The U.S.-China trade war reignited in February 2025 as President Donald Trump announced additional 10 percent tariffs on Chinese imports. This marked the first additional tariff introduced by his administration since halting those on Canada and Mexico. While officially framed as a measure to curb illicit drug flows, the move was widely seen as part of a broader strategy to counter trade imbalances and limit China's growing economic influence. The decision underscored Washington's renewed commitment to economic nationalism and set the stage for heightened tensions between the world's two largest economies.
History shows that tariffs rarely achieve their intended goals. The Trump-Biden tariffs, spanning from 2018 to 2024, resulted in over $233 billion in additional costs borne by U.S. consumers, with $144 billion of that total under the Biden administration alone. Rather than undermining China's economic position, these measures prompted China to adapt, innovate and bolster its resilience. The current trade scenario, however, could prove costly for American families and businesses. According to Time Magazine's February 4 edition, tariff-related costs are expected to increase household expenses by over $800 to each U.S. household in 2025. Industries reliant on Chinese goods, such as the toy sector, brace for inevitable prices, putting small businesses at risk and highlighting the U.S. economy's deep reliance on Chinese manufacturing.
Learning from past experiences, China's response was measured, not reactionary, highlighting its economic adaptability and strategic foresight. It imposed new taxes of 10-15 percent on American coal, natural gas, crude oil, farm machinery and large vehicles, effective February 10, 2025. Additionally, restrictions on critical mineral exports vital for high-tech industries signaled China's economic resilience and commitment to self-reliance.
Despite external pressures, China met its 2024 growth target of 5 percent, with green technology contributing 40 percent to GDP growth. While the World Bank forecasts a slight dip to 4.5 percent in 2025, China remains firmly focused on long-term economic transformation, particularly through its 2029 digital infrastructure plan. This resilience underscores a strategic pivot towards high-tech industries, cementing the nation's commitment to modernization. According to a recent report by Bloomberg, over the past year, China recorded a trade surplus of approximately $1 trillion, marking a 21 percent increase compared to 2023. Electronics and machinery led the surplus, while a surge in computer chip exports further demonstrated China's growing leadership in the global tech sector.
A major area of strength for China lies in the electric vehicle (EV) sector, where it dominates global supply chains. China controls 63.5 percent of the world's EV battery production and continues to set new benchmarks in the industry. CATL, the sector leader, is at the forefront of groundbreaking innovations, including advances in sodium-ion battery technology. Meanwhile, BYD surpassed Tesla in 2024, achieving a 71.86 percent year-on-year increase in exports, shipping 417,204 units abroad. With markets like Australia importing 80 percent of their EVs from China and Chile sourcing 39.4 percent in 2023, China's dominance in the sector is undeniable. BloombergNEF projects that by 2025, China will account for 58 percent of global EV sales, further solidifying its leadership in clean energy transportation.
