The US-China trade war has escalated dramatically in 2025, with the Trump administration imposing tariffs as high as 145% on Chinese imports, while China retaliates with tariffs reaching 125% on American goods. This tit-for-tat tariff increase has severely disrupted global trade, causing a sharp decline in cargo shipments-estimated to have fallen by up to 60% – and putting immense pressure on supply chains worldwide.
The heightened tariffs have already resulted in significant economic fallout. Goldman Sachs warns that up to 16 million jobs in China, particularly in manufacturing, retail, and wholesale sectors, are at risk due to the plummeting exports to the US. Coastal provinces like Guangdong and Jiangsu, which account for about 40% of China’s GDP, are expected to bear the brunt of this downturn. The tariffs have also intensified local government debt problems amid a sluggish property market and slow tax revenue growth. In response, China’s leadership has pledged targeted economic support to stabilize employment and key sectors affected by the trade conflict. Stimulus measures and employment support plans are being rolled out, although Beijing remains defiant, vowing to “fight to the end” if tariff escalations continue.
Meanwhile, the US administration has indicated a potential easing of tariffs, with President Trump acknowledging that the current 145% rate is “very high” and suggesting it could come down if China offers “something substantial” in return. However, no concrete deal has been reached, and communication between the two countries’ leaders remains limited, fueling uncertainty.
The trade war’s ripple effects are being felt globally. The International Monetary Fund recently downgraded its 2025 global growth forecast, citing trade tensions and policy uncertainty as key risks. Global trade growth is projected to slow to 1.7%, outpacing overall economic output but marking a significant decline from earlier expectations. The prolonged conflict is expected to reduce competition and innovation, increase production costs, and disrupt complex global supply chains. Financial markets have shown cautious reactions, with the US dollar weakening and gold prices fluctuating amid shifting investor sentiment. While some relief is anticipated if tariff tensions ease, the immediate outlook remains fraught with risks, including potential supply shortages and inflationary pressures on consumers due to higher import costs.In summary, the intensifying US-China trade war with unprecedented tariff levels is straining both economies and threatening global economic stability. The path forward hinges on diplomatic negotiations and the willingness of both sides to de-escalate tensions to avoid further damage to jobs, growth, and international trade networks.