Consumers Will Pay
Tariffs on China have a nasty habit of hitting Americans’ wallets. The Bureau of Labor Statistics’ September report cited price hikes of 0.3-0.8% in a month on goods from clothes and electronics to toys.
Some items’ prices jumped double digits in recent months.
Strategic Industries at Risk
China’s past tit-for-tat retaliations triggered spikes in costs for an array of high-tech components and producer goods.
ASML – the world’s sole maker of machines producing advanced semiconductors, fears rare-earth curbs could derail its business.
Same goes for defense, where China’s rare earth dominance (70% of mining, 90% of processing) means the US MIC simply won’t have a suitable alternative to China-sourced minerals.
From Inflation to Stagflation?
Inflation has hovered around 2.3-2.9% under Trump.
Some economists now fear tariff wars could trigger stagflation – high inflation coupled with high unemployment and economic stagnation.
US Has Lost Its Leverage
Its 40-year-old Chimerica strategy of offshoring to China in hopes that intertwining economies would make the US and China allies politically has failed to pay off.
From consumer goods, components and machines making machines to rare earths and tech, the US needs China much more than China needs the US.
Tariff wars will only push Beijing to forge even closer economic links with BRICS+ and the Global South, leaving the US high and dry.