I. Background and Core Conflicts of the Tariff War
Since the U.S. launched its "Section 301 investigation" and imposed tariffs on China in 2018, the trade conflict between the two nations has persisted for years. Citing concerns over "fair trade" and "intellectual property protection," the U.S. imposed multiple rounds of tariffs on Chinese goods, covering over $500 billion in imports, with average rates rising from 3% to approximately 19%. China retaliated with equivalent measures, imposing tariffs of up to 25% on U.S.-origin goods such as automobiles and agricultural products. This tariff war has not only reshaped global supply chains but also profoundly impacted the economies of both countries and the world.
II. Direct Impact of Tariffs on Import-Export Trade
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Structural Decline in Bilateral Trade Volume
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According to China Customs data, U.S.-China goods trade reached 633.5 billion) when adjusted for inflation, indicating a significant contraction in real trade volume. The U.S. share of imports from China fell from 21.6% in 2017 to 16.5% in 2023, with orders shifting to third countries like Vietnam and Mexico.
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U.S. tariffs targeted Chinese machinery and electronics (e.g., semiconductors, industrial equipment), textiles, and furniture, raising export costs for Chinese firms by 10%–30% and forcing many small and medium enterprises (SMEs) to exit the U.S. market.
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Global Supply Chain "Decoupling" and Regional Restructuring
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To bypass tariffs, multinational corporations accelerated relocating production to Southeast Asia or Mexico. For example, China’s share in Apple’s iPhone production dropped from 47% in 2019 to 36% in 2023, with Vietnam and India emerging as new hubs.
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However, full "decoupling" remains unlikely: China still accounts for 12% of global intermediate goods trade and holds irreplaceable advantages in sectors like rare earths and lithium batteries.
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Costs Borne by U.S. Consumers and Businesses
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Research by the Peterson Institute for International Economics (PIIE) shows that 90% of U.S. tariffs on Chinese goods are paid by American importers and consumers, increasing average household costs by approximately $1,300 annually.
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U.S. manufacturers, such as agricultural machinery giant John Deere, have opposed tariffs, citing over $200 million in added production costs due to pricier Chinese components.
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III. China’s Countermeasures and Structural Adjustments
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Tariff Retaliation and Market Diversification
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China’s tariffs on U.S. soybeans and liquefied natural gas pressured agricultural states to lobby for trade de-escalation. Simultaneously, China accelerated its Belt and Road Initiative, with exports to ASEAN, the Middle East, and Africa rising to 37.2% of total exports in 2023—surpassing combined exports to the U.S. and Europe.
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Boosting Domestic Demand and Consumption
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China lowered import tariffs, expanded duty-free shopping (e.g., raising Hainan Free Trade Port’s duty-free quota to 100,000 yuan/year), and optimized cross-border e-commerce policies (e.g., "bonded online shopping + offline pickup" models). Consumer goods imports surged to 1.8 trillion yuan in 2023, up 58% from 2018, driven by cosmetics,母婴用品 (maternal and infant products), and other tax-free items.
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Industrial Upgrading and Supply Chain Autonomy
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To address "bottleneck" technologies, China increased R&D investment in semiconductors and industrial software, raising R&D spending to 2.6% of GDP in 2023. It also deepened regional supply chain cooperation via RCEP (Regional Comprehensive Economic Partnership) to reduce reliance on U.S. technology.
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IV. Duty-Free Shopping Policies: Short-Term Stimulus vs. Long-Term Challenges
China’s recent duty-free policies (e.g., Hainan’s offshore duty-free program, urban duty-free store pilots) aim to repatriate overseas consumption and mitigate the tariff war’s impact on consumer confidence.
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Effectiveness: Hainan’s duty-free sales exceeded 80 billion yuan in 2023, with annual growth exceeding 30%, attracting middle-class shoppers who previously traveled to Japan, South Korea, or Europe.
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Controversies: Critics argue that duty-free policies may squeeze domestic retailers and overemphasize luxury goods (70% of sales), offering limited support to broader economic growth.
V. Future Trends and Projections
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Short-Term Stalemate with Partial Easing
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Amid U.S. election cycles, sweeping tariff removal is unlikely, but exemptions for medical supplies or green technologies may ease inflation pressures.
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China may further lower import tariffs on cars and luxury goods to attract foreign investment.
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Long-Term "Coopetition" in Tech and Supply Chains
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Technology and supply chain security will dominate U.S.-China rivalry. The U.S. may tighten semiconductor and AI export controls with allies, while China accelerates breakthroughs via its "new national system" for strategic technologies.
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Regional trade agreements (e.g., CPTPP, DEPA) may become battlegrounds for rule-setting dominance.
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Irreversible Fragmentation of Globalization
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Tariff wars have accelerated "nearshoring" and "friendshoring," but China’s massive market and manufacturing resilience will keep it integral to global supply chains.
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Conclusion
The U.S.-China tariff war reflects a broader contest for global economic leadership. While short-term disruptions persist, China’s market diversification, industrial upgrading, and domestic demand-driven strategies are building a more resilient economy. The ultimate victor may hinge on breakthroughs in energy transition, digital innovation, and high-end manufacturing. For businesses and consumers, adapting to the "dual circulation" paradigm—balancing domestic and international markets—and embracing agile supply chains will be key to navigating this new era.