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“TARIFFS WAR BETWEEN THE U.S. AND CHINA”
Dovud Usmonov
University of World Economy and Diplomacy
contacts: usmanovdovud6@gmail.com
https://doi.org/10.5281/zenodo.15699176
Abstract
This article covers the tariffs war between the United States of America and the People’s
Republic of China from 2018 to the present day. The relevance of this study is determined by
the need for a comprehensive analysis of the impact of the tariff war on bilateral trade,
economic development of the two countries, and global supply chains. Understanding these
tendencies is crucial for both economists and politicians, as well as for businesses, involved in
international trade relations. This article aims to identify the specific effects of tariffs in the US-
China trade war, focusing on three aspects: bilateral trade, economic development, and global
supply chains. The main purpose of this paper is to analyze how tariff war influenced both
global economic hegemons.
Introduction
The tariffs war between the United States of America and the People’s Republic of China,
which began in 2018
1
, has become one of the key events in international trade this decade. The
main instrument of the conflict was mutual tariffs on each other’s goods: the U.S. imposed duties
on Chinese imports worth hundreds of billions of dollars, and China responded with
symmetrical measures. The tariff escalation was prompted by the U.S. accusations against China
of unfair trade practices, including theft of intellectual property, forced technology transfer, and
government interference in the economy (Office of the U.S. Trade Representative, 2018)
2
. Trade
tensions between the world’s two largest economies have had serious implications not only for
their bilateral trade, but also for the global economic system. The International Monetary Fund
(IMF, 2019)
3
warned of a possible 0.8% decline in global economic growth as a result of
increased protectionism. For both countries, the tariff measures turned out to be a double-
edged sword. On the one hand, they dealt a blow to a number of domestic industries, on the
other, they stimulated processes of economic adaptation and diversification of supply chains.
Theoretical Framework and Methodology
To analyze the effects of the tariffs war between the United States and China, it is
important to rely on basic economic theories. In particular, David Ricardo’s theory of
comparative advantage argues that international trade allows countries to maximize economic
efficiency through specialization (Ricardo, 2010)
4
. However, tariff restrictions violate this
principle by limiting the benefits of international trade. On the other hand, the theory of
protectionism, presented by Friedrich List, emphasizes the need for state protection of “young”
1
Klomp
J.
(2025).
‘Trump
tariffs
and
the
U.S.
defense
industry’.
PLOS
ONE
https://doi.org/10.1371/journal.pone.0313204
2
Office of the U.S. Trade Representative (2018).
USTR Issues Tariffs on Chinese Products in Response to Unfair Trade
Practices
. [online] Available at:
https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/june/ustr-
issues-tariffs-chinese-products
3
G. Gopinath, IMF Blog (2019). The World Economy: Synchronized Slowdown, Precarious Outlook. [online] Available at:
4
Ricardo, D. (2010).
‘
On the Principles of Political Economy and Taxation’, Project Gutenberg.
ILM-FAN VA INNOVATSIYA
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industries in the face of external competition (List, 1909)
5
. It was precisely that the United
States relied on these arguments when introducing tariffs against Chinese goods, in particular,
citing the protection of high-tech sectors and intellectual property.
The Impact of Tariffs on US-China Bilateral Trade
As it is stated, “Total U.S.-China bilateral trade in goods was $582.4 billion in 2024, down
from $661.5 billion in 2018. Over that period, the U.S. share of Chinese exports dropped from
19.2 percent to 14.7 percent. Similarly, U.S. exports to China as a share of total American exports
have fallen from 7.3 percent to 6.9 percent over the same period. One should expect bilateral
trade to further fall precipitously in both absolute and relative terms during 2025”
6
. In 2025,
the situation escalated as the U.S. imposed tariffs of up to 145% on Chinese goods, and China
responded with tariffs of up to 125%. These measures effectively amounted to a trade embargo,
which even US officials acknowledge as unsustainable
7
. Furthermore, the wave of new tariffs
has had an impact on logistics, with blank sailings expected to increase by 13% in 2025, with a
forecast increase of up to 28%, particularly on routes to the US West Coast. This points to
reduced demand and potential supply disruptions
8
. Thus, the tariff war between the U.S. and
China has led to a reduction in bilateral trade, an increase in trade imbalance, and a disruption
of supply chains, which has a negative impact on both economies.
The Impact of Tariffs on US and Chinese Economic Development
In 2025, the US economy faced the negative consequences of the escalating trade war. In
the first quarter, GDP contracted by 0.3%, which was an unexpected turnaround from the
previous growth. The main factors were the outpacing imports before the introduction of new
tariffs and the accumulation of inventories, which distorted the indicators of economic activity
9
.
