For Equality in Action – Why U.S - China trade should prosper instead of engaging in blunt trade war

I have always maintained that a person should work for the benefit of each and every constituent or should not remain in power. When you hold highest office, democracy should prevail and everyone should feel empowered, energized and elevated. This is very easier said than done. One should go to any extent so that equality prevails in the society and everyone is fairly treated. In the trade partnership with U.S., China should derive the benefit for the good standing of its huge population. There is nothing wrong in ceding a bit of ground which increases your own high ground and better reciprocation from the manufacturing hub of the world. It is good for both countries that you are able to help by being a huge market and China pays back with interest by providing the vital imports for U.S. There is absolutely no problem in the business model evolved which might benefit China a little. Seeing it in magnifying lens and increasing tariffs across the board doesn’t fit the narrative to treat each and everyone fairly by being in a high position. If there is an impending disadvantage to a country of 1.4 billion population and the largest trade partner due to the steep rise in tariffs, it signifies something problematic when there is no problem at present. Leaving what will happen due to the rise in tariffs in 2025, let us examine what happened due to the trade war in first term in 2018-20. 

The visible affect on the ground due to tariff rise in 2018-20 is almost nil in 2025. Which means there is hardly any major difference in the way U.S. consumes goods and China exports them after trade war in past. For example, in the last three years, I still see a proliferation of Chinese made goods in U.S. Go to any super market, you will bump into Chinese goods. Touch any good quality product, it will be Chinese made and I feel great about that country for its prowess in running the U.S households. So much so that the executives of major retail stores like Walmart, target etc. have warned of empty shelves due to the last month tariff rise. Is it good for U.S. Definitely not. I would be extremely disappointed when I don’t find the great Chinese goods on my next shopping visit. I sometimes feel that China has the leverage to ‘initiate’ trade war for higher prices than ‘retaliate’ on a tariff increase. But it never does that and keeps the prices low which is highly appreciative. Hence continuing the business is highly critical for U.S. for the sake of its consumers and extremely high-quality goods which everyone like me needs in U.S. This is my first hand experience which I am repeating and let us look into various other factors why the trade war in 2018-20 didn’t derive the intended results.  

As the United States continues to navigate its complex economic relationship with China, the question of whether to increase tariffs remains contentious. While there are legitimate concerns driving protectionist sentiment, there are substantial merits to maintaining restraint in tariff policy. These benefits span multiple dimensions including consumer welfare, business competitiveness, macroeconomic stability, and strategic international relations. 

Economic Benefits for American Consumers 

American consumers have been among the primary beneficiaries of trade with China. The affordability of consumer goods has significantly improved living standards, particularly for lower and middle-income households. Research from the Federal Reserve Bank of New York estimated that the trade relationship with China saves the average American household approximately $1,000 annually. 

When the U.S. imposed tariffs between 2018-2020, multiple studies confirmed that American consumers bore most of the costs. Researchers at the University of Chicago and Federal Reserve found that approximately 100% of tariff costs were passed on to U.S. buyers. For essential consumer goods—from clothing and shoes to electronics and household items—price increases directly impact quality of life, particularly for economically vulnerable populations. 

Maintaining reasonable tariff levels helps preserve purchasing power during a period when many Americans are already struggling with inflation and cost-of-living increases. While inflation has moderated from its 2022 peaks, many households remain financially stretched, making any policy that would increase consumer prices particularly burdensome. 

Supply Chain Resilience Through Diversification Rather Than Decoupling 

The COVID-19 pandemic revealed vulnerabilities in global supply chains, particularly those heavily dependent on single-source production in China. However, the most effective response involves strategic diversification rather than broad tariff increases. 

Companies have already begun implementing "China plus one" strategies, establishing alternative supply sources while maintaining necessary Chinese production capacity. This approach allows businesses to build resilience while avoiding the massive disruption that would come from forced decoupling through punitive tariffs. 

