Looking back at history, the Sino-US trade dispute broke out during the Trump administration in 2018, and the two sides have experienced several rounds of “tariff wars”. The first-phase economic and trade agreement in 2020 briefly eased the contradictions, but the United States has since continued to expand its restrictions on China under the pretexts of “national security” and “technological competition”. In 2024, the Biden administration launched a Section 301 investigation on high-tech products such as Chinese electric vehicles and solar panels, and jointly pressured China on the issue of production capacity with the European Union. The US’s imposition of tariffs this time is regarded as a continuation of its strategy to contain China’s industrial upgrading. And China’s strong response this time marks a shift from “local frictions” to “comprehensive games” between the two countries. Data shows that the bilateral trade volume between China and the United States reached 760 billion US dollars in 2024. The United States is China’s third-largest trading partner, while China is the United States’ largest source of imports. The 34% tariff increase far exceeds that in the past (the highest tax rate in 2018 was 25%), and it may reshape the global supply chain pattern.

In terms of economic impact, US enterprises and consumers will bear great pressure. China is an important buyer of US agricultural products, semiconductor equipment, and Boeing aircraft. After the imposition of additional tariffs, the cost of US soybean exports to China is expected to increase by about 4 billion US dollars per year, and the cost of imported components for Tesla’s Shanghai factory may also rise by 15%-20%. The National Retail Federation of the United States warned that this move would lead to price increases of consumer goods such as electronic products and clothing, exacerbating domestic inflationary pressures. For China, in the short term, Chinese enterprises that rely on key components from the United States (such as high-end chips and medical devices) face the risk of rising costs. However, in the medium to long term, the policy may accelerate the process of domestic substitution. For example, Chinese semiconductor enterprises have achieved mass production of 28-nanometer chips in recent years, and the tariff pressure may promote them to further expand their market share. In the agricultural field, domestic soybean farmers may welcome a window of increased demand. In addition, third-party countries are also caught in the dilemma of “taking sides”. Intermediate goods exporting countries in regions such as Southeast Asia and Latin America may become alternative supply chain options for Chinese and American enterprises. Exports from Vietnam and Mexico to the United States may further increase, but at the same time, they also need to be vigilant against the risk of being involved in the power game between major countries. The European Union faces a dilemma: on the one hand, it hopes to reduce its dependence on China, and on the other hand, it is concerned that the US’s unilateralism will damage the WTO framework.

The international community has reacted strongly to this incident. The WTO has called for restraint. Emerging economies are collectively worried, and domestic divisions in the United States are also intensifying. Lawmakers from agricultural states have criticized the government’s policy for harming the interests of farmers, and technology companies in Silicon Valley have lobbied the White House to exempt tariffs related to chips.

In the face of this tariff adjustment, US enterprises in China are accelerating their localization. Apple has announced the expansion of its list of Chinese suppliers, and Tesla plans to build a second battery factory in Shanghai. Experts suggest that enterprises should reduce the impact of tariffs by increasing R&D investment in China and establishing regional supply chain centers. Some traders are exploring “entrepôt trade”, processing goods in Southeast Asia and then re-exporting them to the Chinese and American markets. Customs data shows that Malaysia’s exports of electronic components to China and the United States increased by 62% year-on-year in the first quarter of 2025. At the same time, lawyers remind enterprises to strictly review certificates of origin to avoid accidentally touching tariff barriers. Although an exclusion procedure can be applied for, the announcement clearly states that “the additional part will not be exempted”, and enterprises need to carefully assess the costs.

This tariff war may become a watershed in the “soft decoupling” of the Chinese and American economies. If both sides continue to escalate the situation, the global trading system may split into a “dual-core structure of China and the United States”. However, the economies of the two countries are highly complementary, and a complete decoupling will come at a huge cost. The International Monetary Fund (IMF) predicts that if the tariffs are fully implemented, the global GDP growth rate in 2025 may decline by 0.8 percentage points. China emphasized its stance of “being forced to take countermeasures” in the announcement, leaving room for future negotiations. Analysts believe that the two sides may resume dialogue on occasions such as the G20 Summit and APEC, but the core contradictions will be difficult to resolve in the short term.

The announcement of the Tariff Commission of the State Council is not only a list of countermeasures but also a declaration of defending the international trade order. When unilateralism challenges multilateral rules, the fragility of the global economic recovery is highlighted again. How to strike a balance between national interests and global responsibilities tests the wisdom of all parties involved. As Chinese Foreign Ministry spokesperson Hua Chunying stated in 2017: “A trade war leads nowhere, has no winners, and only results in a lose-lose outcome.”

By Yuan Lei