When U.S. President Donald Trump announced plans to impose 100% tariffs on Chinese imports following Beijing’s new export controls on rare earth minerals, it was billed as a show of strength — a bold move to “protect American industry” and punish China for what Washington sees as unfair trade practices. But beneath the rhetoric lies a sobering reality: these tariffs are likely to boomerang, hitting American consumers, industries, and global credibility harder than their intended target.
By Henry Marandure
China’s response — tightening its grip on rare earth exports and technology — reveals a strategic sophistication that the U.S. may have underestimated. As the world’s largest producer and processor of rare earths, China controls roughly 70% of global mining and nearly 90% of refining capacity. These materials are indispensable for everything from electric vehicles and smartphones to missiles and advanced semiconductors.
What this means is simple: while the U.S. can slap tariffs on Chinese goods, it cannot tariff its way out of structural dependence on China’s industrial ecosystem.
Tariffs That Tax Americans, Not China
The most immediate impact of Trump’s latest tariff threat will not be felt in Beijing, but in the wallets of ordinary Americans.
According to the U.S. Bureau of Labour Statistics’ September report, prices for goods such as clothing, electronics, and toys — much of which are manufactured in or through China — rose between 0.3% and 0.8% in a single month. In several cases, year-on-year increases have been in the double digits.
The reason is straightforward: tariffs are taxes, and they are paid by importers — which means businesses and, ultimately, consumers.
The Trump administration’s earlier trade war in 2018–2019 demonstrated this dynamic clearly. Research from the Federal Reserve and Peterson Institute for International Economics found that nearly all tariff costs were passed through to consumers in the form of higher prices. American households effectively paid an average of $1,200 more per year for goods during that period.
This time, with inflation still hovering around 2.5–3%, new tariffs risk reigniting cost pressures across supply chains, forcing the Federal Reserve to keep interest rates higher for longer — a scenario that could tip the U.S. economy toward stagflation.
Strategic Industries in Jeopardy
Beyond consumer goods, the real vulnerability lies in strategic sectors that underpin U.S. technological and military competitiveness.
The Dutch company ASML, the only manufacturer of extreme ultraviolet (EUV) lithography machines used to produce cutting-edge semiconductors, has already warned that China’s new export curbs could disrupt its supply chain.
For the U.S. defence sector, the risk is existential. The Pentagon’s own reports have repeatedly acknowledged that China’s dominance in rare earths — crucial for guidance systems, fighter jets, and missiles — represents a “single point of failure” in America’s military-industrial complex.
As one defence analyst put it, “You can’t build a next-generation fighter jet without magnets made from Chinese rare earths.”
While Washington scrambles to develop alternative supply chains through Australia, Canada, and domestic mines, the processing technology and industrial capacity remain overwhelmingly concentrated in China. Even if the minerals could be mined elsewhere, the U.S. lacks the refining infrastructure to process them at scale — a deficiency decades in the making.
The Erosion of U.S. Economic Leverage
For nearly half a century, Washington bet on a strategy dubbed “Chimerica” — integrating U.S. capital and Chinese labour under the assumption that economic interdependence would yield political alignment. That illusion has now evaporated.
The result of that offshoring experiment is an American economy that is deeply enmeshed in Chinese supply chains. From consumer electronics and solar panels to pharmaceutical ingredients and precision tools, China has become the workshop of the world — and by extension, the backbone of American consumption and production.
While it is politically convenient to speak of “decoupling,” the reality is that the U.S. cannot disentangle itself without immense cost. Its manufacturing base has hollowed out, its skilled labour force has eroded, and its industrial ecosystem has atrophied after decades of prioritising financialisation over production.
China, by contrast, has spent the past two decades investing in infrastructure, research and development, and regional partnerships — particularly through BRICS+, the Belt and Road Initiative, and bilateral deals with the Global South.
Every time Washington imposes new tariffs, Beijing accelerates its pivot away from Western markets — deepening trade with countries like India, Brazil, Indonesia, and Russia.
In this sense, the U.S. is isolating itself, not China.
From Inflation to Stagflation: The Macro Trap
Economists warn that the combination of high tariffs, sticky inflation, and slowing growth could push the U.S. into a dangerous stagflationary spiral — a mix of economic stagnation and rising prices unseen since the 1970s.
The logic is simple: tariffs raise production costs; higher costs mean higher consumer prices; and higher prices force the Federal Reserve to keep interest rates high — suppressing investment, job creation, and consumer demand.
Data from previous tariff rounds show a pattern of short-term job gains in a few protected sectors, such as steel or aluminium, but larger job losses in downstream industries — like automotive and construction — which depend on affordable inputs.
In short, tariffs create concentrated benefits but diffuse pain across the wider economy.
China’s Counteroffensive: The Rare Earth Gambit
Beijing’s recent decision to tighten control over rare earth exports and technologies marks the next phase in what analysts describe as a “strategic counteroffensive.”
By weaponising its dominance in critical minerals, China can apply pressure on the U.S. industrial base without firing a shot. If Washington imposes tariffs, Beijing can simply restrict access to the materials that American industries need most — from semiconductors to renewable energy technologies.
Gracelin Baskaran of the Center for Strategic and International Studies calls it “a game of asymmetric dependence.”
“The U.S. can restrict chips and AI systems,” she said, “but China can choke off the materials needed to make them.”
In essence, China has transformed economic vulnerability into geopolitical leverage.
A Future Beyond U.S. Hegemony
The broader significance of the U.S.–China trade war lies not in its immediate economic toll, but in what it reveals about the shifting architecture of global power.
The post-Cold War order — anchored by U.S.-led globalisation and dollar dominance — is being steadily undermined by the rise of alternative trade blocs and payment systems. The BRICS alliance, which recently expanded to include Saudi Arabia, Iran, and Egypt, is working on a common currency framework that could further dilute the dollar’s influence.
Meanwhile, China continues to internationalise the yuan, settling more trade with Russia, the Gulf states, and African partners in local currencies.
Every escalation of U.S. tariffs or sanctions inadvertently pushes more countries toward alternative economic alignments. The very instrument meant to contain China is instead accelerating the birth of a multipolar world economy in which American leverage is steadily waning.
Conclusion: A Losing Game of Economic Nationalism
President Trump’s new tariffs might be politically effective — rallying domestic support under the banner of “America First” — but economically, they represent a self-defeating strategy.
By weaponising interdependence without rebuilding its own industrial capacity, the United States risks undermining not just China’s growth, but its own economic resilience.
China, meanwhile, is playing a longer game — using its control of critical resources, manufacturing depth, and alliances with the Global South to position itself as the central hub of a post-Western economic order.
In that context, the tariff war is less about trade and more about time — and time, it appears, is on Beijing’s side.
Sources: U.S. Bureau of Labor Statistics, Federal Reserve, Associated Press, Xinhua, Center for Strategic and International Studies, Benchmark Mineral Intelligence, and Peterson Institute for International Economics.
The post Why America’s New Tariffs on China Will Backfire — and Accelerate the Decline of U.S. Economic Leverage first appeared on The Zimbabwe Mail.