US trade policy has recently witnessed significant shifts that have sparked widespread controversy internationally. Former US President Donald Trump announced a temporary suspension of additional tariffs for 90 days, but this decision did not include China. In response, Beijing escalated its actions, announcing the imposition of tariffs on US imports. This tension brings to the forefront issues of the trade war and its expected impact on the global economy.
Background to the US Decision
In early March 2025, Trump issued a statement announcing the suspension of additional tariffs previously imposed on some imports from Mexico and Canada. This suspension came in the context of domestic and international pressure to address trade tensions, particularly with neighboring countries. This decision is understood to be aimed at providing an opportunity to renegotiate and improve bilateral economic relations.
However, the Chinese issue has taken a different turn. The decision did not include any concessions toward Beijing; on the contrary, the escalation has taken a new turn, with China imposing new tariffs on strategic US imports, including crude oil, vehicles, and agricultural machinery.
Washington insists on reducing the trade deficit with China, claiming that the latter engages in unfair trade practices, such as export subsidies and restricting foreign companies’ access to Chinese market. Therefore, the Chinese measures came as a direct response to what it described as “renewed trade hostility.”
Beijing imposed 10% tariffs on a range of vital American products. These measures targeted the oil and energy sectors, as well as agricultural equipment and transportation vehicles, dealing a severe blow to farmers and manufacturers in states traditionally considered supportive of Trump.
Short-Term Economic Implications
Economists expect this escalation to lead to turmoil in financial markets. Stock markets typically react negatively to news of trade wars. Uncertainty increases, and investors hesitate to make long-term decisions.
Impact on Businesses and Consumers
A 90-day suspension of tariffs will not be enough to restore confidence. Rather, it is viewed as a tactical move, intended to buy time, without addressing the core problem. This is where the need for a more stable trade policy becomes clear.
American consumers are directly harmed by escalating tariffs, as the prices of imported goods rise. Businesses are also forced to restructure their supply chains, potentially increasing operating costs. On the other hand, Chinese companies that rely on the US market will suffer from declining demand and may lose their competitive advantage to competitors from other countries not affected by the tariffs.
The Future of Trade Relations
It is unclear whether the temporary suspension will pave the way for a comprehensive solution. However, continued escalation with China will certainly not serve the interests of either party. Trade relations between the world’s two largest economies are a cornerstone of global economic stability.
The United States may seek to renegotiate its trade agreements and may resort to mediating parties such as the World Trade Organization. However, language of sanctions and tariffs remains the most prominent feature of Trumpian policy.
How do other countries benefit from the conflict?
Amid tensions between Washington and Beijing, opportunities arise for other countries to strengthen their trade position. Oil-exporting countries such as Russia and the Gulf states may find an opportunity to increase their exports to China. Latin American countries could also benefit from the growing demand for agricultural products.
Some Asian countries, such as Vietnam and Thailand, are also seeking to attract companies leaving China due to US tariffs. This shift could reshape global supply chains.
Trade tariffs and their impact on the global economy
Trade wars have historically been linked to a global economic slowdown. Increasing barriers to trade restrict the movement of goods.
US economic policy options amid trade escalation with China
US economic policy may face multiple options in light of the ongoing escalation with China, each with different impacts on the American and international economy. To achieve its economic and geopolitical goals, the United States must make critical decisions in managing its trade relationship with China.
- Continuing the policy of pressure through tariffs
One option the United States could adopt is to continue its policy of imposing tariffs on Chinese imports. This policy aims to reduce the trade deficit with China and strengthen American industry. This approach may be effective in the short term in improving some domestic industries, such as manufacturing and agriculture.
However, over time, this policy may lead to higher prices for American consumers. American companies may also face difficulty finding affordable alternatives to Chinese products. In this context, consumers are expected to be directly affected, leading to a decline in purchasing power.
- Returning to New Trade Negotiations
The United States could choose to negotiate with China to reach a new trade agreement. This option may include making concessions in some areas, such as intellectual property rights, and further opening the Chinese market to American companies. The United States may seek to reconsider some tariffs, particularly those targeting consumer goods, to mitigate their impact on consumers.
However, this option may be difficult given the significant political tensions between the two countries, as well as the complexities of trade relations. China may also require the United States to completely roll back some measures before entering into new negotiations, further complicating matters.
- Focus on Supporting Domestic Industry
Another option the White House may choose is to strengthen support for American industry to reduce dependence on Chinese products. This includes providing tax incentives and financial subsidies to American companies that produce domestically rather than importing.
International Reactions
Trump’s decision was met with mixed reactions. Some European countries welcomed the suspension of tariffs on Canada and Mexico, considering it a positive step. China, on the other hand, expressed its rejection of pressure policies and affirmed that it would respond appropriately to any escalation.
International organizations such as the International Monetary Fund and the World Bank have called for avoiding trade wars, warning of their impact on global growth rates. Trump’s decision to suspend additional tariffs on some countries, in response to escalation against China, reflects the continuation of the confrontational approach to US trade policy. It also demonstrates the magnitude of the challenges facing the global trading system, given the absence of a clear dispute resolution mechanism.
In this context, the balance between protecting the domestic economy and engaging in global trade remains elusive. Suspense remains the order of the day as markets, businesses, and consumers monitor the impact of these policies on their daily lives.
