Who won the tariff war between the USA and China. Analysis
In April 2025, US President Donald Trump began imposing import duties on Washington's trading partner countries and changed the terms of global trade. The tariffs were supposed to help shift production to the United States and reduce the gap between American imports and exports, but so far this gap is only growing. Who wins the tariff war based on the results of its first year, and who had to put up with collateral damage — in the analysis of Izvestia.
Who won
• The main target of Trump's tariff war was China. Despite the fact that duties were also imposed on US allies, the largest tariffs affected imports of Chinese goods: in April they reached 125%, which, together with the base duty of 20%, amounted to 145%. In response, China has reduced purchases of soybeans from the United States and restricted exports of rare earth metals, critical to American military infrastructure and artificial intelligence. Trump managed to unblock supplies only on October 30, in exchange for a reduction in duties to the "basic" 20%.
• The US farms suffered the most from Trump's tariff policy. As a result of the reduction in soybean exports, the number of bankruptcies among farms increased in the first half of 2025. On December 8, Trump announced the allocation of $12 billion in aid to American farmers. But it is much more important for the industry to find new markets that have shrunk due to the imposition of duties.
• Some of the production has been localized in the United States, but the promised revival of the American economy has not yet occurred. US real GDP growth in 2025 was 0.5% lower than forecast in January. In addition to duties, the decline was influenced by a decrease in the influx of migrant workers to the United States. Even Trump's "Big Beautiful Bill" (OBBBA), which significantly cut social spending in the budget, could not compensate for the losses. The Budget Commission of the US Congress expects a 5% drop in real exports this year.
• China, on the other hand, increased its trade surplus to $1.076 trillion, once again setting a world record, with exports over imports approaching $1 trillion last year. Due to the reduction in purchases of products, including soybeans, China continued to sell three times more to the United States than it buys, and also increased exports to Southeast Asia, Africa, Latin America and Europe.
• It is too early to talk about the final victory in the trade war. The imposition of duties was dictated by Trump's desire to ensure the leadership and economic independence of the United States, to increase exports of American goods: it will take 10-15 years for the country to achieve these goals. China also does not intend to stand still at this time and will increase its competitive advantages.
Why the US strategy didn't work
• The high cost of labor prevents the United States from competing with China. The main inflow of funds to the United States is provided by profits from international transactions, not from production. As a result of the deindustrialization of the 1970s and the transfer of enterprises offshore, the United States lost not only factories, but also competencies, becoming in fact a cash center.
• Given China's record trade surplus, which sells more than it buys, it was obvious that the United States and Europe would lose out in the event of retaliatory sanctions. In addition, China is almost impossible to cut off from the supply chain — it has not only the resources and production base, but also the ability to train qualified personnel in each area.
• China is also increasing its trade surplus due to the weak yuan. The Chinese currency is undervalued against the dollar: the Western press suggests that the real yuan should be three times more expensive. Because of this, it is profitable to sell domestically produced goods on foreign markets: neither Europe nor the United States will simply be able to compete with Chinese manufacturers, because the cost of production on their territory will cost them much more.
• Some experts believe that the goal of the United States is not so much to localize production within the country as to place it in its sphere of influence, on the territory of one of the neighboring friendly countries. Then the United States will be able to ensure a full production cycle and reduce its cost, since, for example, labor is cheaper in Mexico than in the United States. This will allow American products to compete with goods from China.
• Despite the losses of the United States as a result of the imposition of tariffs, trade wars will continue because the fundamental causes of the contradiction between the United States and China have not been eliminated. In fact, countries are competing for global leadership and influence, and the United States will continue to use tariff regulation methods against Chinese goods, since such sanctions are a familiar and accessible tool for the United States. There is an example of a failed protectionist policy in the history of the United States: during the Great Depression, an attempt to increase tariffs on goods from other countries led to retaliatory duties and worsened the crisis in the United States, reducing imports and exports by 70%. Therefore, today the United States can conclude which mistakes should be avoided.
How have the duties affected global trade
• The US tariff policy towards the European Union, along with the ongoing Ukrainian crisis and rising arms costs, has led to the fact that the economies of leading European countries showed weak results in 2025. The GDP of the economically strong Scandinavian countries of Norway and Finland decreased compared to the previous year. In addition, Finland, along with Sweden and Switzerland, is at risk of deflation, which indicates a strong slowdown in the economy. Germany was able to increase GDP by only 0.3%, France and the United Kingdom — by 0.9%, while in Portugal and Spain this figure increased by 2.8%.
• The European automotive industry is trying to get out of the crisis after an expensive transition to electric vehicles, forced abandonment of cheap Russian energy resources, aggressive American duties and unequal competition with the Chinese automotive industry, which so far surpasses the European automotive industry in terms of equipment and cost of models. German and French automakers are looking for opportunities to cooperate in order to defend their niche in the market.
• New international trade rule — there are no more rules. The scrapping of the post-war system of economic relations between the countries, which was embodied by the World Trade Organization, began after the introduction of sectoral sanctions against Russia, which destroyed economic ties and existing trade structures between the countries. The seizure of Russian assets abroad has confirmed that the world of freely convertible currencies no longer exists, and confidence in trade based on WTO principles has been completely destroyed.
• To stabilize international economic relations, a new political model is needed, whether it is the reconstruction of the United Nations or another organization that will build forms of international influence based on negotiations, rather than from a position of strength. Such a model has not yet been developed, but it is necessary because there is no longer any trust in the old system.
During the preparation of the material, Izvestia interviewed:
- Leonid Krutakov, political scientist, Associate Professor at the Financial University under the Government of the Russian Federation;
- Sergey Lukonin, Head of the Economics and Politics Sector of China at the E.M. Primakov IMEMO.
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