%. In addition, the United States also targets electric vehicles, semiconductors, photovoltaics, and other key areas for specific taxation, such as imposing a 50% tariff on chips below 14 nanometers, and canceling the tax-free treatment for small packages below $800, while simultaneously imposing taxes on transit countries such as Vietnam (46%) and Mexico (25%). This series of aggressive tariff adjustments has severely disrupted the long-established trade order between China and the United States, and brought significant uncertainty to the global industrial and supply chains.

Faced with the unilateral tariff measures taken by the United States, China quickly responded. On April 4, the Tariff Commission of the State Council of China announced that, starting from April 10, a 34% tariff will be imposed on all imported goods originating from the United States. At the same time, China has implemented export controls on some rare earth elements and initiated the “Unreliable Entity List” system, restricting market access for American companies such as Qualcomm and Apple in China. For a while, the Sino-US trade relations are on edge, causing anxiety in the global economic market, stock market fluctuations, commodity price volatility, and all parties are closely watching where this tariff game is heading.

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Reason analysis

Economic aspect

The United States imposed high tariffs on China, ostensibly to reduce the long-standing trade deficit. For a long time, the United States has been in a deficit in its trade with China. Some officials of the US government attribute this to China’s trade policies and competitive advantages in industry. From a data perspective, the trade deficit in goods between the United States and China has remained high in the past few years. In their view, by imposing tariffs, increasing the cost of Chinese goods entering the US market, and reducing their price competitiveness, it can prompt US consumers to reduce their purchases of Chinese products and instead choose domestic products or substitutes from other countries, thereby reducing the trade deficit.

At the same time, the United States is trying to protect its domestic industries through tariffs. In some traditional manufacturing sectors, such as steel, textiles, etc., American companies face fierce competition from low-cost, high-efficiency products from countries such as China, continuously squeezing their market share. After the imposition of tariffs, the prices of Chinese products entering the U.S. market have increased, providing some breathing space for domestic American companies in price competition, hoping to promote the recovery of domestic industries and increase employment opportunities. For example, the U.S. steel industry has been calling on the government to take trade protection measures to cope with the impact of imported steel, and the tariff policy of the Trump administration to some extent caters to the needs of this part of the industry.

Political perspective

From a political perspective, the tariff policy of the Trump administration has a profound electoral political background. Trump is trying to shape himself as a staunch defender of American interests by adopting a tough trade policy, especially imposing tariffs on major trading partners such as China, in order to win the support of some domestic interest groups and voters. Some domestic manufacturing unions and organizations in the United States have a certain influence in elections. They have long been under pressure from foreign low-cost product competition. Trump’s tariff protection policy has given these interest groups hope for industrial revival, leading them to lean towards supporting Trump politically.

In addition, the United States views China as its global strategic competitor, and it is evident that the intention to curb China’s development in the economic field through tariff measures. In recent years, China has rapidly developed in strategic emerging industries such as high-end manufacturing, new energy, and information technology, gradually narrowing the technological gap with the United States. The United States is concerned that China’s rise in these key areas will undermine its global economic and technological dominance. By imposing high tariffs on relevant Chinese industrial products, restricting Chinese products from entering the US market, hindering Chinese companies from accessing overseas technology and market resources, and thereby slowing down the pace of China’s industrial upgrading, the United States maintains its high-end advantage in the global industrial and supply chain.

Tariff Countermeasure

China’s retaliatory tariffs against the United States are swift and forceful. A 34% tariff is imposed on all imported goods originating from the United States, signaling a more firm and tough stance compared to the differentiated tariff strategies used in previous trade frictions. The retaliatory list covers a wide range of areas including agricultural products, automobiles, and technology products, precisely targeting relevant U.S. industries. Taking agricultural products as an example, U.S. soybeans, corn, and other agricultural products hold a certain market share in China. After China imposed tariffs, American agricultural exporters are facing immense pressure, leading to sharp declines in farmers’ income and causing significant impacts on the economies of U.S. agricultural regions.

