The global economic landscape has been shaken as the US-China trade war 2025 enters a new and aggressive phase. China has officially slapped a 34 per cent tariff on all U.S. goods, effective April 10, marking a significant retaliation against President Donald Trump’s recent move to hike tariffs on Chinese imports by a whopping 54 per cent.
This move not only intensifies bilateral tensions but also sends ripples across global markets — potentially opening up an India export opportunity in select sectors.
The Chinese Finance Ministry, confirming the sweeping tariffs on Friday, said the decision was taken to “safeguard national interests” in response to escalating U.S. aggression. In a strategic twist, China also introduced export controls on seven critical rare earth elements — samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium — that are vital to U.S. defense, electronics, and green technology industries. These restrictions, effective from April 4, are being positioned as a national security measure.
China’s Commerce Ministry added, “The controls are meant to better safeguard national security and fulfill international obligations such as non-proliferation.” Additionally, Beijing has blacklisted 11 U.S. companies by adding them to its “unreliable entity” list, a move that could set the stage for further economic retaliation.
These actions follow Trump’s announcement of a 34 per cent tariff increase on Chinese goods, layered on top of an existing 20 per cent duty — bringing the total to 54 per cent, close to the 60% he pledged during his campaign. The new tariff framework begins with a 10 per cent baseline effective Saturday, while “reciprocal tariffs” go live April 9. Trump defended the move by stating, “China imposes 67 per cent tariffs on U.S. imports. The U.S. must act to protect domestic industries.”
In response, China’s Ministry of Commerce blasted the U.S. approach, calling it a “typical unilateral bullying practice” that violates international trade norms. “It’s aimed at reshaping the global trade order,” the Ministry said.
As expected, the consequences were immediate and intense. A staggering $250 trillion in market value was wiped out from Wall Street in just one day. The dollar reversed all its post-election gains, and investor sentiment dipped globally. This downturn comes at a time when the global economy is already navigating a slowdown.
According to the World Economic Forum, the global GDP growth rate is projected to drop to 3.3 per cent in 2025 and 2026 — down from the 3.7 per cent average seen in previous years. Experts warn that prolonged trade uncertainty could further destabilize economies worldwide.
For India, however, there could be a silver lining. As the U.S. and China clash, Indian exporters may find a window to boost competitiveness in sectors like gems and jewelry, textiles, and leather. With higher tariffs on Vietnam and Bangladesh, India’s cost competitiveness may improve in key markets.
“The uncertainty emanating from trade is hitting the global economy at a time when growth is already slowing,” said one trade analyst. But they added, “This may be an opportune moment for India to consolidate its export base in segments impacted by tariffs.”
The US-China trade war 2025 also affects existing trade balances. In 2024, total goods trade between the two nations reached $582.4 billion. U.S. exports to China dipped 2.9% to $143.5 billion, while imports rose 2.8% to $438.9 billion, ballooning the trade deficit to $295.4 billion — a 5.8% increase over 2023.
Despite tensions, China remains the U.S.’s largest goods supplier, contributing 16.5% of total imports. Meanwhile, the U.S. continues as the world’s second-largest goods exporter, with top destinations including Canada, Mexico, China, Japan, and the UK.
As this high-stakes geopolitical economic chess game unfolds, the world is watching how emerging economies like India position themselves. While the overall global climate may remain fragile, the shifting dynamics may indeed give India a much-needed export advantage amid trade chaos.
