Trump’s tariff paradox is making China great again

Donald Trump’s aggressive tariff regime was designed to restore American economic dominance, but early evidence suggests a troubling paradox.

Rather than weakening China’s position, the tariffs appear to be generating economic headwinds at home, straining key alliances, and creating new opportunities for Beijing to expand its global influence.

Trump’s tariffs have pushed the average US tariff rate to 18%—the highest since the 1930s. According to Yale Budget Lab estimates, these policies will cost US households approximately US$2,400 in 2025, raising prices across consumer goods from electronics to clothing.

While monthly tariff revenues have surged to $29 billion by July 2025—triple the 2024 level—the Congressional Budget Office projects that higher prices and supply chain disruptions will ultimately drag down economic growth.

The economic strain is already visible. US GDP growth slowed to 1.2% annualized in the first half of 2025, down from 2.8% in 2024. Manufacturing job growth has stalled, with trade-related sectors bearing particular costs.

California faces over 64,000 projected job losses in trade and logistics, while the Port of Los Angeles now operates at just 70% capacity due to declining trade volumes.

These domestic economic pressures create the foundation for broader strategic vulnerabilities, as allies and competitors alike recalibrate their relationships with an increasingly unpredictable Washington.

Strategic backfire

The tariff strategy has complicated America’s alliance relationships in ways that may prove counterproductive. While Trump initially announced blanket 25% tariffs on Japan, South Korea and India, the reality proved more complex.

Japan and South Korea, after tense negotiations, accepted modified terms that reduced their tariffs to 15%—still roughly five times their pre-2025 levels. In exchange, they secured limited export quotas and investment commitments.

Only India continues to face the full 25% tariff, which has drawn sharp diplomatic protests from New Delhi. The result is a fractured alliance structure where partners comply not from confidence in American leadership, but from a desire to limit damage. As one South Korean policy analyst noted, these were “acts of damage control” rather than expressions of trust in US strategy.

This approach has created new openings for Chinese influence. While Tokyo and Seoul haven’t abandoned their US alliances, China can now offer more attractive economic incentives for regional cooperation.

Beijing’s pitch doesn’t require ideological alignment—just pragmatic engagement that appears more stable than Washington’s increasingly transactional approach. Rather than turning allies into adversaries, the tariffs have made Chinese alternatives harder to dismiss and positioned the US as the less reliable partner.

The broader risk is that short-term tariff compliance masks a longer-term drift toward the kind of China-centric regional order that US policy until now has aimed to prevent.

China’s gains

While Washington strains relationships with partners, Beijing has moved decisively to capitalize on the shifting dynamics. China’s response has been multifaceted, targeting areas where US policy creates vulnerabilities.

In clean energy technology, China has accelerated its dominance precisely as the US reduces support for renewable initiatives. China added 429 GW of new power generation capacity in 2024—86% from renewables—reaching 1.9 TW of total renewable capacity.

Combined with over $85 billion in power grid investments, this positions China to lead the next phase of global energy transition while the US focuses inward.

China has also expanded its engagement with the Global South as US tariffs strain relationships with developing nations. In May 2025, President Xi Jinping offered Latin American and Caribbean leaders a $9 billion investment credit line, building on China’s position as South America’s largest trading partner.

Twenty-two Latin American countries have now joined Beijing’s Belt and Road Initiative, while China’s systematic engagement across Africa continues to deepen through infrastructure investment and mineral supply partnerships.

Perhaps most significantly, China has leveraged US industry’s continued dependence on Chinese supply chains—particularly in rare earths and critical minerals—to secure strategic concessions even as Washington escalates trade pressure.

This dependency limits how far the US can push confrontation while giving Beijing leverage in key sectors.

Big implications

The evidence suggests that Trump’s tariff strategy, while generating short-term revenue and compliance, may be producing outcomes contrary to its stated objectives.

US consumers and businesses absorb higher costs while traditional allies manage around American volatility rather than embracing American leadership. Meanwhile, China advances in strategic technologies, deepens partnerships across the developing world and positions itself as a more predictable partner.

The fundamental challenge is that economic coercion, while sometimes effective in securing immediate concessions, can weaken the foundation of influence it aims to restore. If current trends continue, the tariff regime risks accelerating the very shift toward Chinese centrality in the global economy that it was designed to prevent.

The question facing policymakers is whether the tactical gains from tariffs justify the strategic risks they appear to create—and whether alternative approaches might better serve America’s long-term competitive position.

Y Tony Yang is an endowed professor and associate dean at the George Washington University in Washington, DC.