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China’s retaliatory tariffs are not only an economic tool but also a strong response to U.S. unilateralism and protectionism, demonstrating China’s firm stance in defending national sovereignty, security, and development interests, upholding fair and just international trade rules and the multilateral trading system, and showing the world China’s determination not to back down under unreasonable trade pressure.

Multiple Strategies

In addition to tariff countermeasures, China has implemented export controls on some rare earth elements, a move of strategic significance. Rare earth elements, as important basic materials for modern industry, play an indispensable role in many high-tech fields such as electronics, new energy, and aerospace. China is a major global producer and exporter of rare earths. The control of rare earth exports has put the U.S. high-tech industry, which relies on Chinese rare earth supply, at risk of raw material shortages, further impacting its related industries. For example, the U.S. semiconductor and new energy vehicle industries have a significant demand for rare earths, and limited rare earth supply will constrain their production scale and technological innovation.

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At the same time, China actively promotes a diversified market strategy. In terms of trade partners, it strengthens economic and trade cooperation with countries along the Belt and Road, as well as the ASEAN, EU, and other regions. In recent years, the scale of trade between China and ASEAN has continued to expand, with ASEAN becoming China’s largest trading partner for several consecutive years. By deepening regional economic cooperation, reducing reliance on the U.S. market, diversifying trade risks, expanding more extensive market space for Chinese enterprises, and providing more support for the stable development of the Chinese economy.

Impact Analysis

(1) Impact on China

For China, the imposition of U.S. tariffs has significantly impacted export trade. The computer electronics, furniture, clothing, and textile industries in China have been particularly affected, as they are heavily reliant on U.S. exports, with some industries having U.S. imports accounting for over 25% of their total. Following the imposition of tariffs, the competitiveness of product prices has decreased, leading to a severe loss of orders, reduced corporate revenue, and forcing some enterprises to cut production capacity and lay off employees to cope with the difficulties. At the same time, in terms of imports, the cost of tariffs has surged, resulting in substantial price increases for medical equipment, automobiles, and machinery imported from the U.S., raising procurement costs for domestic enterprises, which has impacted production and operations.

(2) Impact on the United States

The U.S. economy has not been spared either. American consumers are facing pressure from rising prices, as the prices of low-priced goods that were originally imported from China have increased, leading to higher living costs. American businesses also face many challenges, with companies that import raw materials and components from China seeing rising production costs, squeezed profit margins, and some even being forced to adjust their supply chain layout, increasing operating costs and uncertainty. In addition, industries such as American agricultural products and automobiles have been impacted by China’s retaliatory measures, causing damage to the interests of related companies and practitioners, and having a negative impact on the growth and employment of the U.S. economy.

(3) Impact on the global economy

As the top two economies globally, the tariff game between China and the US has severely impacted the global industrial chain. The global industrial chain relies heavily on trade and industrial cooperation between China and the US. The US imposing tariffs on China has hindered the export of products from China, a crucial manufacturing base globally. Some multinational companies are adjusting their production layout in China, with some orders and production capacity shifting to other countries. However, due to China’s significant position in the global industrial chain, it cannot be easily replaced in the short term. This adjustment has brought chaos and increased costs to the global industrial chain. For example, the supply chain of the electronics industry involves China, the US, and many other countries and regions. Changes in tariffs have led to increased costs in raw materials, components transportation, and production, resulting in extended product delivery cycles.

In terms of the global economic landscape, the China-US tariff friction has accelerated the trend of global economic multipolarity. Countries have begun to re-examine their positions and trade relationships in the global industrial chain, seeking more diversified trade partners and supply chain layouts. Some emerging economies have seized opportunities in this process, such as Vietnam, India, and other countries, which have taken over some of the industrial orders transferred from China. At the same time, China’s active promotion of regional economic cooperation, such as the effective implementation of RCEP, has further strengthened economic links in the Asia-Pacific region, promoted trade liberalization and economic integration within the region, and had a positive impact on reshaping the global economic landscape.