US using Tariffs as an Economic Weapon against China

By Gerald Mbanda

Published: April 15,2025

Photo credit: REUTERS/Florence Lo/Illustration

The Trump administration announced increased tariffs on Chinese goods as high as 145%, forcing China to retaliate with an 84% tariff on US imports. To other countries, Trump cancelled the planned tariffs for 90days. The development opens   a war of wits between the two largest economies in the world.

The US resorts to tariffs as a tool to sabotage China’s rising economic power. Framed as a strategic move to protect domestic industries, correct trade imbalances, and curb China’s global influence, these tariffs are often portrayed as an economic weapon—a way to weaken China’s economy without resorting to military conflict. But while the rhetoric suggests a path to American resurgence, the reality tells a different story: in a trade war, there are no true winners.

According to a 2020 report by the Federal Reserve Bank of New York, the tariffs cost the average American household $831 annually through higher prices and reduced consumption. Sectors such as electronics, appliances, clothing, and machinery were among the hardest hit.

The U.S. began imposing significant tariffs on Chinese goods in 2018, targeting over $360 billion worth of Chinese imports. China responded with tariffs on about $110 billion of U.S. goods. The stated goals were to “punish China for intellectual property theft, forced technology transfers, and to narrow the U.S. trade deficit with China—which stood at $419 billion in 2018,” the highest on record at the time. However, beneath these surface-level justifications was a broader strategic objective—restraining China’s economic ascent and reasserting U.S. dominance in global trade.

A study by the Peterson Institute for International Economics found that more than$80 billion in new taxes were imposed on U.S. importers between 2018 and 2020 due to tariffs. Many small and medium-sized businesses struggled to absorb the increased costs, especially those dependent on Chinese components for their products.

By raising the cost of Chinese goods, the U.S. hoped to reduce its dependency on Chinese imports, revive domestic manufacturing, and pressure China into trade reforms.

By making Chinese goods more expensive in the American market, the tariffs aimed to reduce Chinese exports, hurt manufacturers, slow down China’s GDP growth, and force Beijing to the negotiating table. In essence, tariffs were deployed as an economic weapon, designed to apply pressure without firing any bullet.

However, the reality of economic warfare is rarely as clean or effective as intended. While the tariffs did cause some disruption to Chinese supply chains and created short-term pain for certain sectors of China’s economy, the impact was far from one-sided.

Tariffs are essentially taxes paid by importers—often U.S. businesses. These costs are passed down the supply chain, resulting in higher prices for everything from electronics to machinery to everyday household items. American manufacturers reliant on Chinese components have seen costs rise, reducing competitiveness and sometimes leading to job losses.

China’s retaliatory tariffs severely hit American farmers. U.S. agricultural exports to China fell from $19.5 billion in 2017 to$9.1 billion in 2018—a53% decline in just one year. The federal government responded with $28 billion in subsidies between 2018 and 2020 to help offset the losses.

Despite the tariffs, the trade deficit with China has remained large. In 2022, the U.S. trade deficit in goods with China was $382.9 billion—only modestly lower than the peak. This suggests that tariffs alone have not succeeded in significantly altering the structural dynamics of trade.

Many industries, especially technology and manufacturing, rely on globally integrated supply chains. Tariffs forced businesses to absorb losses, pass on costs, or seek alternative suppliers—none of which are easy or cheap. The uncertainty and volatility hurt investment and slowed innovation.

The trade war between the world’s two largest economies injected instability into the global economy. Markets became jittery, investment slowed, and international trade flows declined. Developing countries, caught in the crossfire, also suffered. While the immediate economic consequences of the tariffs were painful for both sides, some U.S. policymakers argue that the long-term goal is “strategic decoupling”—reducing dependence on China and encouraging domestic or allied production.

However, decoupling is a complex and costly process. China remains deeply embedded in the global economy, not just as a manufacturer but as a consumer, innovator, and investor. Attempting to unwind decades of economic integration is a monumental task that comes with significant risks.

While U.S. tariffs on China were intended to weaken a strategic rival, the broader consequences of the trade war have proven the old economic adage true: in trade wars, everyone loses. Consumers pay more, businesses face uncertainty, farmers suffer, and global growth stalls. The strategy of using tariffs as an economic weapon may deliver some tactical wins, but the long-term fallout suggests a different path forward is needed—one that balances competition with cooperation, and rivalry with resilience.

In an interconnected world, mutual economic destruction is a far more likely outcome than unilateral victory. In 2020, a World Trade Organization (WTO) panel ruled that the U.S. tariffs imposed on China violated global trade rules, stating that they were “inconsistent with WTO obligations” and that the U.S. failed to provide adequate justification under the WTO’s dispute mechanisms.

The U.S. rejected the ruling, arguing that the tariffs were necessary to address China’s unfair trade practices—pointing to national security exceptions and systemic issues not adequately addressed by WTO rules. The rejection signifies weakening of multilateral institutions. When the US violates or bypasses the WTO’s rules-based system, the trade war sets a precedent that other nations might follow, further eroding the effectiveness of global trade governance. There is need for countries to engage in fair trade rules under WTO rules to promote fair competition and global economic growth. 

Gerald Mbanda is a Researcher and publisher on China and Africa.