The ongoing trade tension between the United States and China has reached a critical point with President Donald Trump’s recent threat to impose tariffs of 145% on Chinese imports, effective from April 9. This move marks a significant escalation in the trade war between the world’s two largest economies, raising concerns about potential economic disruption and a shift in global trade dynamics. With the US being the largest importer and China its biggest supplier, such drastic measures could lead to a substantial decrease in bilateral trade and increased market volatility.
CA A K Mandhan, in a post on X, explained these tariffs could effectively serve as a trade embargo, with the possibility of causing an “unmanaged decoupling” of direct trade between the two nations.
He added that the implications of such a scenario are far-reaching, potentially exacerbating existing economic tensions and contributing to an already volatile global trade environment. The short-term effects are expected to include heightened market volatility, while the long-term consequences could result in a more fragmented global economic landscape, further straining America’s economic influence.
He explained that what started as targeted import taxes quickly escalated into a full-blown trade war, with biggest focus on China. The tariffs affected hundreds of billions of dollars’ worth of goods and prompted retaliatory measures from other nations, sparking diplomatic tensions, disrupting supply chains, and increasing costs for businesses and consumers alike.
“Donald Trump wanted to reduce the U.S. trade deficit and bring back American manufacturing. America First Policy: Tariffs were part of Trump’s “America First” economic agenda. Main Target – China: The biggest focus was on China, due to its large trade surplus with the US,” he wrote on X.
He gave a 20-point breakdown of what the Trump Tariffs were, why they were implemented, and how they affected both the U.S. economy.
What Are Tariffs?
Tariffs are taxes imposed on imported goods to make them more expensive.
Trump’s Goal:
Donald Trump wanted to reduce the U.S. trade deficit and bring back American manufacturing.
America First Policy:
Tariffs were part of Trump’s “America First” economic agenda.
Main Target – China:
The biggest focus was on China, due to its large trade surplus with the U.S.
Trade War Begins (2018):
Trump started placing tariffs on billions of dollars’ worth of Chinese goods.
China Retaliated:
China hit back with its own tariffs on American goods (soybeans, cars, etc.).
Tariff Amounts:
By late 2019, over $350 billion in Chinese goods were hit with U.S. tariffs.
Steel & Aluminum Tariffs:
Trump also added tariffs on steel (25%) and aluminum (10%) globally, citing national security.
Europe, Canada, Mexico Also Hit:
Even allies like the EU and Canada faced some tariffs, leading to tension.
U.S. Farmers Got Hit:
China’s retaliation hurt American farmers, especially soybean exporters.
U.S. Gave Bailouts:
The U.S. government gave billions in aid to affected farmers.
Cost to Consumers:
Tariffs raised prices on electronics, clothes, and appliances for American buyers.
Companies Adjusted Supply Chains:
Many firms moved manufacturing out of China to avoid tariffs (e.g., to Vietnam, Mexico).
WTO Criticism:
The World Trade Organization criticized the U.S. for breaking trade rules.
“Phase One” Deal (Jan 2020):
China agreed to buy more U.S. goods, and the U.S. reduced some tariffs.
Most Tariffs Remained:
Even after the deal, most of the original tariffs stayed in place.
Mixed Economic Impact:
Some U.S. industries benefited, others suffered; overall trade volumes dipped.
No Clear Win:
Economists debated the effectiveness. Trade deficit didn’t shrink much.
Biden Kept Many Tariffs:
The Biden administration has reviewed them but not removed them all.
Long-Term Shift:
The tariffs started a broader push for “decoupling” from China and reshaping global trade.