US-China Trade War: How Tariffs Backfire on America and Open Doors for Ukraine

Upon returning to the Oval Office, Donald Trump immediately pulled out the loudest weapon in his old arsenal – tariffs. And now the main target is China.

The United States has declared an all-out economic war against China, and the White House is ready to impose not just recurring 10- or 25-percent duties on almost all Chinese imports, but fantastic rates that sometimes reach a combined 245 percent.

The logic is as follows: 60 percent is the “basic” protective rate for all Chinese goods, plus 100 percent is the “punitive” tariff for Beijing's priority industries (primarily electric vehicles, batteries, solar panels, and microelectronics) and up to 85 percent is the markup from existing anti-dumping and countervailing investigations that have persisted since Trump's first term.

For comparison, the highest post-Cold War barriers against China were recorded in 2016 and concerned cold-rolled steel, with 256% of total duties. Now the record has been almost repeated, but against strategic technologies of the 21st century, not the steel of the last century.

The Chain Reaction of the 245% Sword of Damocles

Beijing responded symmetrically and instantly. First, a 34 percent counter-duty on all U.S. goods was imposed immediately after the White House decree; second, targeted 120-150 percent barriers were imposed on soybeans, corn, and automobiles.

The most painful measure is the restriction of imports of high-tech soybeans and corn from the Iowa farm belt, which is a blow to the very electoral core of the Republicans. In addition, China's State Council has instructed state-owned corporations – from CNOOC to CATL – to convert dollar contracts into yuan, effectively stimulating the de-dollarization of Asian trade in critical minerals.

Most dramatically, Chinese companies have begun to build Western supply chains outside of U.S. jurisdiction. BYD has announced the construction of an electric vehicle plant in San Luis Potosí, Mexico, and CATL is entering a joint venture in Argentina to control lithium locally and protect itself from expanding US duties.

The United States responds by imposing a 100 percent duty on all Chinese electric vehicles, regardless of the country of assembly, which means that the tariff also reaches Mexican sites. Bloomberg estimates that the full cascade of new barriers will raise the average price of a smart sedan from China in the US market from $28,000 to $46,000, virtually killing the segment of affordable electric cars and rendering part of the US green subsidies useless.

At the same time, Trump is returning to the practice of targeted restrictions: a 25% duty on high-capacity batteries (a category where China controls more than 60% of the global market) and an 18% duty on rare earth metals. In response, Beijing is extending export licenses for gallium and germanium, key components of optoelectronics, which are concentrated in China.

It looks like a strategic game of “who has the most fragile chain” and so far, it is the American tech giants who are panicking: Apple warns shareholders that the cost of top iPhone models could rise by up to 35%, and Tesla scraps plans for a second battery gigafactory in Nevada due to uncertainty over cathode supply.

Stock markets are reacting nervously. According to Reuters, the total capitalization of the S&P 500 lost five trillion dollars in two trading days after the announcement of the basic 10 percent tariff, and the Yale University Budget Institute estimated that the new duties would “eat up” 1.1 percent of US GDP annually. The China CSI 300 lost 7 percent, but Beijing relies on the domestic market and tax incentives, so the spillover effect, on the contrary, helps reorient manufacturers to ASEAN and Latin America.

Why a Blow to China Hurts America

History repeats itself: instead of returning production to the United States, the chain is moving – Chinese parts go through Vietnam, Thailand, or Mexico, where the goods get a different country of origin and still end up on the American market, only more expensive. The World Bank states that the structure of U.S. imports remains 68% Chinese, if you count the insert parts, not just the final product. So the consumer pays more, entrepreneurs suffer losses, and the trade deficit hardly changes.

This is hitting America's own “green” transformation the hardest: the rust belt from Michigan to Pennsylvania is called “battery valley” for a reason, but the price of a lithium-iron-phosphate battery has now increased by 14%. While Congress debates subsidies, inflation is returning: import prices rose by 1.9% in March, and Citi is already predicting an inflationary tail of 0.7% annually.

Farmers have been hit with a double whammy. Beijing has sharply curtailed purchases of U.S. soybeans, leaving farmers with a six million-ton surplus, and the federal Department of Agriculture has estimated losses in agricultural exports at $27 billion – and that's with record subsidies falling back on the budget.

The Ukrainian Dimension of the Tariff War

For Ukraine, the tariff collapse has opposite effects. On the negative side, it has resulted in a drop in global steel demand, which has already pushed ore prices down to $92 per tonne and cost steelmakers hundreds of millions in lost revenue. On the plus side, the US and the EU are increasingly looking for “liberal-friendly” production sites as they close in on China.

For example, two Korean companies have already confirmed the relocation of cable harnesses to Zakarpattia, and Swiss Gurit is building a line of carbon parts for wind turbines in Mykolaiv precisely because Ukrainian exports to the EU are not subject to American or Chinese tariffs.

In June, the NBU lowered its 2025 GDP forecast to 3.1%, citing “American protectionism” as a key risk, but also noted the arrival of a record $1.2 billion in direct investment in the first quarter-a double effect that Kyiv is trying to exploit by using special zones for processing industries.

Tariffs Meant to Hit China Hard End Up Weighing on America’s Economy — While Ukraine Finds New Paths Amid Global Shifts

The super-tariffs against China were supposed to be Trump's trump card, but they are turning into a boomerang. Beijing is rapidly reorienting chains, developing domestic consumption, and at the same time hitting Washington's political pain points, from the farm belt to the green industry.

The American consumer is facing a new inflationary wave, stock indices are adjusting downward, and global demand is slowing down – the US partners, including Ukraine, are also suffering. Instead of the promised “America First”, we get “America Pays First”, and the bill with China at the end of the year may be too much for the Fed's printing press to bear.

Bohdan Popov, head of digital at the United Ukraine Think Tank, communications specialist, and public figure