The early indications suggest that the posture and policies of a second Trump administration will be shaped, to a large degree, by the President’s desire to dominate the daily news cycle. Few issues command the attention of politicians and the business community alike more than the potential for a renewed trade war between the U.S. and China. While the economic impact of the tariffs implemented during Trump’s first term remains contested, one thing is clear: tough talk on China plays well with Trump’s MAGA base.
Tariffs as a political weapon
Tariffs, which President Trump has referred to as “the most beautiful word in the dictionary,” are once again being positioned as a cornerstone of his administration’s trade policy. His first term saw extensive use of tariffs, reinforcing his image as a defender of American manufacturing and a champion of workers who felt left behind by globalization. Headline grabbing proposals during the election, suggesting that tariffs on all Chinese imports into the United States could climb as high as 60%, sends a strong signal that Trump intends to continue using them as a primary instrument of economic policy.
However, tariffs are not merely an economic policy but a political strategy. The perception of standing up to China is politically potent, particularly in a time of rising bipartisan scepticism toward Beijing. This was evident in President Biden’s decision to maintain many of Trump’s tariffs despite his earlier criticism of them. The difficulty of opposing tariffs outright reflects the shifting consensus in Washington: economic competition with China is no longer just a partisan talking point but a fundamental national security and economic concern.
Economic realities
The most common misconception surrounding the imposition of tariffs by the American government concerns who will actually bear the brunt of their costs. The economic reality is that the cost is borne by the American businesses that ship goods from China across the border, effectively a tax on imported goods. Studies have shown that the most common impact of import tariffs are higher prices on end consumers, or the diversification of supply chains to host countries not subject to tariffs, with Vietnam and Malaysia poised to benefit most as things stand. There is a growing footprint of Chinese companies all across Southeast Asia, with Foreign Direct Investment into the region blurring the definition of what is precisely a ‘Chinese good’, while leveraging the cost of reducing exports with the U.S. by deepening trading relationships elsewhere.
The more challenging economic consideration to judge is whether the proposed ‘tariff-war’ has the firepower to deal a blow to the faltering Chinese economy significant enough to restore the United States as the single eminent economic power globally. There is reason to believe that this could be possible given that the housing sector, historically a bulwark of Chinese economic growth, has slumped and exposed households to spiralling levels of debt.
All bark and no bite?
The full extent to which a tit-for-tat tariff war will improve the lives of the American working class, or indeed subjugate the Chinese economy is a contentious issue. While tariffs create controversy and project strength, their economic effectiveness remains uncertain. In an era where political messaging often outweighs policy substance, tariffs offer a clear, easily communicated stance on economic nationalism—one that plays well with Trump’s base. However, the political benefits of tough talk must be weighed against the economic risks, including higher consumer prices, supply chain disruptions, and market instability.
As the administration moves forward, the ultimate test will be whether tariff policies deliver tangible benefits beyond campaign rhetoric. Reducing reliance on China and strengthening domestic industry requires more than just import taxes—they demand strategic investments in infrastructure, education, and innovation. Whether tariffs become a defining feature of U.S. economic policy or simply a recurring political soundbite will depend on how global trade evolves and whether policymakers are willing to look beyond short-term political gains toward long-term economic growth.
