The intensifying trade war between the United States and China has moved beyond a bilateral economic dispute, evolving into a global geopolitical confrontation with profound implications for East Asia. The economic fallout from escalating tariffs is expected to have wide-ranging consequences, including the restructuring of global supply chains and a realignment of strategic relationships in the region.
Although the US launched the trade war in an effort to curb China’s economic rise, the outcomes thus far indicate a reversal of those goals – strengthening China’s position in global trade, eroding US influence among key regional allies, and accelerating the shift toward a multipolar order in East Asia.
It is time for Washington to pause and fundamentally reconsider its strategy.
Disruption of the post-war global trading order
The US-China trade war now represents the most significant disruption to the global trading system since the formation of the post-World War II liberal economic order. Triggered by the imposition of steep tariffs – up to 125% by the US and 84% by China – the conflict now affects over $650 billion in bilateral trade, encompassing a wide range of consumer and industrial sectors.
And this may be just the opening salvo. No one can say with certainty where both countries will ultimately end up, as neither side appears willing to back down
Initially intended to rebalance trade flows and counter China’s perceived economic aggression, the trade war has instead generated widespread economic uncertainty and strategic dislocation – especially across East Asia.
The World Trade Organization projects an 80% reduction in US-China trade volumes, sending shockwaves through global markets. The OECD has revised its global GDP growth forecasts downward, predicting 3.1% growth in 2025 and 3.0% in 2026. US economic growth is expected to decline to 2.2% in 2025 and farther to 1.6% in 2026, reflecting not only trade-related headwinds but also rising inflation and waning investor confidence.
Tariffs have driven up import costs, particularly in sectors such as electronics, pharmaceuticals and retail. Financial markets have reacted negatively, with major stock indices experiencing notable declines.
Economic forecasts are becoming increasingly cautious, with growing concerns about the possibility of a recession. These trends point toward a heightened risk of stagflation – a troubling mix of economic stagnation and rising inflation.
Multinational corporations have begun reconfiguring their supply chains, shifting some production to other alternative countries. However, these alternatives lack China’s scale, efficiency, and integration, leaving global supply chains in flux and emerging markets vulnerable to further disruptions. The OECD warns that continued fragmentation could inflict lasting damage on global productivity.
China’s resilience and strategic position
Contrary to US expectations, China has not been economically crippled. As of 2024, it remains the world’s leading trading nation, accounting for 14.5% of global exports – far surpassing the United States’ 8.5%. Exports to the United States make up only 12.3% of China’s total exports, which amounted to almost $3.6 trillion.
This underscores Beijing’s strategic diversification and deep integration into global value chains. US leadership may be overestimating the significance of American imports in sustaining the economic strength demonstrated by the Chinese economy.
China supplies the US with critical goods, including semiconductors, rare earth minerals, and pharmaceuticals. Any further restrictions by Beijing in these sectors would have immediate and severe repercussions for US industry.
Strategic implications in East Asia
East Asia is witnessing a quiet but significant realignment. Major US allies such as South Korea and Japan are increasingly drawn toward China due to its economic size and geographic proximity. In 2023, China-South Korea trade reached $310 billion, and China-Japan trade exceeded $330 billion. In contrast, both countries traded only around $230 billion with the United States. This trend underscores a shift driven by economic pragmatism over ideology.
The ongoing trade war has started eroding the credibility of US-led alliances in the region. Participation by South Korea in China-led initiatives such as the Regional Comprehensive Economic Partnership (RCEP) signals a growing tilt toward Beijing.
Economic dependence is translating into diplomatic flexibility, with potential implications for long-standing security alignments. The region may never be the same again.
Should Washington continue with protectionist policies without offering viable economic alternatives, regional allies may begin to hedge their bets. This could result in reduced participation in US-led defense initiatives, joint military exercises, and diplomatic forums – marking a profound transformation in the region’s geopolitical landscape.
The US may be overestimating regional countries’ commitment to shared political values. That bond may not be strong enough to hold them together in the face of mounting economic hardships and rapidly shifting geopolitical dynamics.
US miscalculation and the rise of a multipolar Asia
Instead of curbing China’s rise, the trade war is catalyzing a broader realignment. China’s economic resilience, assertive diplomacy, and expanded global trade ties are accelerating its emergence as a rival superpower. Meanwhile, the US risks strategic overreach and diminishing relevance in a region it once dominated.
The Cold War-era architecture of US leadership is increasingly ill-suited for a world defined by economic interdependence. China sees this confrontation not merely as a trade dispute but as a strategic test of its national resolve. Far from backing down, Beijing is doubling down – confident that it can emerge from the conflict stronger and more globally engaged.
The way forward
The notion that the United States can bring China to its knees through a trade war is outdated. That window closed a long time ago. China is now the world’s largest trading nation – a status it has held for over a decade – and its share of global exports reflects a deeply embedded position within global supply chains.
It is crucial for American leadership to realistically assess the current role of US trade with China in driving China’s continued growth. Washington appears to be stuck in the past, when American investment and trade played a major role in China’s economic expansion. Today, China’s growth is increasingly sustained by diversified global partnerships and domestic innovation.
In 2024, China’s exports to the US accounted for a small portion of its total exports, underscoring its reduced dependence on the American market. On the other hand, the US remains heavily reliant on Chinese imports across critical sectors, from electronics and pharmaceuticals to rare earth minerals and consumer goods. A disruption in Chinese exports would paralyze major American companies and fuel inflationary pressures.
Moreover, China holds the ability to retaliate by targeting key US exports such as agricultural products, aircraft and luxury goods, which would hurt American farmers, exporters, and manufacturers. This could ripple across global markets, destabilize supply chains, and weaken US competitiveness.
In this multipolar landscape, China is no longer a subordinate player. It is a superpower with diversified markets, resilient trade networks, and growing geopolitical reach. The US strategy of using trade as a weapon – originally intended to constrain China – is now ironically enabling its rise.
Given these realities, the United States must fundamentally rethink its trade and strategic posture. Rather than continuing to rely on punitive tariffs, Washington should adopt a strategy of constructive engagement that reflects the complexities of a multipolar, interconnected global economy.
This requires a renewed commitment to work through multilateral trade institutions, ensure fair competition and promote transparency. Simultaneously, the US must lead the formation of inclusive regional trade agreements that offer its allies viable economic alternatives to dependence on China – thereby reinforcing trust and shared prosperity.
At the same time, Washington should deepen its partnerships in the  region by investing in joint ventures in digital infrastructure, green technology and next-generation innovation.
Domestically, the United States must enhance its economic strength by investing heavily in artificial intelligence, semiconductors, clean energy, and workforce development. These sectors will define global leadership in the 21st century, and the US must lead not merely through power, but by setting the pace of innovation.
Ultimately, preserving American competitiveness and credibility requires a comprehensive and forward-looking strategy. The challenge is no longer about winning a trade war with China – it is about whether the United States remains a central architect of the future global order or is gradually forced to cede that role to China
