Tariffs and the China Problem

Strategic Intelligence Report
Written By Matt Helmkamp

Executive Summary

President Trump’s escalating tariff war with China has hit a new peak with a 145% base tariff on Chinese imports, prompting a fierce backlash from Beijing and chaos in global markets. China has responded with retaliatory tariffs, public warnings to other countries, and actions like sending back a $55 million Boeing jet. Trump has also initiated three Section 232 national security investigations on semiconductors, pharmaceuticals, and critical minerals, while offering other countries 90 days to negotiate exemptions. But the economic turbulence is already being felt, with simultaneous drops in U.S. stocks, bonds, and the dollar — a historically rare and ominous signal. As other countries weigh whether to side with Washington or maintain relations with China, economist Michael Hudson argues that Trump’s tariff strategy is a class war benefiting elites while accelerating U.S. economic decline and global isolation.

Analysis

China’s Ministry of Commerce has made it clear that it will retaliate against any country that reaches a trade agreement with the U.S. at China’s expense, warning that such concessions will “only fail on both ends.” The latest trade rift comes after the U.S. raised tariffs on Chinese imports to 145%, and China responded with 125% tariffs on American goods. As part of its retaliation, China sent back a Boeing 737 MAX aircraft worth $55 million that was en route to Xiamen Airlines — a stark display of declining economic cooperation.

Trump’s administration is doubling down by opening three new Section 232 investigations into imports of semiconductors, pharmaceuticals, and processed critical minerals — all under the guise of national security. These probes could lead to more tariffs on key global industries, even as trade partners like Japan and Indonesia are scrambling to negotiate tariff relief.

While Trump claims this is about strengthening the U.S., Wall Street is reacting with alarm. For the first time in years, stocks, government bonds, and the dollar are falling in tandem — a sign that global investors are losing faith in the U.S. economy’s stability. Treasury Secretary Scott Bessent has denied that foreign investors are pulling out, but analysts note the panic is tied directly to the unpredictable and aggressive trade policies coming out of the White House.

Economist Michael Hudson argues that Trump’s trade war is less about protecting American jobs and more about protecting America’s billionaire class. By shifting the tax burden onto tariffs — which disproportionately hurt consumers — Trump is resurrecting a Gilded Age economic model designed to favor oligarchs. He warns that these policies not only hurt the working class but push the U.S. further into international isolation, accelerating the formation of alternative trade networks centered around China and the Global South.

As China tightens control over rare earth exports, weaponizes its own trade tools, and seeks solidarity from other nations, the Trump administration appears increasingly boxed in. The U.S. is pressuring allies to choose between their Chinese trade ties and American tariff relief, but the economic math is growing harder to justify.

Sources

Matt Helmkamp
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