It is important to mention: “US President Donald Trump’s announced tariffs mark the biggest
upheaval to international trade policy since US President Herbert Hoover signed the Smoot-
Hawley Tariff Act in 1930. The Budget Lab at Yale (TBL) estimates that on tariff polices
announced through 7 April 2025, the US average effective tariff rate will be 22.5%, the highest
rate since 1909. On their calculations this will push US inflation up by 2.3% in the short-run,
reduce US GDP growth by 0.9 percentage points in 2025, and reduce the size of the US economy
by 0.6% persistently”
10
. Additionally, the tariffs increased federal tax revenues by $166.6
billion, or 0.55% of GDP, making them the largest tax increase since 1993
11
.
The Chinese economy has also come under pressure. In April 2025, the manufacturing
purchasing managers’ index (PMI) fell to 49.0, the lowest since December 2023. This indicates
5
Friedrich List, trans. Sampson S. Lloyd, with an Introduction by J. Shield Nicholson (1909). ‘The National System of
Political Economy’.
London: Longmans, Green and Co.
6
Center for Strategic and International Studies (2025).
China and the Impact of “Liberation Day” Tariffs
. [online]
Available at:
https://www.csis.org/analysis/china-and-impact-liberation-day-tariffs
7
AP News (2025).
China says it’s evaluating US overtures for trade talks, but tariffs remain an obstacle
. [online] Available
at:
https://apnews.com/article/china-tariffs-trump-trade-8637f1b88cf6801c9b9d2b3481389bee
8
WIRED (2025).
The Slowdown at Ports Is a Warning of Rough Economic Seas Ahead.
[online] Available at:
https://www.wired.com/story/maritime-shipping-tariffs-blank-sailings/
9
Financial Times (2025).
Transcript: GDP goes negative
. [online] Available at:
https://www.ft.com/content/6a5fb114-
10
ICG (2025).
Trade War Views: Implications for the Economic Outlook and Business Operating Environment.
[online]
Available
at:
https://www.icgam.com/2025/04/16/trade-war-views-implications-for-the-economic-outlook-and-
business-operating-environment/
11
Tax Foundation (2025).
Trump Tariffs:
The Economic Impact of the Trump Trade War.
[online] Available at:
https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/
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a contraction in manufacturing activity and a decline in export orders. The International
Monetary Fund, Goldman Sachs and UBS have revised downward their growth forecasts for
China in 2025, citing the impact of U.S. tariffs. China’s economy is expected to miss its official
growth target
12
. However, China is taking steps to stimulate domestic consumption and support
small and medium-sized businesses to offset the decline in external demand
13
.
Both economies are negatively affected by the trade war, but the nature and extent of the
impact differs. The U.S. is facing slowing growth and inflationary pressures, while China is
experiencing a decline in industrial activity and export orders. These changes are having an
impact not only on domestic markets, but also on global supply chains, and economic stability.
The Impact of Tariffs on Global Supply Chains
The escalating trade war between the U.S. and China has caused significant disruptions to
global supply chains. Blank sailings have increased by 13% in 2025, with a forecast to grow to
28%, especially on routes to the U.S. West Coast. The Port of Los Angeles expects import
volumes to decline by 31%, indicating a sharp decline in trade activity
14
. Experts see these flight
cancellations as early signs of economic hardship, with potential consequences including higher
consumer prices on goods, such as toys, and electronics due to reduced supplies, and disrupted
routes.
In response to high tariffs, companies began moving production from China to other
countries, such as Vietnam, Mexico, and India. This led to increased economic activity in these
countries as they benefited from moving production to the U.S. market and increased exports
to other parts of the world. However, despite this redistribution, many of these industries retain
“Chinese characteristics” through subsidiaries of Chinese companies and the export of Chinese
components used in products destined for the United States
15
. Third countries, such as Vietnam
and Mexico have benefited from the reallocation of production capacity, which has led to the
growth of their economies. However, they also face challenges in adapting to new requirements
and standards, as well as risks associated with possible changes in US and Chinese trade
policies.
Supply chain disruptions have increased logistics and manufacturing costs. Companies
like Apple have reported an additional $900 million in tariff-related costs in the first quarter of
2025. This is putting pressure on consumer prices and could contribute to higher inflation
16
.
The trade war is also having an impact on the global energy transition. China, the world’s largest
producer of clean energy, is facing difficulties in exporting its products due to tariffs and export
12
Reuters.
China's factory activity falls sharply as Trump tariffs bite
. [online] Available at:
13
Coface (2025).
The US-China trade war has entered uncharted waters.
[online] Available at:
https://www.coface.com/news-economy-and-insights/the-us-china-trade-war-has-entered-uncharted-waters
14
WIRED (2025).
The Slowdown at Ports Is a Warning of Rough Economic Seas Ahead.
[online] Available at:
https://www.wired.com/story/maritime-shipping-tariffs-blank-sailings/
15
CEPR (2025).
What comes next for global supply chains might be complicated
. [online] Available at:
https://cepr.org/voxeu/columns/what-comes-next-global-supply-chains-might-be-complicated
16
AP News (2025).
Apple posts stronger-than-expected Q2 results, says majority of US iPhones sold will come from India
.
[online]
Available
at:
https://apnews.com/article/apple-iphone-second-quarter-earnings-
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restrictions. This could slow down global efforts to transition to a low-carbon economy and
meet climate goals
17
.
