After United States President Donald Trump suspended his “reciprocal tariffs” on major US trading partners on April 9, he ramped them up on China’s goods. US trade levies on most imports from China have climbed to 145 percent. Beijing retaliated with duties of its own, at 125 percent on US goods.
Trump has long accused China of exploiting the US on trade, casting his tariffs as necessary to revive domestic manufacturing and reshore jobs back to the US. He also wants to use tariffs to finance tax cuts. Most economists remain sceptical Trump will achieve his aims.
For now, the US and China are locked in a high-stakes game of chicken. The world is waiting to see which country will yield and which will stay the course. As Trump nears his first 100 days in office for the second time, here’s where the tariff war with China stands:
What’s happening with negotiations?
Trump recently played up the possibility of securing a trade deal with China. Last week, the US president said his tariffs on China will “come down substantially” in the near future.
“We’re going to have a fair deal with China,” Trump told reporters on April 23, stirring hopes of a de-escalation. He also said his administration was “actively” negotiating with the Chinese side without elaborating.
On April 24, however, China’s Ministry of Commerce rebuffed president Trump’s remarks, saying there were no talks taking place between the two countries.
“Any claims about the progress of China-US economic and trade negotiations are groundless and have no factual basis,” ministry spokesman He Yadong said.
While he insisted that Beijing won’t duck any economic blows from Washington, he also said the door was “wide open” for talks.
Last week, the Reuters news agency reported that China was evaluating exemptions for select US imports – a list of up to 131 products.
Beijing has not made any public statement on the issue.
Has the tariff war impacted US exports?
Trump introduced his sweeping tariffs on China less than three weeks ago. The fallout for US businesses won’t be fully felt until later this year. Still, the warning signals are already flashing red.
Data from the US Department of Agriculture shows that exports of soya beans – the biggest US farm export – fell dramatically for the period April 11-17, the first full week of reporting since Trump’s China tariff announcement.
By April 17, net sales of US soya beans dropped by 50 percent compared with the previous week. That was driven by a 67 percent fall in weekly soya bean exports to China, which, until recently, was America’s biggest export destination for the legume.
According to Piergiuseppe Fortunato, an adjunct professor of economics at the University of Neuchatel in Switzerland, “China’s retaliatory tariffs will hit US farmers hard. Some may go out of business.” He added that all sectors with exposure to China would come under strain.
In 2023, the US exported roughly $15bn of oil, gas and coal to China. Losing that market would hit US energy firms.
Are imports to the US going to take a hit?
Since the start of Trump’s tariff war, cargo shipments have plummeted. According to Linerlytica, a shipping data provider, Chinese freight bookings bound for the US fell by 30 to 60 percent in April.
The drastic reduction in shipping from America’s third largest trading partner – after Canada and Mexico – has not yet been felt. In May, however, thousands of companies will need to restock their inventories.
According to Bloomberg News, retail giants Walmart and Target told Trump in a meeting last week that shoppers are likely to see empty shelves and higher prices from next month. They also warned that supply shocks could roll out to Christmas.
Electronic appliances, such as TV sets and washing machines, made up 46.4 percent of US imports from China in 2022. The US also imports a lot of its clothing and pharmaceutical product ingredients from China. The price of these goods will begin to rise from next month.
On April 22, the International Monetary Fund raised its US inflation forecast to 3 percent in 2025, owing to tariffs – a full 1 percentage point higher than in January. The lender also lowered its US economic growth forecast and raised its expectation that the US will tip into recession this year.
How will China’s economy be affected?
Despite growing tensions between the US and China, Washington and Beijing remain major trading partners.
According to the Office of the US Trade Representative, the US imported $438.9bn in Chinese goods last year.
That amounts to roughly 3 percent of China’s total economic output, which remains heavily reliant on exports.
In a report shared with its clients this month, Goldman Sachs said it expects Trump’s tariffs to drag down China’s gross domestic product (GDP) by as much as 2.4 percentage points.
For their part, China’s top officials said the country can do without American farm and energy imports and promised to achieve a 5 percent GDP growth target for this year.
Zhao Chenxin, vice chairman of the National Development and Reform Commission, said that together with non-US imports, domestic farm and energy production would be enough to satisfy demand.
“Even if we do not purchase feed grains and oilseeds from the United States, it will not have much impact on our country’s grain supply,” Zhao said on Monday.
He also noted there would be limited impact on China’s energy supplies if companies stopped importing US fossil fuels.
In some ways, experts said, China has been preparing for this crisis.
Fortunato told Al Jazeera: “The US is one of China’s biggest export markets, so tariffs will slow GDP growth. But Beijing has played this smartly as it began diversifying its imports away from the US during the first Trump trade war” in 2018.
He also pointed out that “the US depends on China for up to 60 percent of its critical mineral imports, used in everything from clean energy to military technology. The opposite flow simply isn’t there, so the US is more vulnerable.”
Could the US lose its geopolitical standing?
Trump has made little secret of his wish to conscript US allies into a trade war. The administration said it aims to strike free trade deals with the European Union, Great Britain and Japan.
More generally, reports suggest that Washington is asking trade partners to loosen their economic ties with China as a pre-condition for securing relief from Trump’s “reciprocal” tariffs.
Nevertheless, US allies seem largely opposed to any economic showdown with China. Last week, the European Commission said it has no intention of “decoupling” from China.
Elsewhere, UK Chancellor of the Exchequer Rachel Reeves recently told the Daily Telegraph newspaper: “China is the second biggest economy in the world, and it would be, I think, very foolish to not engage.”
Many countries are not in a position to abandon their trade ties with Beijing. The EU, in particular, has a huge trade deficit with China. Cutting off access to Chinese goods – both consumer products and inputs for industry – would bruise its already sluggish economy.
Across the developing world, China’s trade role is equally as crucial. Roughly a quarter of Bangladesh’s and Cambodia’s imports come from China. Nigeria and Saudi Arabia are similarly dependent on Beijing for their goods imports.
“It’s hard to see why countries would want to undermine their own business interests to try and reduce America’s trade deficit with China,” Fortunato said. “On this point, I think Trump has been short-sighted and may be forced to blink first on lowering tariffs with China.”
Is Trump losing his grip on Republican voters?
The Chinese Communist Party doesn’t need to worry about its next election cycle. Trump’s Republican Party does, so Beijing has the political upper hand in Trump’s trade war. Simply put, it has more time on its side.
For Trump’s party, his sabre rattling already looks politically costly. A new Economist-YouGov poll shows Americans reporting Trump’s economic actions have hurt them personally more than they’ve helped by a 30-point margin.
And public approval of the president’s economic management has been low for a while: It had fallen to 37 percent in a Reuters-Ipsos poll published on March 31, his lowest score ever in that survey.
If Trump stays the course, it is likely that his approval ratings might fall still lower, jeopardising the Republican Party’s fragile grip on the US House of Representatives – and possibly the Senate, experts said.
“For these reasons”, Fortunato said, “China does not feel compelled to rush to the negotiating table to secure a trade deal. That will probably fall to Trump.”
