Tariff Turmoil: US-China Trade War Escalates Again | Image Source: www.euronews.com
BEIJING, China, 14 April 2025 – As US President Donald Trump intensifyes his tariff campaign against China, the world is watching with anxiety. The latest escalation - which now includes the imminent threat of additional costs for pharmaceuticals and electronics – is not just another chapter in the current US-China trade dispute. It is a high-performance global-economic tug with wavy effects that extend from Wall Street to Southeast Asia, from Silicon Valley to European ports.
What caused new trade tensions?
The Trump administration’s latest economy in the trade war includes an incredible 145% cumulative tariff on Chinese imports. Although some exemptions were initially offered for electronics such as smartphones and semiconductors, conflicting statements from U.S. officials quickly razed the water. Trade Secretary Howard Lutnick later indicated that such devices could in fact be included in future tariff cycles within a month or two.
Trump’s position is clear – nobody is safe. In a post on his social platform of truth, he said,
“No one gets rid of the hook.”
This unpredictability feeds the volatility of global markets and forces companies to reassess their strategies.
How does China react?
China plays the long game. According to the statements of Lyu Daliang, spokesman for the Chinese customs administration, the country is not familiar.
Heaven won’t fall
stated, referring to the continued diversification of Beijing’s trading partners and the resilience of its large internal market. In order to counter US pressure, China has reduced up to 125% of retaliatory duties on US goods and has highlighted economic alliances with emerging markets in Southeast Asia, Africa and within its own borders.
Chinese President Xi Jinping reinforced this sentiment during a diplomatic tour in Vietnam, Malaysia and Cambodia, noting that protectionism is a dead end. His visit, although mentioned earlier, has taken on a new urgency as China seeks to strengthen regional trade links in the midst of the current situation.
Do consumers already feel the pinch?
Sure. Sony recently announced a 25% increase in PlayStation 5 prices in Europe, the Middle East, Africa and Oceania, attributing this increase to what he called “a difficult economic environment”. This marks one of the first clear indicators that consumers are beginning to bear the cost of tariff war, and experts warn that this will not be the last.
Electronic manufacturers, especially those heavily dependent on Chinese supply chains, are trapped in a network of uncertainty. The possibility of a shortage of American electronics is real. As Zhiwei Zhang, chief economist at Pinpoint Asset Management, pointed out, supply chains cannot simply be rebuilt at night.
“In the short term, I expect the chaos of supply chains and the potential shortage in the United States that can stimulate inflation”
Zhang warned, suggesting that long-term supply adjustment is far from easy or fast.
What happens with commercial volumes?
Despite growing pressure, China recorded a surprising annual increase of 12.4% in exports by March 2025, its largest since October of the previous year, largely due to the companies that accelerated shipments prior to tariff deadlines. However, imports fell by 4.3%, indicating a decline in domestic demand and a slowdown in the domestic economy.
In this context, Chinese exports increased by only 2.3% in the first two months of 2025, making the March increase remarkable. Economists attribute this difficulty not to growth demand but to ”frontloading” – a common tactic in trade tensions where companies rush to export goods before tariffs make it too expensive.
Who are China’s new trade allies?
As tensions with Washington intensified, Beijing became increasingly interested in regional trade. Exports to South-East Asia, particularly Vietnam, increased by almost 17% last month, while exports to Africa increased by more than 11%. In the meantime, imports from these countries, whether stagnating or declining, underline China’s willingness to increase its production shipments while limiting its domestic dependence.
Xi’s tour of the area was more than symbolic. Vietnam, which is now the eighth source of goods for American consumers, is also in Trump’s eyes. 46% of the tariff is expected to expire at the end of the current 90-day break, which could bring Hanoi out of need.
How do global markets respond?
Surprisingly, markets rebounded despite chaos. The main indices in Asia increased: Japan’s Nikkei increased by 1.2 per cent, Hong Kong Hang Seng jumped by 2.2 per cent, and China’s Shenzhen and Shanghai increased by 1.2 per cent and 0.8 per cent, respectively. The European indices followed the example: Germany DAX increased by 2.6%, France CAC 40 by 2.4% and the United Kingdom FTSE 100 by 2.1%. In the United States, S decreased, P 500 and Dow Jones gained about 0.8%, with Nasdaq after a little 0.6%.
Investor optimism, at least for the moment, is based on speculation that a large-scale escalation could still be avoided. However, this hope can be more than one bet than a good evaluation, given the combination of Washington’s messages.
Can China cope with the storm?
In economic terms, China has not left the forest. His leadership has set an ambitious annual growth target of 5% by 2025, which is now more difficult to achieve. Imports from developing countries and countries continue to decline and domestic consumption remains low. However, officials are quick to report their diversified export strategy and huge internal market as buffers.
Lingjun Wang, Vice-President of China’s Customs Administration, highlighted China’s open door policy and called the United States for what he described as ”abusive tariffs”. He stressed that China would not only implement countermeasures, but would also continue to expand cooperation with global partners.
It should be noted that, despite all the chances, China’s trade surplus with the United States reached $76.6 billion in the first quarter of 2025, and that only March represented $27.6 billion. These figures represent an image of a nation that, although under pressure, is far from being beaten.
What does this mean for the global economy?
The impact is considerable. Supply chains are in shape. Investment strategies are underway. Multinationals are uncomfortable with making costly and long-term decisions based on short-term political rhetoric. If the United States applies broader tariffs, particularly in the pharmaceutical and semiconductor sectors, the decline could include higher prices, delayed product launches and even a shortage of essential goods.
For daily consumers, this could mean paying more for phones, drugs and technological equipment. For business, it’s about sailing a storm without a clear weather report. And for policymakers, the question is whether the world economy can still dance at the pace of trade wars without tripping alone?
As Chinese spokesman Lyu Daliang said,
These efforts not only supported the development of our partners, but also enhanced our own resilience
If this resilience remains – or if the sky, in fact, begins to break – it depends to a large extent on the extent to which both sides are willing to push the line between economic strategy and political theatre.
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