The US–China trade war has entered a perilous new phase. What began as a predictable tit-for-tat exchange of tariff hikes has rapidly escalated into a broader, more complex struggle that goes far beyond import duties. The events of this week—America’s unprecedented 145% tariff on Chinese goods and Beijing’s swift counter with a 125% tariff on US products—underscore a deepening rivalry driven by strategic mistrust, technological competition, and a mutual desire to assert global dominance.
This isn’t just about economics anymore. It’s about leverage. It’s about power. And neither side appears willing to blink first.
The rapid exchange of tariffs over the past two months reflects a trade relationship spiraling into a high-stakes confrontation. On April 10, the Biden administration—under intense political pressure and keen to show resolve—raised tariffs on a broad range of Chinese imports, citing unfair trade practices and persistent Chinese subsidies for key sectors like electric vehicles, semiconductors, and green technology. Just one day later, Beijing responded with its own aggressive hike.
But unlike in 2018, when China largely mirrored US tariffs, Beijing’s response this time was more expansive and calculated. The Chinese government not only upped its own tariffs but also launched a multi-pronged counteroffensive.
- A new anti-dumping investigation into US-made CT tubes.
- The addition of 11 American firms to its “Unreliable Entity List,” severely limiting their ability to operate in China.
- A ban on exports of dual-use technologies to 16 more US companies.
- Tighter export controls on key rare earths essential to the defense and tech industries.
- A measured reduction in the number of Hollywood films allowed into Chinese cinemas.
Each of these moves is designed to send a clear message: tariffs are no longer China’s only weapon.
China’s retaliation signals a maturing strategy. In the 2018–2019 trade war, Beijing leaned heavily on reciprocal tariffs. But it learned hard lessons. Its trade imbalance with the US meant it could not match dollar-for-dollar retaliation. Worse, tariffs on American imports sometimes backfired, making Chinese exports more expensive and weakening domestic manufacturers dependent on US supply chains.
Now, Beijing is playing a longer game. Following the US crackdown on Huawei, ZTE, and Chinese access to advanced semiconductors, the trade conflict evolved into a tech war. China responded by accelerating its domestic innovation push, doubling down on “dual circulation”—a strategy to reduce foreign dependency while boosting internal consumption—and building a regulatory system to counter foreign pressure.
This institutional pivot wasn’t just reactive. It reflected a growing awareness that the core of the US–China conflict lies not in soybeans or solar panels but in control over future technologies and strategic industries.
From Beijing’s perspective, the tariffs are just one front in a broader campaign by Washington to contain China’s rise. Chinese officials frequently argue that US policy is less about trade fairness and more about maintaining American hegemony.
Although President Biden authorized the April 10 tariffs, it is former President Donald Trump’s influence—looming large in the 2024 election and the Republican-dominated House—that casts a long shadow over US trade policy.
Trump’s previous use of tariffs as both punishment and negotiating leverage remains a blueprint. His administration made clear that economic coercion could drive political concessions, a logic that many in Washington still embrace. The current escalation appears to be following that playbook, despite the change in administration.
Beijing has studied Trump’s methods closely. Chinese media and academics often frame him as a transactional negotiator—focused more on deal-making than on principle. That lens shapes their response. By targeting powerful American corporations and tech firms with stakes in China, Beijing hopes to trigger lobbying pressure within the US, potentially influencing policy from the inside.
The goal isn’t simply retaliation. It’s leverage.
China’s evolution in its economic statecraft is apparent. Unlike 2018, Beijing is no longer relying solely on reactive tools. Instead, it’s integrating trade, investment restrictions, tech controls, and political messaging into a coordinated strategy. That’s a significant shift.
One major change is how China now deploys rare earth elements—a group of 17 metals critical to advanced manufacturing and defense. In 2025, China remains the world’s dominant producer of rare earths. By tightening exports, especially to US defense contractors and chip manufacturers, Beijing can exert real pressure on sensitive parts of the US economy.
Similarly, Hollywood’s reduced access to Chinese audiences may seem symbolic but carries weight. US studios make hundreds of millions annually from Chinese box offices. Limiting that access not only hits the entertainment sector’s bottom line but also sends a warning: cooperation is conditional.
Beijing’s decisions are increasingly designed to trigger domestic pressures within the US by hitting politically and economically sensitive sectors.
However, China’s ability to retaliate is not without limits. Despite its global ambitions, Beijing still faces domestic economic fragility. GDP growth is sluggish—hovering near 4%—foreign direct investment has slowed, and youth unemployment remains stubbornly high.
These internal constraints mean that every retaliatory move is weighed carefully. Aggressive escalation risks further damage to an already strained economy. But failing to respond could be seen as weakness, both by the US and China’s domestic audience.
So Beijing walks a tightrope: appearing strong enough to deter further American aggression, but restrained enough to avoid deeper economic fallout.
This strategic calculus is evident in its recent messaging. While announcing the latest set of retaliatory measures, Chinese officials simultaneously called for dialogue and mutual respect. They emphasized that the “door to talks is open”—a familiar refrain designed to show international audiences that China is not the aggressor.
But the message to Washington is clear: continued escalation will be met with tangible consequences, not just rhetorical protest.
What’s emerging is not a series of disconnected trade skirmishes but a structural, long-term rivalry. And it won’t be resolved through tariffs alone.
The US sees China as a systemic competitor—one that challenges its technological edge, geopolitical influence, and economic model. For its part, China views US actions as efforts to contain its rise, undermine its sovereignty, and protect a declining global order centered around American power.
This clash of visions ensures that trade frictions will persist regardless of who sits in the White House. Biden may differ in tone from Trump, but the direction of US policy—towards decoupling in sensitive areas, tightening supply chains, and bolstering domestic production—remains largely unchanged.
China, likewise, continues to push for greater economic self-sufficiency, greater control over its tech ecosystem, and a more assertive global role. Its retaliatory playbook is more diversified now, with policy tools that can shape not just trade outcomes, but strategic behavior.
For multinational corporations, the expanding scope of the trade war spells prolonged uncertainty. Firms operating across the Pacific now face not only tariff hikes but also regulatory minefields, supply chain disruptions, and escalating political risk.
US tech firms, in particular, are caught in the crossfire. Companies like Intel, Apple, and Nvidia rely heavily on the Chinese market. With China targeting dual-use technology exports and applying national security filters to outbound investments, the environment is increasingly unpredictable.
Similarly, Chinese firms listed on US stock exchanges remain under scrutiny, with potential delisting threats and compliance crackdowns adding more volatility.
The corporate world is recalibrating—not just hedging against risk, but rethinking operations entirely. Some companies are relocating production out of China. Others are diversifying supply chains across Southeast Asia and India. But decoupling is expensive and complicated. For many, dependence on both the US and Chinese markets remains a business reality, even as the geopolitical climate turns hostile.
The fundamental truth emerging from this latest escalation is that the US–China trade war is no longer a skirmish—it’s a core feature of the international system.
Both sides are digging in for a long campaign. China’s new measures mark a turning point: no longer simply matching US tariffs, but wielding broader state power to shape global outcomes. The US, meanwhile, continues to blend economic coercion with strategic containment.
In the absence of a broader reset in relations—or a compelling reason for either side to de-escalate—the risk of further escalation remains high.
Tariffs may have sparked this conflict, but it’s no longer about tariffs alone. What we’re witnessing is a cold economic war, rooted in ideology, power, and control over the future. The question now isn’t who escalates next—but how much further either side is willing to go before the costs become unbearable.
