The U.S.-China Trade War | Shale Magazine

In recent weeks, President Donald Trump has introduced sweeping trade tariffs on numerous countries and industries, and no country has been hit harder than China. The United States has long relied on China for a wide range of imports, from energy components to electronics and machinery. China’s manufacturing sector is a global powerhouse and a shift away from the Asian giant spells an uncertain future for the U.S. 

U.S. Tariffs on China Explained

The U.S.-Chinese relationship has deepened over the last 50 years, largely thanks to how well the two powers respond to one another’s strengths. As China has progressively increased its low-cost manufacturing capabilities, the U.S. has proved itself the perfect consumer destination for its goods. 

In 2024, bilateral trade between China and the U.S. totaled $582 billion, with China contributing around 13% of all U.S. goods imports. There has been a clear shift in the U.S. reliance on China over the last half a century, with the U.S. exporting just $143.5 billion in goods to China last year compared to $438.9 billion in Chinese imports. 

Owing to the uneven trade balance, the U.S. has been implementing high tariffs on a range of Chinese products, including solar panels, aluminum and steel, pharmaceuticals, and cars for several years.  

In January 2018, the U.S. tariffs on Chinese exports stood at 3.1% and by January 2025, this figure had risen to 20.8%, demonstrating a significant increase in tariffs under Biden. Since Trump took office for his second term in January, he has repeatedly increased U.S. tariffs on Chinese goods, to reach 145% by April, more than 40 times higher than before the U.S.-China tariff war began in 2018. Meanwhile, China has introduced reciprocal tariffs of 125%. 

A Trade War

President Trump’s recent increase of tariffs on China demonstrates his aim to shift away from a reliance on the Asian superpower, to focus on ramping up domestic manufacturing and encourage companies to seek alternative trade partners. Trump justified the tariffs early on in his presidency, saying that the U.S. had been taken advantage of by “cheaters” and “pillaged” by foreigners. He ultimately aims to eliminate the trade deficit. However, whatever the reason for introducing the tariffs, living under an international trade war will likely spell disaster for several U.S. industries. 

By introducing record-high tariffs, Trump is effectively pushing the world’s two biggest economic powers into battle, which will have numerous repercussions. The new tariffs have already led several U.S. factories to cancel orders from China and some Chinese manufacturers to place workers on temporary leave, due to economic uncertainty. Meanwhile, shipments of Chinese goods to the U.S. have begun to fall. 

The Harsh Reality

Trump is optimistic that the tariffs on China will contribute to long-term growth in jobs and investment in the U.S. However, many financial experts are less certain. JPMorgan recently stated that it is “more likely than not” that the U.S. economy will shrink this year. The financial services company has increased its forecast of the likelihood of the global economy entering recession by year-end from 40% to 60%, citing “disruptive U.S. policies” as the “biggest risk to the global outlook”. The company stated, “The effect … is likely to be magnified through (tariff) retaliation, a slide in U.S. business sentiment and supply-chain disruptions.”

In addition to introducing reciprocal tariffs, China has responded to Trump’s trade war by suggesting the possibility of delisting the stocks of several major Chinese companies from American stock exchanges and deterring Chinese citizens from travelling to or studying in the U.S., demonstrating just how far-reaching the tariffs implications could be. 

Economists at Capital Economics said that their calculations suggest that China’s exports to the U.S. could more than halve in the years ahead, and it’s small businesses that are being hit the hardest so far, with economic uncertainty weighing heavily on them and price increases cutting into profit margins. If the tariffs on Chinese and other foreign goods increase prices and contribute to weaker economic growth, they will likely drive up U.S. inflation in the coming months.

Could Trump go Back on China Tariffs?

Just as everyone was preparing for a future battling with 145% tariffs on Chinese goods, recent moves by President Trump suggest he may be the first to blink in the trade relationship with China, as he has appeared to soften his comments towards the Asian giant in recent days. 

Speaking in the Oval Office on Tuesday, Trump said he was optimistic about improving trade relations with China, saying that the level of tariffs the U.S. had imposed on Chinese goods was “very high, and it won’t be that high. … No, it won’t be anywhere near that high. It’ll come down substantially. But it won’t be zero.” He also told reporters that he would be “very nice” in negotiations in Beijing.  

Chinese Foreign Ministry spokesperson Guo Jiakun responded on Wednesday to Trump’s comments saying, “China’s attitude towards the tariff war launched by the U.S. is quite clear: We don’t want to fight, but we are not afraid of it. If we fight, we will fight to the end; if we talk, the door is wide open.” 

The recent comments from both sides suggest that there may be a better trade deal to be had, but only time will tell, and, for now, economic uncertainty looms over the United States. 

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