On April 9, President Trump announced a highly controversial tariff policy: suspending 'reciprocal tariffs' for 75 countries for 90 days and lowering them to 10%, while abruptly raising tariffs on China from 104% to 125%, effective immediately. This aligns closely with my previous judgment. See article (The 'Smoke and Mirrors' of Trump's Tariff Policy and the Feasibility of a 10% Base Tariff).
This combination of 'global easing and increased pressure on China' not only continues the tense situation of the China-U.S. trade war but also further exposes the intentions behind Trump's 'decoupling' strategy. However, as warned by Chinese economist Huang Qifan, decoupling between China and the U.S. will lead to a 'lose-lose' situation, and time may stand on China's side, with the U.S.'s long-term losses potentially being more significant.
Trump's Calculation: Short-term Pressure and Long-term Decoupling
Trump claims that this move is a response to China's 'lack of respect for the global market,' while providing a 90-day negotiation window for other countries, attempting to use a 'carrot and stick' approach to divide opponents. However, the deeper goal of this strategy evidently points toward economic decoupling between China and the U.S. Since his first term, Trump has sought to curb China's rise through trade wars and technological blockades. This 125% tariff is not only a maximum pressure tactic on the China supply chain but also a continuation of political scapegoating—blaming domestic economic stagnation and social division on external enemies.
Huang Qifan pointed out that the essence of the U.S. advocating for decoupling is an extreme action taken by politicians to divert contradictions. However, in the context of globalization, the deep integration of the China-U.S. industrial chain means that forced decoupling not only violates market laws but will also backfire on American interests. Trump may hope to force China to compromise through short-term high pressure, but the contradiction between his long-term strategy and reality is gradually becoming apparent.
The Economic Cost of a China-U.S. Mutual Loss: The Immediate Impact of a 125% Tariff
The tariff on China has risen to 125%, which will directly increase the cost of Chinese goods exported to the U.S. Based on an estimated $440 billion in imports from China in 2024, this tariff rate could add over $500 billion in extra burdens, ultimately passed on to American consumers and businesses. Price increases in sectors such as electronics and clothing will exacerbate inflation, and small and medium-sized enterprises that rely on Chinese supply chains may see their profits severely eroded if they cannot shift production.
China also faces short-term pain. Huang Qifan estimates that if American companies fully withdraw from China, the country would lose approximately 80 trillion RMB in output, 4 million jobs, and hundreds of billions in tax revenue. However, China's 'dual circulation' strategy has already shown resilience—the rapid recovery of GDP after the pandemic proves that its domestic market and industrial adjustment capabilities are sufficient to offset some shocks.
In contrast, the losses for the U.S. may be more irreversible. Huang Qifan analyzes that American companies in China have annual sales of $700 billion (for example, General Motors' sales in China account for 37% of its global sales); decoupling will lead to these companies permanently losing the Chinese market, making it difficult to replicate equivalent benefits in other regions. More critically, if the American chip industry loses China as the largest global market (annual procurement of $200 billion), the high depreciation costs cannot be absorbed, and companies will fall into a spiral of shrinkage, putting their technological hegemony at risk.
Time is on China's side: The long-term game of decoupling
The China-U.S. trade war is essentially a war of attrition that 'kills a thousand enemies while self-inflicting eight hundred damage,' but Huang Qifan believes that the long-term costs for the U.S. are more significant. First, 60% of the goods exported from China to the U.S. are produced by American companies in China, and decoupling directly impacts the profits of U.S. parent companies; if General Motors withdraws from China, its global competitiveness will significantly decline. Second, American universities rely on Chinese students to contribute over $30 billion in revenue; education and technology blockades not only severely impact research funding but also force China to accelerate independent innovation. Meanwhile, American companies find themselves in a 'high investment, low return' vicious cycle due to market losses.
The agricultural sector is also a soft spot for the U.S. As the controller of 50% of global grain trade, the U.S. relies on China as its largest buyer. If China turns to alternative markets such as Brazil and Argentina, U.S. agricultural states will face unsold products and political backlash. Moreover, if Wall Street financial institutions lose China, which accounts for 1/5 of the global consumer market, their profit-driven nature will force them to resist government policies, further undermining the feasibility of decoupling.
In contrast to China, its dual circulation strategy has five major advantages: the efficiency of the internal circulation's output is three times that of the external circulation, energy security is enhanced, independent innovation is accelerated, regional development is balanced, and institutional openness is deepened. These factors give China greater maneuverability. In recent years, China's exports to the U.S. have decreased from 19.2% to 14.7%, indicating that its economic focus is gradually shifting inward and diversifying.
Global Chessboard and the 90-Day Stalling Tactic
Trump's implementation of a 90-day tariff suspension for 75 countries may seem like a de-escalation, but it is, in fact, a stalling tactic to consolidate allies' support and isolate China. However, global supply chains are formed based on the principle of minimizing costs; U.S. allies (such as G7 countries) depend on China as an assembly hub for intermediate goods, and forced decoupling will lead to conflicts of interest. Israel and Japan have already negotiated exemptions, and the EU has also expressed a willingness to cooperate, but if negotiations break down after 90 days, the reimposition of tariffs could trigger new market turmoil and even prompt some countries to join forces with China against U.S. pressure.
Time is on China's side, global patterns are about to be reshaped
Huang Qifan emphasized that China's dual circulation strategy (with internal circulation efficiency being three times that of external circulation and accelerated independent innovation) gives it the confidence to resist decoupling, while America's technological hegemony and financial capital will gradually crumble amid market losses. A 125% tariff on China may cause short-term pain, but in the long run, the stagnation of U.S. agricultural states, the shrinkage of high-tech industries, and the centrifugal tendencies of allies will impose a greater cost. The 90-day easing period is merely a temporary respite; if negotiations yield no results, the restructuring of global supply chains will further weaken the dollar-dominated trade system.
This trade war is unlikely to have a winner but may become a catalyst for a new order. With its vast domestic market and complete industrial chain, China is expected to reshape the global economic landscape; meanwhile, the retreat of dollar hegemony has paved the way for the rise of decentralized assets like Bitcoin. Trump's unilateralism may stir temporary waves, but the efforts to reverse the tide of globalization will ultimately fail—time firmly stands on China's side.