On April 9, 2025, China announced a significant escalation in its ongoing trade conflict with the United States, raising tariffs on U.S. goods to a staggering 84%. This move, reported widely across platforms like X and major news outlets such as Reuters and CNBC, comes as a direct retaliation to the U.S. imposing a 104% tariff on Chinese imports. The decision marks a new chapter in the U.S.-China trade war, which has been simmering since 2018, with both economic superpowers now locked in a cycle of retaliatory measures that threaten global markets and economic stability.
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Background of the U.S.-China Trade War
The U.S.-China trade war began in January 2018 under then-President Donald Trump, who accused China of unfair trade practices, including intellectual property theft and forced technology transfers. The U.S. initiated tariffs to address a trade deficit—estimated at $295 billion in 2024, according to BBC data—and to pressure China into changing its economic policies. China, led by President Xi Jinping, responded with retaliatory tariffs, accusing the U.S. of protectionism. A tense phase-one agreement was reached in January 2020, but it did little to resolve the underlying tensions.
Fast forward to 2025, and the trade war has reignited with renewed intensity. The Biden administration continued the tariff approach, doubling tariffs on Chinese solar cells and tripling them on lithium-ion batteries in 2024, as noted in Wikipedia’s entry on the trade war. Trump, back in the spotlight, has pushed the tariff rate on Chinese goods to 104%, prompting China’s latest 84% tariff hike on U.S. imports. This tit-for-tat escalation has sent shockwaves through global markets, with the S&P 500 falling 9.08% and the Nasdaq declining 10.02% in the week following China’s earlier 34% tariff increase on April 4, according to Reuters.
The Immediate Impact of the 84% Tariff
China’s decision to impose an 84% tariff on U.S. goods will have far-reaching consequences for both nations. For the U.S., this tariff hike directly affects key industries such as agriculture, pharmaceuticals, and aircraft manufacturing. X user
@EdKrassen highlighted the potential devastation for U.S. farmers, noting that the tariffs could “kill many US Farmers’ businesses.” American consumers will also feel the pinch, as the cost of Chinese goods—already impacted by U.S. tariffs—will rise further, exacerbating inflationary pressures.
On the Chinese side, the tariff increase aims to protect domestic industries but risks hurting Chinese consumers, who will face higher prices for U.S. imports like soybeans, aircraft, and pharmaceuticals. China’s economy, already grappling with global supply chain disruptions, may face additional strain if the U.S. responds with further measures, such as tightening restrictions on advanced microchip exports, as suggested by BBC analysis.
Globally, the trade war is creating ripple effects. J.P. Morgan estimated a 60% chance of a global recession by the end of 2025, up from 40% previously, due to the escalating trade tensions. The interconnected nature of global supply chains means that countries like Canada, which have also faced U.S. tariffs, are preparing their own retaliatory measures, further destabilizing international trade.
How Far Will This Tariff War Go?
The question on everyone’s mind is: how far will this tariff war go? To answer this, we need to consider several factors: the strategic goals of both nations, the economic costs of escalation, and the potential for de-escalation through diplomacy.
- Strategic Goals and Political Will
Both the U.S. and China are driven by long-term strategic objectives. For the U.S., the tariffs are part of a broader effort to reduce reliance on Chinese goods and bring manufacturing back home, as articulated by Trump during his 2016 campaign and reiterated in his recent policies. The U.S. also aims to curb China’s technological and military rise, as evidenced by restrictions on exports of materials like germanium and gallium, which are critical for military applications.
China, on the other hand, views the U.S. tariffs as an attempt to stifle its economic growth. Beijing has signaled its determination to “fight to the end,” as reported by BBC, and is leveraging its control over rare earth metals and other critical resources to pressure the U.S. The 84% tariff is a clear message that China will not back down, even at the cost of short-term economic pain. - Economic Costs and Global Pressure
The economic costs of this trade war are mounting. A 2020 study by the National Bureau of Economic Research estimated that U.S. tariffs on China cost American consumers $40 billion annually in higher prices. With tariffs now at 104% on Chinese goods and 84% on U.S. goods, the impact could be five times greater, as noted by BBC. Global stock markets are already reeling, with the Nasdaq entering a bear market and the Dow confirming a correction, according to Reuters.
The risk of a global recession is real, and other nations may pressure both the U.S. and China to de-escalate. Analysts like Joe Mazur from Trivium, cited in Reuters, warn that Trump’s aggressive trade policies could alienate U.S. allies, potentially driving them to align with China. This could create a coalition of nations opposing U.S. tariffs, increasing diplomatic pressure on Washington to negotiate. - Potential for De-escalation
Despite the tough rhetoric, there are signs that both sides are leaving room for dialogue. China’s retaliatory measures have been described as “reciprocal but not deliberately provocative” by Sun Chenghao of Tsinghua University, as quoted in Reuters. The U.S. and China have also held talks, such as the recent meeting between U.S. National Security Adviser Jake Sullivan and CCP Foreign Affairs Commission Director Wang Yi, aimed at preventing competition from escalating into outright conflict.
However, the political climate in both countries makes compromise difficult. In the U.S., tariffs are a key part of Trump’s political vision, and backing down could be seen as a sign of weakness. In China, Xi Jinping faces domestic pressure to stand firm against perceived U.S. bullying. Without a significant shift in political will, the tariff war is likely to continue escalating. - Worst-Case Scenario: A Full-Scale Trade War
If neither side backs down, the tariff war could evolve into a full-scale economic conflict. The U.S. might further tighten its technological blockade, cutting off China’s access to advanced microchips and other critical technologies. China could retaliate by restricting exports of rare earth metals, which are vital for industries ranging from electronics to defense. Such moves would not only devastate bilateral trade—valued at $585 billion in 2024—but also disrupt global supply chains, potentially leading to shortages and price spikes worldwide.
The BBC notes that a full-scale trade war could have a “highly negative” impact on the global economy, with spillover effects felt in every corner of the world. Manufacturers and exporters are already scrambling, and the rapid changes in trade policy are leaving businesses in flux.
Conclusion: A Long Road Ahead
The U.S.-China tariff war shows no signs of abating, with China’s 84% tariff on U.S. goods marking a new high in this economic standoff. While both nations have strategic reasons to continue this fight, the mounting economic costs—both domestically and globally—may eventually force a reckoning. The risk of a global recession, coupled with pressure from other nations, could push the U.S. and China toward negotiations, but political dynamics on both sides make a quick resolution unlikely.
For now, the tariff war is likely to escalate further, with both sides exploring additional measures to inflict economic pain. The U.S. may target Chinese technology firms, while China could leverage its dominance in critical materials. Unless diplomatic efforts gain traction, this trade war could drag on for years, reshaping global trade patterns and testing the resilience of the world economy. As X user
@Aan_ aptly put it, “Tariff for tariff makes the whole world broke”—a sobering reminder of the stakes involved.