President Trump, has escalated tariffs on Chinese imports to a total of 145%, effective as of recent announcements, while China has retaliated with 125% tariffs on U.S. goods. This tit-for-tat escalation marks a significant intensification of the trade war that began in Trump's first term. The U.S. has paused reciprocal tariffs on most other countries for 90 days but China remains the primary target, with exemptions for certain tech products like smartphones and laptops from the latest reciprocal tariffs—though these are temporary, and new semiconductor and pharmaceutical tariffs are looming.In the short term, here’s what’s likely: 1. **Economic Impact on Trade**: U.S.-China trade is already shrinking. China’s exports to the U.S. could drop by over 50% if these tariffs persist, per Capital Economics, shaving up to 1.5% off Chinese GDP growth. Many Chinese goods tailored for the U.S. market may not easily find buyers elsewhere, and U.S. exports like soybeans and LNG to China will face higher costs, though these are less critical to the U.S. economy overall. 2. **Shift in Global Trade**: China is pivoting to diversify trade away from the U.S., strengthening ties with neighbors like Vietnam and the EU. However, this risks flooding Europe with cheap Chinese goods, potentially destabilising local industries—a concern echoed by EU leaders like Ursula von der Leyen. Meanwhile, six Asian countries are reportedly nearing trade deals with the U.S., which could further isolate China. 3. **Tech Sector Twist**: The temporary exemption of electronics like iPhones and chips from the 145% tariffs has calmed markets but Trump’s administration is launching national security investigations into semiconductors and pharmaceuticals under Section 232. New tariffs on these could hit within weeks, reversing the reprieve and raising costs for U.S. consumers and tech firms reliant on Chinese manufacturing. 4. **China’s Countermoves**: China’s options include dumping its $760 billion..
