Trump’s High-Stakes Trade War with China: Risks and Uncertainty for the US Economy

President Trump is entering yet another critical and explosive week in his trade war with China, as he attempts to de-escalate tensions that he himself ignited, before they cause severe damage to the American economy, according to CNN analysis. Chinese President Xi Jinping has not responded to pressure to engage in phone negotiations with Trump to pursue an agreement following the imposition of 145% tariffs by the U.S., which escalated the conflict. Trump continues to assure the American public about his ‘exceptional relationship’ with the Chinese leader, despite the lack of progress in restarting talks that could end the deadlock threatening new market collapses and painful impacts on citizens. In a sudden move last week, Trump suspended retaliatory tariffs on dozens of countries for 90 days after stock market turmoil and early signs of a potential financial crisis. Beijing viewed this retreat with interest, but while trying to ease one crisis, Trump exacerbated another—imposing 145% tariffs against China in what was seen as an attempt to save political face. The White House added confusion Friday night by announcing exemptions for Chinese-made smartphones and computers from the highest tariffs, indirectly acknowledging the potential harm these excessive charges could inflict on the tech industry and American consumers. However, on Sunday (April 13, 2025), the Trump administration clarified that these products would still be subject to new, albeit lower, tariffs in the coming weeks, raising further questions about their seemingly erratic moves that have repeatedly caused panic in markets. Despite the uncertainty, Trump insists on showcasing the multiple advantages of the conflicts he has initiated. Analysts argue, however, that the conflict with China is not just theater—it’s a high-risk confrontation. The economies of both nations are deeply interdependent: the U.S. relies on China for electronics, rare earths, pharmaceuticals, and basic consumer goods, while American farmers depend on soybean and sorghum exports to China. Imposed tariffs from both sides could lead to a complete freeze in trade, causing significant losses for both parties. American consumers could face shortages and price surges. Some experts believe China, due to its authoritarian political system, might endure even greater sacrifices to avoid defeat in this crucial showdown against the United States. The White House often portrays all these consequences and provocations as part of a grand plan, insisting its strategy is paying off. They claim numerous countries subjected to the most ‘frozen’ retaliatory tariffs rushed to offer impressive deals to Trump to avoid American pressure. Applying the same logic against China, they believe the strength of the American economy will force Xi to make concessions on long-standing issues like market access, intellectual property theft, and the massive trade deficit—a proof, Trump insists, that Beijing exploits Washington. This approach by Trump, according to CNN, is perilous as it seems to ignore the complexity of relations between the two countries and the political culture in Beijing. Xi’s efforts to establish China as a dominant global power stem from the belief that the U.S. and other Western powers historically adopted colonial policies aimed at suppressing Chinese influence and denying its rightful place in the world. Thus, Xi cannot appear to bow down to what China views as American bullying. The upcoming days will test Trump’s favored tactics of bluffing and escalation, perfected during his time as a New York real estate mogul. If Trump can redefine U.S.-China trade relations, it could signify a major success in a new era of Washington-Beijing relations. While expanded trade with China contributed to its rise as a superpower, cheap clothing and consumer goods like iPhones have improved living standards for millions of Americans, despite globalization’s impact on industrial regions and social decay. Despite rising tensions and fragile balances in financial markets, Trump’s allies defended his strategy, which risks triggering a recession in an economy that experienced steady growth when he assumed office less than three months ago. Many analysts view government claims of receiving offers skeptically, suggesting countries like Japan, India, South Korea, and EU member states may offer Trump impressive-sounding concessions without substantially altering bilateral trade relations. This would mean one of Trump’s key trade war goals—the revival of American industry—has not been achieved, leaving his communication ‘victories’ unable to justify the trillions lost in international markets and the losses suffered by millions of Americans in their retirement funds. Commerce Secretary Wilbur Ross declared on ABC News’ ‘This Week,’ ‘Donald Trump has the ball, and I want him to have it. He’s the right man in the right place.’ ‘He knows how to play this game. He knows how to handle President Xi. He’s the right person for the job, and I’m confident the situation with China will have a positive outcome.’ Nonetheless, Trump’s reputation as a ‘great negotiator’—central to his political image—has never been tested so harshly.