Critical industries like semiconductor manufacturing, pharmaceuticals, and advanced materials require thoughtful, sector-specific approaches rather than across-the-board tariff increases. Targeted investments in domestic capacity—like those in the CHIPS Act—combined with diversified international sourcing creates more resilient supply chains than tariff walls alone. 

Companies like Apple demonstrate this balanced approach. Rather than completely abandoning Chinese manufacturing due to existing tariffs, Apple has strategically diversified production to Vietnam and India while maintaining significant operations in China. This measured approach preserves supply chain functionality while gradually reducing over-concentration risk. 

Business Competitiveness and Global Market Access 

American businesses that rely on Chinese inputs for their products face significant challenges when tariffs increase. Manufacturing firms that import components or raw materials from China experience higher production costs, making their finished products less competitive both domestically and in export markets. 

According to the U.S.-China Business Council, most American companies cannot simply substitute domestic suppliers for Chinese ones in the short or medium term. The specialized manufacturing ecosystems that have developed in China over decades—combining skilled labor, infrastructure, component suppliers, and process knowledge—cannot be replicated quickly elsewhere. 

Maintaining reasonable tariff levels allows American businesses to access these established supply networks while gradually developing alternatives. This preserves competitiveness while transition strategies are implemented. 

Additionally, retaliatory tariffs from China in response to U.S. increases have harmed American exporters. Agricultural producers have been particularly affected, with soybean, corn, and pork farmers losing significant market share in China that has proven difficult to regain. Avoiding escalating tariff conflicts helps protect these export opportunities. 

Macroeconomic Stability and Inflation Management 

Economists widely recognize that significant tariff increases contribute to inflationary pressure. As the Federal Reserve continues its efforts to stabilize prices without triggering recession, major tariff hikes would complicate this delicate balancing act. 

A study by the Peterson Institute for International Economics estimated that removing the tariffs implemented during the 2018-2020 period could reduce CPI inflation by 1.3 percentage points in the short term. By extension, significant new tariffs would likely push inflation in the opposite direction. 

Bond markets also react negatively to tariff increases that threaten to reignite inflation, potentially driving up interest rates across the economy. This affects everything from mortgage rates to business investment costs, creating negative ripple effects throughout the economy. 

The manufacturing reshoring that tariff advocates often promise rarely materializes at the scale projected. Research examining the 2018-2020 tariffs found they created approximately 1,800 manufacturing jobs—at a cost of roughly $900,000 per job when accounting for the increased costs to consumers and businesses. 

Global Economic Stability 

The interconnectedness of the American and Chinese economies means that significant disruption in trade flows affects global economic stability. China remains a major growth engine for the world economy despite its recent challenges, and severe trade restrictions risk triggering broader international economic weakness. 

Financial markets have repeatedly demonstrated sensitivity to U.S.-China trade tensions. Major tariff announcements between 2018-2020 triggered stock market volatility, affecting retirement savings and investment capital availability. Maintaining policy stability helps preserve market confidence and economic predictability. 

The International Monetary Fund has consistently warned that trade conflicts between major economies pose significant risks to global growth. In an already uncertain economic environment with ongoing conflicts in Ukraine and the Middle East, avoiding additional trade shocks helps prevent compounding economic challenges. 

Strategic Diplomatic Engagement 

Trade policy represents an important component of broader diplomatic strategy. While economic and national security concerns must be balanced, maintaining some degree of economic interdependence creates channels for dialogue and cooperation on other critical issues. 

Climate change presents perhaps the most compelling case for continued economic engagement. China and the U.S. are the world's two largest carbon emitters, and meaningful progress on emissions reduction requires cooperation. Trade discussions provide platforms for parallel climate negotiations that might otherwise stall completely during periods of heightened tension. 

Non-proliferation efforts, particularly regarding North Korea and Iran, similarly benefit from maintained economic communication channels. When economic relationships are severed entirely, leverage for cooperation on security concerns diminishes accordingly. 

