Clash of Titans: How the US-China Trade War is redrawing the Global Power Map

Maria Waris

Two giants come crashing together in the world. The ongoing war of tariffs and trade imbalance between Washington and Beijing is no longer a simple matter of tariffs and trade deficits, but a decisive struggle over who would rule the world and be the global hegemony. Ripple effects of the economic rivalry between the two great powers lead to reformation of alliances, disruptions in the world’s global supply chain, and a similar global landscape as that of Cold War era. 

Historically China was much behind USA in terms of economic development. For 30 years since its formation, Beijing was not active in trade. It was in 1970 when Deng Xiaoping transformed China economically and opened it to the outside world. In the following years in 1986, China became a part of General Agreement on Trade and Tariff and in 2001 became a part of WTO.

The US-China economic rivalry is no longer about trade—it’s a struggle for global dominance.

It achieved huge success and economic growth ($100B in 2001 to $400B in 2023). As China advanced, it became a threat to global hegemony of USA. Today both compete to become global Super power yet still do trade with each other. Both states benefit from this mutual trade USA firms earn in Billions from sale in Chinese markets and so does China but this mutual investment is disrupted recently by change of governance in USA and mutual implementation of Tariffs by Trump and Xi Jing Ping. 

From the beginning, their relationship has been turbulent marked by expansionary intensions, contrast ideologies and mistrust among the two. In 1972 the US President Nixon visited China which laid the ground for their future relationship. In 2017 China became USA’s no.1 trading partner with trade of goods worth 710B $ . Nevertheless, their trade relationship experienced a turn in the 21st century with the establishment of trade wars and aggressive protectionist policies that limited their economic cooperation. These economic conflicts have many reasons behind them.

USA blames China for being involved in illegal practices in trade, such as Intellectual Property or IP Infringements, such as reexporting goods, copyrighted software, exploitation of technology, espionage, currency manipulation and that they knew of trade secrets worth 225-600B $. Chinese Investment abroad is in consortium with public or state-owned firms that provides technological exploitation to the authorities. In addition to this, China also provides a market penetration option to only those firms who are willing to share technology. USA takes all these causes for initiation of trade war and levying Tariffs on China and uses them for justifying its actions in front of WTO. But the question here is: Are Tariffs a viable option?

When Tariffs do affect China up to some extent when its economy is already dealing with aftershocks of the pandemic, it has even worst consequences for the USA. Tariffs can be evaded using methods like altering products, transshipment of products which allows masking of origin, transfer pricing in which money is expelled outside the state etc. China is safer in this situation as it has lots of financial reserves, a centralized economy, military might, maritime presence and greater sense of nationalism.

As a strategic response ,China is already strengthening its ties with neighboring states of Asian and Africa by investing in them i.e. Belt and Road Initiative in Pakistan, Bright Road in Kazakhstan, Steppe Road in Mongolia and 2 Corridor one Belt in Vietnam also establishment of Asian Infrastructure Investment Bank (AIIB), similar to IMF which would provide funds to Asian nations thus bringing them closer to China and making them more dependent on it.

Tariffs have triggered inflation, disrupted innovation, and forced nations to take sides.

Trump has put 125% Tariffs on China in April 2025 and China has responded with 84% Tariffs in return. China’s strategically tackles the tariffs by quitting agricultural imports from USA and halting export of 16 defense-related products to USA. It has instigated antidumping and monopoly investigations in the US and also started export curbs on rare earth materials wisely because some of them like dysprosium and terbium are used in electronics and defense-related fields by USA thus making them irreplaceable.  Chinese Foreign Minister Guo Ji Akun says, “Courtesy demands Reciprocity.”

For United States these tariffs have much bigger consequences as they can lead to 1-1.5 percent increase in inflation and can hurt employment and innovation in businesses. The shock’s tariffs that have been imposed on USA have caused competitiveness to seem to decline, and hiring and investment decisions are stalled. This is for American economic superiority and global soft power. At first, Trump also imposed tariffs on allies to make them quit trade with China, but then Trump again gave a 90-day relaxation to all the states by bringing the tariff down to 10%. The change of decision was due to the threat to the American position in the Indo-Pacific region, a threat to American allies a lack of reward to allies would potentially get them to a rival state.

Instead, the policy of Trump is more based on aggression and impulsivity instead of wisdom and farsightedness. According to IMF, USA and China contribute 43% to the global economy and Trade war between them can eventually lead to economic recession, decline in global investment and boom. As Tariffs heighten and tensions increase between the two powers, rest of the states of the world are compelled to choose between either of the two rival states, which has a destabilizing effect to the existing economic order of the world.

China has responded with intensifying its self-reliance in the face of US tariffs for instance its “Made in China 2025” goal and increasing its presence in the Global South by introducing developmental programs over there. In the meantime, USA is also trying to bond with its allies via initiatives like the Indo-Pacific Economic Framework and CHIPS Act meant to contain China in technological and industrial fields.

China’s strategic outreach to the Global South contrasts with America’s reactive protectionism.

Another global implication of this rivalry could be transformation of world order, it will shift from unipolar or bipolar to multipolar because states like India, Mexico and Vietnam would benefit from the situation and increase their manufacturing and supply. ASEAN and EU are also deciding on choosing either side. The world is witnessing transformation.

The author is a graduate in Defense and Diplomatic Studies. She is interested in geopolitical analysis.