Trade wars don’t end with a bang — they grind on, dragging economies and consumers through the mud while politicians play a game of economic chicken.
In the past decade, the U.S. has turned tariffs from a niche economic lever into a blunt instrument, swinging it at allies and adversaries alike.
The results? Skyrocketing costs, bruised supply chains, and a global economy caught in the crossfire. Right now, prediction markets forecast a 54% that the U.S. will negotiate a new free trade deal with China this year.
Here’s a look at how we got here, where we stand, and what could be coming next.
2018-2020: The Trade War Begins
- March 2018: Trump slaps 25% tariffs on steel and 10% on aluminum imports, citing national security. This sets the tone for a bruising trade war.
- July 2018: 25% tariffs hit $34 billion worth of Chinese imports. China fires back with its own set of tariffs, escalating the conflict.
- September 2018: U.S. adds a 10% tariff on another $200 billion in Chinese goods, later hiking it to 25% in 2019.
- January 2020: The “Phase One” trade deal hits, easing tensions slightly with China agreeing to boost U.S. agricultural purchases.
2021-2024: Stabilization and Strategic Shifts
- 2021-2022: Biden keeps Trump’s tariffs in place but tries to stabilize the chaos. The CHIPS and Science Act of 2022 aims to reduce reliance on Chinese semiconductors.
- 2023-2024: Companies like Apple move production to India to dodge tariffs, sparking a political backlash over perceived tariff evasion.
2025: The Second Trade War Erupts
- January 2025: Trump kicks off his second term with fresh tariffs:
- 25% on steel and aluminum (no exemptions this time).
- 25% on all cars and auto parts, even from USMCA partners.
- 10% on all Chinese imports, with a promise to go higher.
- February 2025: Tariffs on Chinese goods spike to 145%, triggering Chinese retaliation with up to 125% tariffs on U.S. exports.
- April 2, 2025 (“Liberation Day”): Universal 10% baseline tariff on all imports, with higher rates (11%-50%) for 57 countries.
- May 2025: A 90-day truce sees U.S. tariffs on Chinese goods drop to 30%, with China cutting its rates to 10%.
Where We Are Now (May 2025)
- Universal Tariff: 10% on nearly all imports.
- China: Temporary 30% tariffs during ongoing talks.
- Steel and Aluminum: 25% remains the baseline.
- Cars and Auto Parts: 25%, though USMCA-compliant goods see some relief.
- De Minimis Exemption: Suspended for low-value Chinese imports, meaning no free rides for cheap goods.
What’s Next?
- Negotiations Ongoing: Talks with China are ongoing, but both sides are playing hardball.
- Potential Changes: Tariff adjustments likely as the U.S. tries to manage inflation and supply chain issues.
- Economic Impact: The current tariff regime is projected to cut long-term U.S. GDP by 6% and wages by 5%, with middle-income households feeling the biggest pinch.
