Even before his election, Donald Trump threatened China with high tariffs, accusing it of encouraging drug traffic flow to the United States. When back in the White House, he imposed ten-percent tariffs on all the Chinese imports first off, and doubled them a month later. At the first stage, China was taking restrained measures, limiting the import of specific American goods such as coal, LNG, oil, agricultural machinery, large-displacement cars, and farm products. A new round of trade confrontation, on a larger scale this time, began as part of Trump’s mutual tariff campaign. The upshot is that import duties on Chinese goods have reached 145 percent, with 125-percent reciprocal ones. This has gone off the scale for normal trade, and their further increase seems to no longer make much sense.

But it is still feasible because Washington has almost no other levers of pressure on Beijing. Its previous restrictions on the supply of the most high-tech products have also reached the limit, with China manufacturing certain chips on its own. Delisting shares of Chinese companies from American stock exchanges is unlikely, given the lack of legitimate reason for this. Extreme moves on the US part could be a ban on Chinese banks executing payments via SWIFT, and forcing other trading partners to cease cooperation with China. However, this requires willingness of other states, particularly the EU (SWIFT). So, Trump's current tariff policy is rather pushing other countries towards trade rapprochement with the PRC as it pursues a much more predictable policy. If things keep escalating, they will become defensive and stop trade between the United States and China. With the United States and China being countries with the world’s largest trade volume, this will affect the entire global trade and global economy, since most of the planet will get indirectly involved in the war.

While the Trump administration is "turning international trade upside down," Beijing has been deriving benefit to boost its international clout. "We will provide certainty to this uncertain world," Chinese Foreign Minister Wang Yi said recently. US withdrawal from the World Health Organization and the Paris Climate Agreement also play along with statements to that effect. Also, Trump has embarrassed his allies with territorial claims to Greenland and Canada. And the Chinese authorities’ rhetoric portraying their country as a victim of American aggression finds a receptive ear within the country, making it easier for the people to perceive difficulties their economy may face over tariffs and US-imposed restrictions. This has been confirmed by the Chinese Internet segment that is full of talk about the need to resolutely resist and stand to the end.

Assessing trade war consequences, let us note that in 2024, the United States exported $143bn worth of goods to China, $14bn worth of oil, gas and coal exports, and $15.3bn worth of electronics and microchips. China, which is called the "global factory," exported three times as many goods to the United States ($434bn) and, despite a reduction in overall trade, proved able to raise its profile in a number of American market segments. It has been major supplier to the United States of electronic and electrical equipment ($124bn), heavy machinery products, including equipment for nuclear power plants and energy ($88bn), toys, video games and sporting goods ($29bn). Therefore, the United States is obviously in a more dependent position.

Beijing certainly apprehended inevitabilities of a new confrontation, analyzed US weaknesses, and carefully developed retaliatory measures. It has already dealt a strong though not immediately noticeable blow to the main element of US exports — energy, by suspending purchases of American LNG, oil and coal. Last time, Beijing bypassed American LNG for 400 days and, as a result, American traders were ousted from the Asia-Pacific region’s premium market. American experts also note that amidst the trade war, US alternative energy sector crisis has started to expand. The construction and operation of wind and solar power plants is 90 percent dependent on lithium-ion batteries coming from China. Moreover, the United States is heavily dependent on Chinese components used in products exported to the United States from Mexico, Vietnam, and Thailand. Therefore, many American importers will struggle to quickly find alternative suppliers, which is going to leave them with no choice except for paying duties. These additional costs will manifest themselves in higher consumer prices. The US administration is well aware of this, seeking to adjust its actions. On April 11, tariff exclusions were announced for smartphones and a number of other electronic products, but April 13 saw US Commerce Secretary Howard Lutnick clarify that a "special target tariff" would be introduced for smartphones, computers and other electronic products in a month or two, along with sectoral tariffs targeting semiconductors and pharmaceuticals, with these new fees outside the "mutual tariffs".

China responded to US duties not only by raising tariffs, but also blacklisted many American companies unwilling to have their products enter China, and slowed down exports of rare earths vital for manufacturing electronics and e-vehicles in the United States. And China has powerful tools to enforce the ban. Given the risk of being cut off from Chinese supplies, third countries may not rush to Uncle Sam's aid. Therefore, the Chinese ban will deal a heavy blow to America.

Apart from that, in a bid to reduce the impact of Trump's tariff moves, China has embarked upon systematically devaluing the yuan. Last week, its exchange rate hit a record low against the dollar after the People's Bank of China set the lowest interest rate since 2023. A number of foreign analysts say Beijing may let the yuan further weaken, mitigating the impact of Trump’s tariffs. At the same time, they do not expect a significant currency weakening over the long term, sure that this may stimulate capital outflows.

Given the facts presented, The Wall Street Journal tends to believe that China has a better chance of winning. The current state of affairs is a strategic gift for Xi Jinping, it claims. "Beijing is confident in its ability to find alternative sources for critical imports. At the same time, countries striving earlier to strengthen their economic ties with the US to counter Chinese influence are now under pressure. For example, US tariffs were set at the rate of 46%, 36%, 32% and 17% respectively for Vietnam, Thailand, Indonesia and the Philippines. Duties for Japan and South Korea stand at 24% and 25% accordingly. This threatens Washington’s efforts of creating an economic and strategic bloc capable of opposing Beijing," the outlet reports. And to avoid these complications, Washington, according to US Commerce Secretary Lutnick, launched a "soft dialogue" with Beijing through intermediaries.