Chinese authorities on April 28, 2025 addressed concerns regarding the potential impact of US tariffs on the nation’s economic recovery.

These tariffs, introduced by the US on April 2, include a 145% levy on most Chinese goods, prompting China to respond with 125% tariffs on US imports.

Zhao Chenxin, vice head of the National Development and Reform Commission (NDRC), expressed confidence in reaching the country’s 2025 economic growth target of around 5%.

He noted that the performance in the first quarter provided a solid foundation for growth. However, he did not announce new stimulus measures.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Historical trade war lessons show predictable economic consequences

The current US-China tariff escalation follows a well-documented pattern of economic damage seen in previous trade conflicts.

The Smoot-Hawley Act of 1930 provides a sobering precedent. When the US raised tariffs on thousands of goods, retaliatory measures from trading partners contributed to a staggering 61% drop in US exports by 1933 1.

More recent economic modeling shows that all-out trade wars typically reduce GDP growth significantly, with projections suggesting a 0.9% reduction in US GDP by 2027 and wage declines of 1.1% over the same period 2.

The current conflict has already demonstrated this impact pattern. The previous round of US-China tariff exchanges slowed global GDP growth by approximately 0.7 percentage points according to 2019 data 3.

For consumers and businesses, tariffs function essentially as taxes, with projections suggesting the average US household could face increased costs of about $1,243 due to the current tariff policies 4.

2️⃣ Beyond the superpowers: trade wars create global collateral damage

While headlines focus on US-China dynamics, the economic consequences extend far beyond their borders, creating both losers and unexpected beneficiaries.

Countries with supply chains integrated with China face significant disruption as manufacturing networks built over decades struggle to adapt to sudden tariff barriers 5.

The uncertainty generated by the conflict has sent global markets into volatility, with the World Trade Uncertainty index reaching record highs during previous US-China tensions 3.