The escalating trade tensions between the US and China have reached a boiling point, with tariffs now hanging heavily over both nations like an economic embargo. The consequences will be far-reaching, affecting not only the two major economies but also global markets.
The US stands to lose $150 billion worth of exports to China, while China’s $440 billion in exports to the US may drop by up to 75% within the next 18 months. This could tip the US into a mild recession this summer and undermine its financial system, which is already showing warning signs.
China, meanwhile, faces significant economic challenges, including a trade surplus of over $2 trillion in manufactured goods. The government is struggling to stabilize its economy, which has been plagued by debt and asset deflation in local governments.
Despite the dire situation, some experts believe that both sides may be willing to negotiate a deal, possibly involving a rollback of high tariffs or other concessions. The US has announced tariff exemptions for certain industries, but it remains unclear whether these will be sustained.
The implications of this trade war extend far beyond the two nations involved. Countries such as Vietnam and Cambodia are using “trans-shipment” tactics to bypass sanctions and trade barriers, while others have already begun implementing measures to protect their own manufacturing interests.
As the situation continues to unfold, it is essential to remember that trade conflict has erupted in response to China’s surging trade surplus, which is driven by a political system that provides excessive support to its companies. While some may view this as an isolated incident, others see it as part of a broader trend that threatens global stability.
George Magnus, research associate at Oxford University’s China Centre and Soas University of London, has warned about the risks facing Xi Jinping’s China. As he notes, “trade conflict is not just a trade issue, but a reflection of deeper structural problems within the Chinese economy.”
Source: https://www.theguardian.com/business/2025/apr/14/sky-high-us-china-tariffs-are-a-mutual-trade-embargo-that-will-hurt-both-sides