Donald Trump’s trade war has suddenly taken center stage again — here’s why, but this time, it’s focused less on the whole world and more directly on China. While a 90-day suspension on increased tariffs remains in place for many countries, the U.S. still enforces a universal 10% tariff. China, however, is facing a much steeper 125% tariff, targeting its massive export base to the U.S., which includes everything from smartphones to toys.
Trump justifies this by pointing to China’s retaliatory 84% tariffs on American goods, calling the move disrespectful. But for a president who built his initial campaign around confronting China, this goes beyond mere retaliation. It’s about finishing what he started in his first term. “We didn’t have time to do it right back then,” he said.
Trump’s goal appears to be a complete overhaul of the global trade system that currently relies on China as a manufacturing hub. This also challenges the long-standing belief that more trade automatically means more progress.
To grasp how central this view is to Trump’s thinking, it’s helpful to rewind to 2012. At that time, during early reporting from Shanghai, nearly everyone—from economists to business leaders—saw growing trade with China as a no-brainer. It drove global growth, provided cheap products, and integrated China’s workforce into international supply chains, benefitting multinational companies.
Soon, China became the top market for luxury and mass-market brands like Rolls-Royce, GM, and Volkswagen. There was also a belief that wealth would push China toward political reform and a consumer-driven economy. But while political change didn’t materialize, China remained export-reliant—and even aimed to expand this dominance.
Its “Made in China 2025” policy, launched in 2015, outlined ambitions to lead key sectors like aerospace, shipbuilding, and electric vehicles with heavy state support.
By 2016, Trump, a political outsider, leveraged this growing discontent in the U.S., arguing that China’s rise had decimated American industry and jobs. His trade war during his first term disrupted long-held global trade norms, and though President Biden retained many of his tariffs, they haven’t fundamentally altered China’s economic strategy.
Today, China dominates the global electric vehicle and battery markets, controlling 60% and 80% of production, respectively. Trump’s new tariff escalation could be one of the biggest shocks to the world trade system—if it weren’t for the frequent back-and-forth nature of his previous tariff measures.
What happens next hinges on two critical factors: whether China is willing to enter negotiations, and if it is, whether it’s ready to make sweeping changes to its export-focused economy. This remains uncertain, as China’s economic approach is deeply tied to its national identity and one-party political structure. With tight control over information and limited access for foreign tech firms, it’s unlikely to make major concessions.
A third, broader question looms for the U.S.: Does it still believe in free trade? Trump often suggests tariffs aren’t just a strategy but a benefit in themselves—tools to boost domestic investment, bring supply chains home, and increase revenue.
If China perceives these tariffs as permanent fixtures, not negotiating tools, it may see no reason to talk at all. That could lock the two superpowers into a deeper economic rivalry, with global cooperation giving way to a battle for dominance. If that’s the case, it would mark a stark and potentially dangerous departure from the global trade consensus that’s held for decades.