Conclusion
The US-China tariffs war, which began in 2018, and continues in a transformed form as of
2025, has had a multifaceted and long-term impact on the global economy, bilateral trade, and
domestic sectors of both countries. The introduction of high tariffs has become not only an
instrument of economic pressure, but also an expression of deeper geopolitical competition,
where trade serves as a lever in the struggle for technological and strategic leadership.
Economically, tariffs have reduced bilateral trade, particularly in the electronics, engineering
and agriculture sectors. Despite short-term adjustment efforts, both countries have suffered
significant losses: the US has seen rising costs for small and medium-sized businesses, while
China has faced a drop in export demand and the threat of massive job losses in the
manufacturing sector. Global supply chains have been threatened, causing inflation and
logistics costs to rise and spurring the shift of production to third countries such as Vietnam,
Mexico and India.
However, this process is accompanied by uncertainty and requires infrastructural and
institutional readiness on the part of new industrial centers. Thus, tariff policy as an instrument
of pressure turned out to be a double-edged sword: it exacerbated economic and political
contradictions, undermined trust in the rules of global trade, and forced key players to rethink
their development strategies. The most important task will be to find mechanisms for
sustainable cooperation, and reform international trade institutions that can adapt to the
changing balance of power.
References:
Используемая литература:
Foydalanilgan adabiyotlar:
1.
Klomp J. (2025). ‘Trump tariffs and the U.S. defense industry’.
PLOS ONE
https://doi.org/10.1371/journal.pone.0313204
2.
Office of the U.S. Trade Representative (2018).
USTR Issues Tariffs on Chinese Products in
Response to Unfair Trade Practices.
[online] Available at: https://ustr.gov/about-us/policy-
offices/press-office/press-releases/2018/june/ustr-issues-tariffs-chinese-products.
3.
Gopinath G., IMF Blog (2019).
The World Economy: Synchronized Slowdown, Precarious
Outlook.
[online] Available at: https://www.imf.org/en/Blogs/Articles/2019/10/15/the-
world-economy-synchronized-slowdown-precarious-outlook.
4.
Ricardo, D. (2010).
‘
On the Principles of Political Economy and Taxation’, Project
Gutenberg.
5.
Friedrich List, trans. Sampson S. Lloyd, with an Introduction by J. Shield Nicholson (1909).
‘The National System of Political Economy’.
London: Longmans, Green and Co.
17
Center for Strategic and International Studies (2025).
Analyzing the Impact of the U.S.-China Trade War on China’s
Energy Transition.
[online] Available at:
https://www.csis.org/analysis/analyzing-impact-us-china-trade-war-chinas-
ILM-FAN VA INNOVATSIYA
ILMIY-AMALIY KONFERENSIYASI
in-academy.uz/index.php/si
166
6.
Center for Strategic and International Studies (2025).
China and the Impact of “Liberation
Day” Tariffs
. [online] Available at: https://www.csis.org/analysis/china-and-impact-
AP News (2025).
China says it’s evaluating US overtures for trade talks, but tariffs remain
an obstacle
. [online] Available at: https://apnews.com/article/china-tariffs-trump-trade-
8637f1b88cf6801c9b9d2b3481389bee.
8.
WIRED (2025).
The Slowdown at Ports Is a Warning of Rough Economic Seas Ahead.
[online] Available at: https://www.wired.com/story/maritime-shipping-tariffs-blank-
sailings/.
9.
Financial Times (2025).
Transcript: GDP goes negative
. [online] Available at:
https://www.ft.com/content/6a5fb114-1d9e-4633-8bb6-2372c1574a17.
10.
ICG (2025).
Trade War Views: Implications for the Economic Outlook and Business
Operating Environment.
[online] Available at: https://www.icgam.com/2025/04/16/trade-
war-views-implications-for-the-economic-outlook-and-business-operating-environment/.
11.
Tax Foundation (2025).
Trump Tariffs:
The Economic Impact of the Trump Trade War.
[online] Available at: https://taxfoundation.org/research/all/federal/trump-tariffs-trade-
war/.
12.
Coface (2025).
The US-China trade war has entered uncharted waters.
[online] Available
at:
https://www.coface.com/news-economy-and-insights/the-us-china-trade-war-has-
CEPR (2025).
What comes next for global supply chains might be complicated
. [online]
Available at: https://cepr.org/voxeu/columns/what-comes-next-global-supply-chains-might-
be-complicated.
14.
AP News (2025).
Apple posts stronger-than-expected Q2 results, says majority of US iPhones
sold will come from India
. [online] Available at: https://apnews.com/article/apple-iphone-
second-quarter-earnings-70e4b60e081814ca11a75fe02622535b.
15.
Center for Strategic and International Studies (2025).
Analyzing the Impact of the U.S.-
China
Trade
War
on
China’s
Energy
Transition.
[online]
Available
at:
https://www.csis.org/analysis/analyzing-impact-us-china-trade-war-chinas-energy-
transition.
