Made in USA vs Made in China: Trump Returns to Charge with New Tariffs

The trade war between the United States and China, which intensified during the administration of Donald Trump, is a complicated phenomenon that goes beyond simple tariffs; it is a struggle for global economic and technological supremacy. As of April 2025, this conflict remains constantly evolving, with deep implications for both countries in such areas as production, trade, economy and the value of their currencies. I then offer a detailed analysis of the current state, the effects of the escalation of tariffs and an assessment of who could benefit most, both in the short and long term.

Current Context of the Commercial War

The trade war formally began in 2018, when Trump decided to impose tariffs on Chinese products for billions of dollars, arguing that China was engaging in unfair practices, granting massive subsidies to its industries and stealing intellectual property. Since then, the conflict has been escalating in different stages, with reprisals from both sides. In 2025, after Trump’s return to the presidency, tariffs have reached record levels, such as the recent 54% to Chinese products, to which China responded with a 34% tax on American goods, according to Reuters reports of April 4, 2025. This exchange reflects a top-pressure strategy on the part of the US and a Chinese resistance stance.

The background of this climb lies in the growing strength of Chinese products. China has consolidated its role as “the factory of the world,” not only in the production of low-cost goods, but also in high-tech sectors such as electric, semiconductor and renewable energy. This poses a threat to American production, which Trump seeks to revitalize with his “America First” policy. However, the economic interdependence between the two countries complicates the situation: the US depends on cheap Chinese imports, while China needs the US market for its exports.

Effects of the Earrings

For the United States

1. Impact on Economics:
   • Consumer Costs: Tariffs operate as an import tax, making Chinese products more expensive in the US market. Previous research, such as that of economists Flaaen, Hortacsu and Tintelnot on the tariffs on the washing machines in 2018, reveal that American consumers ended up paying a high price (about $820,000 for each created job). By 2025, with tariffs of 54%, it is estimated that the additional cost per household could reach $1,900 per year, according to projections based on economic analysis.
   • Inflation: The Federal Reserve and several economists have pointed out that this policy could rekindle inflation, a problem that already had an impact on the Democratic defeat in 2024. Essential products such as electronics and clothing, which mostly come from China, would become more expensive, thus affecting the purchasing power of consumers.
   • National Production: Trump argues that tariffs will promote American manufacturing by protecting it from Chinese competition. However, moving supply chains is a slow and costly process. Companies such as Apple, which assemble 90% of their iPhones in China, face a dilemma: taking costs, moving them to consumers or changing production, which is not viable in the short term.
2. Impact on Currency:
   • The dollar could gain strength at first due to the perception of a more aggressive economic policy. However, in the medium term, inflation and fear of a possible recession, which analysts associate with trade disruptions, could cause it to weaken. This uncertainty has already caused some volatility in the financial markets, as seen with the fall of the S blindfold 500 (-1.6%) on April 4, 2025.
3. Long-term effects:
   • If companies fail to replace Chinese imports quickly, the U.S. could face an economic contraction. UNCTAD (United Nations Conference on Trade and Development) warns that if all countries decided to impose massive tariffs, global GDP could fall by 4 per cent, which would cause the United States to lose competitiveness against more open economies.

For China

1. Impact on Economics:
   • China’s exports to the US reached $524.7 billion in 2024, which represents an increase of 4.9% compared to the previous year, according to El Confidencial. However, the 54% tariffs will reduce this figure, affecting key sectors such as electronics, which represents 41.6% of their exports to the US. Despite this, China has been diversifying its markets and strengthening its relations with the EU, Mexico and Vietnam, helping to mitigate the impact of these tariffs.
   • Internal Growth: With GDP expected to grow less than 5% in 2025, compared to 7% of 2018, China is dealing with internal pressures such as the real estate crisis and high youth unemployment. Tariffs have made things even more complicated, but the government has taken steps in implementing tax stimuli in key sectors such as semiconductors and electric vehicles, as well as devaluing yuan by 30%, according to publications in X, to maintain their competitiveness.
   • Production: Unlike the US, China does not depend so much on importing intermediate goods from its rival. Its advanced manufacturing ecosystem allows you to adapt, although at the expense of narrower margins.
2. Impact on Currency:
   • The devaluation of the yuan makes Chinese exports more competitive, which helps mitigate the impact of tariffs. However, this also increases imports, such as energy and raw materials, which in turn pressures domestic inflation and affects the purchasing power of Chinese citizens.
3. Long-term effects:
   • China could benefit if it accelerated its transition to an economy of internal consumption and technological leadership. Projects such as the New Silk Road and advances in 5G (Huawei) reinforce their overall position, although tariffs delay this goal by limiting export earnings.

Who’s Benefitting More?

A Short Term (2025-2026)

• The United States: Wins in political terms, with Trump projecting strength and appealing to his base with the narrative of protecting jobs. Some local producers (steel, aluminum) could see temporary benefits. However, the economic cost (inflation, recession) and dependence on Chinese goods tilt the balance against it.
• China: Although it suffers immediate losses in exports, its capacity for diversification and state control allows it to better absorb the coup. The devaluation of yuan and non-tariff measures (restrictions on rare land) give you tools to resist.

Winner: China, for its resilience and lower relative dependence on the US market.

A Long term (2027 onwards)

• The United States: If it manages to relocate production and reduce the trade deficit ($295.4 billion in 2024), it could strengthen its economy. However, this requires massive investment and time, something only tariffs do not guarantee. The risk of isolation from global trade and losing technological competitiveness (e.g. delay in energy transition) is high.
• China: Its strategy of self-sufficiency and expansion in emerging markets places it as an economic leader if it maintains course. The commercial war accelerates its decoupling of the US, a geopolitical goal of Xi Jinping, and reinforces its influence in Asia and Africa.

Winner: China, for its strategic vision and adaptive capacity, provided it avoids a severe internal crisis.

Benefits for Economy and Currency

• Economy: China is more likely to benefit in the long term by consolidating itself as a manufacturing and technological power, while the US risks stagnation if it does not innovate quickly. In the short term, they both lose, but the U.S. more for the impact on consumers.
• Currency: The dollar could be weakened in the medium term by inflation and recession, while the yuan, although devalued, gains relevance if China expands its use in international trade (e.g. via the Silk Road).

Conclusion

The trade tariff war in 2025 is a risky move by Trump to boost U.S. production, but the immediate effects are further damaging the U.S. due to rising prices and inflation. China, with its most controlled and diversified economy, seems to be resisting better and could come out as the great long-term winner, strengthening its economy and currency on the global stage. However, the final result will depend on how well the U.S. is able to carry out effective reindustrialization and China’s ability to face its own internal challenges. For now, this escalation seems to favor Beijing more in strategic terms, while Washington faces a more immediate economic cost.