The historical perspective is instructive countries with significant trade relationships have additional incentives to avoid military conflicts and find diplomatic solutions to disputes. While trade alone cannot prevent geopolitical competition, it can help establish guardrails against the most dangerous forms of confrontation. 

Alternative Approaches to Legitimate Concerns 

Acknowledging the legitimate concerns about certain aspects of trade with China doesn't necessitate broad tariff increases. More targeted and effective approaches include: 

Precision-targeted trade measures focused on specific sectors with documented unfair practices rather than across-the-board tariffs. This approach addresses problematic behavior without the collateral economic damage of broad tariffs. 

Strengthened export controls on genuinely sensitive technologies with clear national security implications, rather than commercial technologies without significant military applications. 

Multilateral coordination with allies to address shared concerns about China's trade practices, which proves more effective than unilateral action. The Biden administration's efforts to work through structures like the U.S.-EU Trade and Technology Council represent a more sustainable approach than bilateral confrontation. 

Domestic investments in research, education, infrastructure, and manufacturing capability that enhance American competitiveness without the economic costs of tariffs. The CHIPS Act and infrastructure investments demonstrate this alternative approach. 

Enforcing existing trade agreements through established World Trade Organization mechanisms and bilateral dialogue, focusing on specific violations rather than imposing new broad restrictions. 

Progress Through Engagement 

Meaningful progress on intellectual property protection in China has actually occurred over the past decade, partly due to continued economic engagement. Chinese domestic companies increasingly value IP protection as they develop their own innovations, creating internal pressure for improved enforcement. 

Environmental and labor standards in Chinese manufacturing have similarly improved over time, partly due to requirements from Western corporate partners and consumers. These positive developments happen through engagement rather than isolation. 

Chinese consumer markets represent significant growth opportunities for American companies in sectors ranging from agriculture to entertainment to advanced services. Maintaining trade relationships preserves access to these markets as Chinese middle-class consumption continues to expand. 

The merits of avoiding increased tariffs on Chinese goods extend across multiple dimensions of American economic and strategic interests. From preserving consumer purchasing power to maintaining business competitiveness, from controlling inflation to sustaining diplomatic engagement, a measured approach to trade policy serves American interests better than escalating tariff confrontation. 

This doesn't mean uncritical acceptance of all aspects of the trade relationship. Legitimate concerns about unfair practices, security risks, and economic distortions deserve attention through targeted measures. However, the blunt instrument of broad tariff increases typically creates more economic harm than benefit for Americans. 

The most effective approach combines strategic diversification of supply chains, targeted responses to specific unfair practices, domestic investments in competitiveness, and multilateral coordination with allies. This balanced strategy addresses legitimate concerns while preserving the substantial benefits of international trade. 

As the United States continues navigating its complex relationship with China, recognizing the full range of economic and strategic interests at stake argues for policy restraint rather than escalation when it comes to tariff policy. The evidence suggests that American prosperity and security are better served by measured engagement than by economic confrontation.  

Unfortunately, the above lessons aren’t learnt from the past and the abnormal rise in tariffs are announced again in 2025 to have debilitating effects. These measures have led to major stock market declines, with the Nasdaq Composite down 7.8%, the S&P 500 down 6.4%, and the Dow Industrials down 5.3%—marking the worst week for the Nasdaq and S&P 500 since 2020. The National Retail Federation expects U.S. imports to drop by at least 20% in the second half of 2025 if tariffs remain in place. Some companies have already raised prices due to increased costs. To offset these all, it is highly wished that China should be seen more as a preferred partner than an enemy in the trade to initiate any ‘war’. In the better interests of both the countries and the world, the partnership is expected to be strengthened. For our anticipation to spread equality and order in the world, let us hope the trade war will add more fuel to this just cause by amplifying it. We are really in times of equality and wish this trade war will augment this very virtue by being extremely good for all.