Since Trump’s return to power, the US-China trade rivalry has reignited into a full-blown economic battlefield, with tariffs as their weapons of choice. The present scenario of both powers is Tariff tension. A tariff is a tax that a government charges on goods that come into the country (imports), and sometimes on goods that go out (exports). Tariffs help the government earn money and protect local businesses by making imported products more expensive, so that people of the said country will prefer the local goods rather than importing products from other countries.

There are three main types of tariffs: Ad valorem tariff – This is a percentage of the product’s value. For example, if a product costs $100, and the tariff is 10%, the tax will be $10. The second type of tariff is a specific tariff, a fixed amount charged per unit, like $5 per kilogram of a product. The third type of tariff is a Compound tariff, which is a mixture of ad valorem and specific tariffs. Tariffs can affect product prices, consumer choices, international trade, and relations between countries.

In a recent report, the IMF predicted that the U.S. economy would grow by only 1.8%, less than the earlier estimate of 2.7%

The International Monetary Fund (IMF) said tariffs could slow economic growth and increase global debt. In a recent report, the IMF predicted that the U.S. economy would grow by only 1.8%, less than the earlier estimate of 2.7%. Tariffs on imported goods have been essential to U.S. policy since the country’s began. When Donald Trump came into power for the first time, he tweeted in 2018 and called himself a “Tariff Man”. His slogan on tariffs made him the focal point of his first term.

George Washington, the United States’ first president, signed a statute that mandated a 5% duty on most imports. Trump has several objectives behind tariff charges. He wants to provide some protection to the American manufacturers, initially at the expense of consumers who will bear the tariffs for higher-priced goods. Another objective of Trump is to give a tax cut to U.S. citizens once the process is streamlined and the flow of tariff revenues materializes meaningfully. In Trump’s view, tariff revenues compensate consumers for the high cost of inflation.

Following the initial escalation by President Donald Trump earlier this year, the United States and China have both announced a reduction in the tariffs they imposed on one another.

Tit-for-tat tariffs between the U.S. and China have escalated into significant charges, reaching up to 125 percent for U.S. goods seeking to access the Chinese market and a rate of 145 percent for Chinese goods seeking to enter the U.S. However, things have abruptly altered. Following the initial escalation by President Donald Trump earlier this year, the United States and China have both announced a reduction in the tariffs they imposed on one another.

As part of the agreement, both countries have eliminated specific tariffs and postponed others for ninety days, concluding on 14 May 2025.

As a result, recently raised Chinese tariffs on certain U.S. imports dropped from 125% to 10%, while new U.S. duties on Chinese goods—the additional tariffs imposed during this recent standoff—dropped from 145% to 30%. Both nations agree on a tariff of 115%.
Other non-tariff countermeasures that China implemented in reaction to the initial escalation, such as exporting vital minerals to the U.S., have also been delayed or abandoned.

The statement followed the two nations’ first meetings in Switzerland since Trump started the most recent trade war.

The market response has been overwhelmingly positive. For over 30 years, we have built global supply chains based on the seamless movement of goods across borders. So, the international market welcomed this announcement, and suddenly, stock markets across Europe rose after the announcement from the U.S. and China. Germany’s DAX index jumped by nearly 1%, as Mercedes-Benz, Daimler Trucks, and BMW were among the biggest risers. France’s CAC 40 index rose by 1.3%. Shares in the Danish shipping group Maersk rose 12%. Brent crude rose almost 3% at $65.75 a barrel, while the dollar index, which measures the greenback against a basket of currencies, jumped by 1.2%

The Chinese government asserted that appeasement should not be mistaken for peace and that compromise, in such contexts, does not necessarily command respect.

These initiatives seek to lessen the effects related to potential trade obstacles and strengthen the company’s position in overseas markets. The trade war between China and the U.S. has escalated over the past few weeks, with each nation hiking its import duties multiple times in a tit-for-tat. At the same time, the Chinese government asserted that appeasement should not be mistaken for peace and that compromise, in such contexts, does not necessarily command respect. The evolving tariff war between the U.S. and China is reshaping global trade dynamics. As businesses recalibrate supply chains and consumers brace for rising costs, governments continue to weigh economic gain against geopolitical influence.” “There is no winner in a tariff war or a trade war.”

Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.