Escalating US-China Tariff War

China announced it will raise tariffs on U.S. goods from 84% to 125% starting Saturday, escalating the trade war after recent U.S. tariff hikes. China’s Finance Ministry condemned U.S. tariffs as violations of global trade rules and said further U.S. increases would be economically meaningless, while vowing to retaliate if its interests are harmed. China also filed another WTO complaint. Markets fell on the news, with analysts warning of higher recession risk. Despite the U.S. pausing most “reciprocal tariffs” on other countries for 90 days, experts see limited prospects for a substantive U.S.-China deal amid deep distrust and geopolitical tensions.

Jim Cramer advises investors to focus on stocks with minimal international exposure and low economic cyclicality amid tariff uncertainty and a potentially weakening economy. He warns that trade policy is fluid and companies dependent on overseas business could be vulnerable. Sectors he favors now include telecom (Verizon, AT&T), drug distributors (McKesson, Cencora, Cardinal Health), health insurers (Humana, Cigna, UnitedHealth), and cybersecurity (Palo Alto Networks, CrowdStrike). He suggests building a list of durable names you can hold through volatility, unless you’re investing long term and can tolerate short-term drawdowns.

Taiwan and the U.S. held their first tariff talks via video conference, focusing on reciprocal tariffs, non-tariff barriers, and export controls. Taiwan, facing a 32% tariff on its semiconductor exports, called the duties unfair and proposed a zero-tariff regime along with increased purchases and investments in the U.S. Both sides agreed to pursue follow-up consultations to strengthen economic ties. The talks come as Taiwan seeks a long-desired trade deal with the U.S., its key backer, amid rising pressure from China.

The U.S. briefly imposed a 46% “reciprocal” tariff on Vietnamese imports on April 9 before resetting it to 10%, giving affected countries under 90 days to negotiate. Vietnam is highly exposed due to its large U.S. trade surplus (about $123.5 billion in 2024) and its role in supply chains shifting from China. While most of Vietnam’s manufacturing growth is genuine value-added (estimated 84%), a smaller share (around 16%) reflects rerouted Chinese goods to evade tariffs, heightening U.S. scrutiny. Higher U.S. tariffs could disrupt foreign investment and supply chains in Vietnam, as companies adapt in a “global whack-a-mole” of trade diversion.

Investor Steve Eisman, known from “The Big Short,” told CNN the United States is better positioned than China to withstand a trade war, arguing the U.S. economy and market structure can absorb tariff impacts more effectively. The segment is part of a broader CNN package on tariffs and trade, featuring varied perspectives on the economic and political fallout of U.S.-China tensions.

Nintendo announced its next-gen Switch, but US preorders are paused amid President Trump’s new tariff plan. While there’s a 90-day pause on most tariffs, a 145% tariff on China remains, putting the China-made console at risk of sharp price hikes once the pause ends. Industry analysts warn the Switch 2 could become significantly more expensive in the US if the tariffs take effect, making it a casualty of the escalating trade war.

CNN outlines the escalating US-China tariff war culminating in April 2025, when the White House set minimum tariffs of at least 145% on Chinese imports and Beijing responded by raising tariffs on US goods to 125%. The piece traces the tit-for-tat pattern of increases, noting persistent uncertainty over how and when the dispute might end.

Trump’s 25% tariffs on all Canadian goods are raising costs for U.S. maple syrup producers, who rely heavily on Canadian-made equipment like evaporators and vacuum systems. With thin margins, farmers say they can’t absorb the increases and may pass them to consumers, potentially boosting syrup prices. The U.S. already can’t meet domestic demand—production would need to at least double or triple—so it remains dependent on Canadian syrup, where Quebec’s government-backed producers and strategic reserves help set prices. Industry groups warn the tariffs will hurt U.S. producers, slow expansion, and add inflationary pressure, leaving family farms waiting to see if consumer prices must rise.

The article argues that after months of antagonizing allies with tariffs and rhetoric, the Trump administration now needs them to pressure China in a mounting trade war it struggles to win. Officials suggest coordinating with countries like Japan, South Korea, India, and Vietnam to address issues such as market access and intellectual property theft, claiming allies are eager due to reliance on U.S. markets. However, Trump’s “America First” approach—slamming the EU, straining ties with Canada and Mexico, and scrapping multilateral deals like the Trans-Pacific Partnership—has undermined trust. The core question is whether alienated partners will cooperate, given perceptions of the U.S. as an unreliable ally.

U.S. Indo-Pacific Commander Adm. Samuel Paparo warned that China’s intensified military activity around Taiwan amounts to “rehearsals,” not mere drills, amid a 300% increase in PLA pressure. He said the actions are backfiring by boosting global attention and accelerating Taiwan’s defenses. Paparo cautioned that China is outproducing the U.S. in air, maritime, missile, and space capabilities—building fighters at about 1.2 to 1 and naval combatants at roughly 6 to 1.8 compared to the U.S.—and urged addressing shipbuilding capacity, logistics, and workforce incentives to maintain deterrence. China seeks to “reunify” Taiwan despite Taipei’s self-identified sovereignty and U.S. warnings against forceful changes to the status quo.

