Here’s how an all-out trade war between America and China will play out

The trade war between China and the US has gone nuclear, and every single human on earth is in major trouble because of it.

On February 1, the Trump administration fired the first shot when it abruptly imposed a 10% tariff on every Chinese import, covering everything from electronics to clothing.

Around 30 days later, Washington doubled down, raising the tariff to 20% on March 4. The message we were getting from those guys was that China was gonna pay for what Mr. Donald Trump personally calls decades of “unfair trade practices.”

Oh but Beijing was ready for them. By February 10, China announced its own tariffs: 15% on coal and liquefied natural gas, 10% on oil and agricultural machinery.

Then, on March 10, the real pain came—tariffs on chicken, wheat, and soybeans, a direct hit to US farmers who rely on Chinese buyers. The agricultural industry is a major Trump voter base, and China knew exactly where to apply pressure.

Washington takes the fight beyond China

But the White House wasn’t done yet. The Trump administration then announced the very next day that apart from China, it was coming for the EU, Canada, Mexico, and even South Korea too for some reason.

The argument Trump made was that all trade partners must follow what the US calls “fair” trade practices. The entire global economy is living in fear right now. I mean, China and America are the two largest economies on earth.

But Washington also claimed it was about national security, saying that depending on foreign metals was a risk, and with China being the world’s largest steel producer, the indirect hit was undeniable.

Anyway, by March 12, a 25% US tariff on all Chinese steel imports went into effect, alongside an increase in aluminum tariffs to 25%.

Then came talk of an even bigger escalation. Trump announced on Tuesday that another tariff hike was on the table—more sectors could be targeted, or the current 20% rate could go even higher. The way I see it, the strategy here is to force Beijing to fold or take the full economic hit.

China counters with more than just tariffs

Beijing isn’t backing down though. If Washington wanted a fight, it was getting one. Officials in China said they were expanding tariffs to technology and pharmaceuticals, two industries where American companies rely on Chinese supply chains. The bigger threat is export controls on rare earth minerals.

Rare earths are critical for electronics, electric vehicles, and even military technology. The US imports 80% of its rare earths from China, and a blockade on these materials could cripple production for everything from smartphones to fighter jets.

Both sides also turned to non-tariff barriers—new import inspections, licensing rules, and complex regulations designed to slow global trade to a crawl. These invisible weapons were just as effective as tariffs but harder to challenge under international trade law.

And as Cryptopolitan reported on March 4th, Chinese president Xi Jinping sued the Trump administration at the World Trade Organization, for the second time this year, even as the two presidents say they’re working on their friendship.

And the damage? It was everywhere. Supply chains broke down, factories stalled, and the cost of doing business surged.

In the US, companies that relied on cheap Chinese imports were forced to hike prices or shut down completely, and Chinese manufacturers scrambled to find new buyers.

Meanwhile, China’s top leaders have been shifting more revenue from central to local coffers in recent years, including by taking on more debt and sharing funds from a consumption tax now levied mainly on tobacco, refined oil, automobiles and alcohol.

The idea would be to give local governments an incentive to boost consumption and thus revenues, shifting them away from the need to promote investments.

Markets crash, crypto booms, and global trade slows

Investors weren’t waiting around to see who would win. The US stock market plummeted, with tech and manufacturing stocks hit hardest. The Dow Jones dropped 8% in just two days after the second tariff hike. Meanwhile, China’s Shanghai Composite Index suffered its worst quarterly drop since 2015, per data from CNBC.

But while traditional markets burned, the crypto market saw a bit of a surge, though it had little to do with the trade fight, and more to do with Trump creating a “national crypto strategic reserve.”

Meanwhile, the entire global economy slowed down as companies adjusted to higher costs and weaker trade flows. JPMorgan economists warned that a full-scale trade war will wipe out 1.5% of global GDP in 2025 alone, meaning every corner of the world is gonna feel it.

Behind closed doors, both Beijing and Washington knew they needed a way out, according to a feature report by Bloomberg. Even if neither side wanted to admit defeat, the economic damage was piling up too fast to ignore.

The first sign of cracks came when Chinese Premier Li Qiang addressed the National People’s Congress on March 5. Instead of focusing on foreign policy, Li turned to a domestic message, telling officials that “vigorously boosting consumption” would be China’s top economic priority for 2025.

The speech made it clear that Beijing was moving focus away from export-led growth and toward making its own 1.4 billion citizens the primary economic driver.

On the ground, ordinary people feel the squeeze from Trump’s trade games

Meanwhile, Trump doubled down on one of his Truth Social tirades, saying, “Massive Trade Deficit with the World, just announced, compliments of Sleepy Joe Biden! I will change that!!! It’s time we make America the manufacturing powerhouse of the world again.”

The entire thing has been met with mixed reactions up in Washington though, with Republican lawmakers cheering while Democrats warned of long-term economic instability.

And beyond the political posturing, real people are paying the price. In China, factory workers faced layoffs as American companies canceled orders. In the US, farmers struggled to find buyers for their soybeans, wheat, and meat exports, with storage facilities overflowing.

Even inside China’s political circles, tensions were evident. A Communist Party delegate, Li Zhanguo, from Zhejiang province, admitted after the March 5 speech that “The US will definitely have an impact on China. But the more they suppress us, the more vitality it will stimulate, and the more innovative we become.”

Neither Washington nor Beijing is close to backing down right now, so as the kids say these days, we’re all essentially cooked, in more ways than one.