China has taken a tough stance against US President Donald Trump, matching the last two rounds of US tariffs with tariffs of its own. The US tariff on goods from China is now 145%, while China’s is 125%. Why does China take such a position, and are there any off-ramps that would allow it to mitigate the costs of a prolonged trade war?

For many nations, a highly profitable trade relationship with the United States is now no longer a given. With President Trump’s tariff agenda looming over the world, how is Asia planning for a future where the U.S. may not be so open for business?

The recent tariff episode shook global economic confidence in a way that’s only been seen in the aftermath of major catastrophes, despite relief coming in the short-term. Has the damage been done to America’s trade hegemony?

An estimate of the impact of the tariff war between China and the U.S. on the Chinese GDP in 2025 is presented. The dependence of the Chinese economy on its exports and, in particular, on its exports to the U.S. has been declining significantly over time. At the current tariff rates, a total cessation of bilateral trade is a real possibility. Under the assumption, the reduction in the rate of growth of Chinese GDP may be estimated to be 1.2%, other things being equal. Even though the announced target rate of Chinese growth is around 5%, the weighted average of the target rates of growth of the provincial-level units is 5.26%, indicating room for further increase. In addition, China is expected to launch additional domestic economic stimulus measures in response to the new tariffs, which should result in an additional growth of 0.5%. For 2025 as a whole, a rate of growth of around 4.5% (5.26 – 1.2 + 0.5) may be predicted.

His poorly conceived global tariff war will severely affect U.S. consumers, increase inflation, damage America’s reputation as a reliable partner and put the entire global trade system and practices that the U.S. once championed at risk.

The tariffs will not spell the end of alliances between the United States and Japan or South Korea, but they are likely to promote a strategic awakening in both countries and accelerate the integration process in East Asia.

After a decade of deglobalization and U.S. geopolitics, globalization is no longer at crossroads, but unraveling. The longer this plunge prevails, the greater will be its costs.

The world’s major growth engines are about to run in reverse. The policies and uncertainties of US President Donald Trump’s second administration have hit a sluggish global economy with a transformational exogenous shock. Risks are especially worrisome in both the United States and China, which have collectively accounted for a little more than 40% of cumulative global GDP growth since 2010.

A great many negative consequences would follow a successful effort by the United States to pull the MFN rug out from under the world’s second-largest economy. If this key pillar of global trade is taken away, the collapse of the WTO itself could follow.

The introduction of reciprocal tariffs represents a pivotal shift in U.S. trade policy. The move from multilateral trade engagements to bilateral or regional agreements is a strategic effort to redefine international trade and ultimately give the United States an advantage.