Taiwanese President William Lai is taking a tougher stance against China’s influence operations, following a harshly worded speech vowing Taiwan won’t be “bullied or manipulated.” Recent actions include jailing soldiers for spying, investigating ruling party figures for alleged CCP ties, revoking Taiwanese nationality from citizens holding Chinese IDs, and expelling Chinese nationals who advocate violent annexation, such as influencer “Yaya in Taiwan.” Lai warns against Beijing’s “United Front” tactics that mix pressure with financial inducements. While many Taiwanese welcome stronger measures, some analysts suggest the moves serve domestic political goals ahead of future elections and align with anticipated U.S. hard-line China policies under a potential Trump administration.

Taiwan’s small and midsize manufacturers say U.S. tariffs are painful but the uncertainty around future changes is even more disruptive. While Taiwan currently faces a 10% U.S. tariff (down from a threatened 32%) and Chinese goods face far higher rates, Taiwanese exporters fear ripple effects: delayed orders, shifting supply chains, and intensified competition from Chinese firms redirected to non-U.S. markets. Many are seeking new customers in regions like the Middle East and potentially the United States where Chinese rivals may be priced out, but worry about broader demand softness and persistent price pressures. Taiwan’s strength—flexible, decentralized networks of small, frugal firms supplying customized, small-batch orders—has helped it endure past shocks, yet owners caution that frequent policy swings, labor shortages, and China’s aggressive pricing could strain their resilience despite some emerging opportunities.

Once a global textile hub, South Carolina’s Upstate has shifted to high-value manufacturing led by foreign firms like BMW and Michelin. Locals and business leaders say Trump’s shifting tariffs—especially criticisms of BMW’s model and higher China levies—threaten the very investments that revived the region after textiles collapsed in the 1990s. Many residents don’t want traditional textile jobs back, citing low pay and poor conditions, and officials argue cheap fabric production won’t return or replace potential losses. The area’s prosperity now relies on international supply chains and anti-union policies, with leaders warning that a trade war could discourage future investment and risk layoffs, particularly at BMW’s massive Spartanburg plant. Smaller towns like Union still struggle, seeking diversified, better-paying employers, while textiles persist only in specialized niches.

Facing escalating Chinese tariffs on US goods—from 20% toward 145%—Colorado-based Cocona sold off its entire China-held inventory of its sweat-wicking fabric additive from a Shanghai free-trade zone before duties took effect. CEO Jeff Bowman said the preemptive sell-off, enough to supply buyers for 9–12 months, aimed to avoid steep costs amid uncertainty, noting strong demand and criticizing the US administration’s competence.

Chinese EV makers, squeezed by new US tariffs, are expected to redirect excess production to Southeast Asia, intensifying competition in Malaysia. Analysts warn of a looming price war as firms like BYD, Nio, and Xpeng target markets with fewer regulatory barriers and unmet demand. BYD has already slashed prices in Malaysia—cutting up to 26,000 ringgit on its Atto 3, bringing it into direct competition with Proton’s debut EV. The aggressive pricing threatens Malaysia’s domestic auto industry with margin pressure and potential job losses.

Analysts say record-high US tariffs could act as a stress test for China’s resilience to Western economic pressure in a Taiwan crisis, potentially boosting Beijing’s confidence if it weathers them. However, they stress any move on Taiwan remains a complex political-military decision. Beijing has long factored US involvement and sanctions into its Taiwan planning, so additional tariffs may have limited impact. Washington’s effective tariff rate on Chinese goods is now about 156%, near levels Trump once floated if China attacked Taiwan, while the US maintains opposition to unilateral status changes and continues arming Taiwan for defense.

The article argues that Trump’s sweeping tariffs and ensuing market turmoil have damaged both his political credibility and the broader system of globalisation. While the White House framed the moves as leverage to lower global tariffs and punish China, markets revolted, forcing a partial retreat but leaving U.S. effective tariffs at historic highs. Leaders like Mark Carney and analysts such as Paul Krugman see this as an American abdication of postwar trade leadership, eroding trust and rules that underpin global trade. Trump’s long-standing protectionist instincts—once constrained by advisers like Gary Cohn—now dominate, reflecting populist backlash to deindustrialisation but risking higher consumer costs, fractured alliances, and a lasting reordering of the global economy. The piece suggests that rather than killing globalisation outright, the episode has exposed its fragility and may have mortally wounded economic populism’s credibility.

Border regions like San Diego–Tijuana, deeply integrated by decades of NAFTA/USMCA-driven co-production, face major disruption from President Trump’s new tariffs on Mexican imports. While some goods remain exempt under USMCA, only about half of Mexico’s exports qualify, and many firms hadn’t used those provisions, triggering frantic supply-chain audits and shifts to North American components—especially in autos, electronics, and medical devices. Short tariff windows already froze shipments and investment, and rising costs could hit California hospitals and other sectors. At the same time, steep new tariffs on China are driving Chinese firms to explore manufacturing in Mexico, offering potential gains for Mexico if rules on cross-border components don’t impose repeated duties. Both countries risk job losses and price hikes as uncertainty persists, even as Mexico seeks exemptions for co-produced goods.