^{Source: France 24}

As trade tensions between the United States and China intensify, experts warn that Beijing has a robust arsenal of economic weapons it could unleash in retaliation against mounting U.S. tariffs. With tariff rates on Chinese goods now exceeding 124% and new hikes potentially reaching as high as 245%, the threat of a full-blown trade war looms large.

This rising hostility could ripple through global markets and directly affect American consumers, manufacturers, and investors. But while the spotlight has largely been on Washington's tariff strategies, China has its own high-impact countermeasures—and they could prove equally, if not more, disruptive.

China’s Economic Leverage: More Than Meets the Eye

China is the world’s second-largest economy and second-largest buyer of U.S. exports, making it a pivotal player in global trade. According to the U.S. Treasury Department, Chinese entities hold at least $784 billion in U.S. federal debt as of early 2024. This massive stake in U.S. Treasurys gives China significant influence over American financial markets.

"China is actually a bigger financial power than it looks like on the surface," says Brad Setser, senior fellow at the Council on Foreign Relations and former advisor to the U.S. Trade Representative under the Biden administration. “Its ability to shape global supply chains and exert pressure through financial channels is underappreciated.”

Rare Earth Monopoly: A Strategic Trump Card

China controls approximately 60% of global rare earth production—materials essential to the manufacturing of smartphones, electric vehicles, military equipment, and advanced electronics. With few alternative suppliers worldwide, any restrictions on rare earth exports could cripple U.S. tech giants like Apple and Tesla.

Beijing has been tightening its export control laws since 2018, giving it the legal and logistical framework to restrict exports at will. These regulatory tools are widely seen as pressure points for retaliating against U.S. companies operating in or dependent on Chinese supply chains.

Tariff Warfare: Numbers Paint a Stark Picture

A recent analysis from the Peterson Institute for International Economics highlights the scale of the trade weaponry already in use. As of April 12, 2025:

• Average U.S. tariffs on Chinese goods: 124.1%
• Average Chinese tariffs on U.S. goods: 147.6%

And with the White House proposing hikes up to 245% on select Chinese imports, trade volumes could be driven toward zero, Setser warns.

“We’ve already raised tariffs to such a high degree that, over time, trade will go to zero,” he said, emphasizing the unsustainability of these rates.

Port Slowdowns and Supply Disruptions

The economic fallout is already visible. Major U.S. ports—especially those on the West Coast like Los Angeles and Long Beach—have reported substantial slowdowns, raising fears of inventory shortages. These ports handle a significant portion of U.S.-Asia trade, and reduced activity signals deeper supply chain disruptions ahead.

Shipping industry analysts have noted a 17% decline in container throughput in key West Coast ports this spring compared to the same period in 2023.

China's Diplomatic Offensive: Rallying Against “Bullying”

China isn’t just posturing economically—it’s going on the diplomatic offensive. In April, Beijing urged other nations to resist what it called “unilateral bullying” by the United States. Chinese officials issued public statements condemning new U.S. tariffs and pledged retaliation against any country aligning with Washington to China’s detriment.

“China is sending strong signals ... that the games we are playing, which are tariff games and supply chain games, for them, it’s about survival,” said Dewardric McNeal, Managing Director at Longview Global.

No Talks, No Truce on the Horizon

Despite mounting tensions, there have been no formal trade negotiations between the two countries in recent months. While members of the Trump administration have suggested a return to the bargaining table, Chinese officials maintain that talks have stalled and accuse the U.S. of creating a hostile environment.

“These 125%, 145% tariffs are unsustainable,” Treasury Secretary Scott Bessent said on CNBC’s Squawk Box in late April, urging for de-escalation and fresh negotiations.

The Bigger Picture: What’s at Stake for the U.S.

An escalation into a full-scale trade war could mean:

• Higher consumer prices in the U.S.
• Disruptions in tech and auto manufacturing
• Volatility in U.S. financial markets
• Increased global economic uncertainty

With global supply chains already under pressure from geopolitical events and post-COVID restructuring, further friction with China may strain fragile economic recovery efforts worldwide.

Final Thoughts

While the U.S. may hold the upper hand in terms of tariff volume, China’s ability to disrupt global supply chains, restrict rare earth exports, and unsettle financial markets makes it a formidable opponent. As the world’s two largest economies dig in their heels, the risk of mutual economic harm grows—and with it, the urgency for both sides to re-engage in meaningful negotiations.

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