3 min0%
19 January 2026|The Indian Express
3 min read
EconomyInternational RelationsEDITORIAL

Tariffs' Impact on China: Analysis of Trade War Effects

Study suggests US tariffs did not significantly damage China's economy.

Background Context

The imposition of tariffs as a tool of economic policy has a long and complex history. In the early days of the United States, tariffs were a primary source of government revenue. The Tariff Act of 1789, for example, aimed to protect nascent American industries. Throughout the 19th century, debates over tariffs fueled political divisions, culminating in events like the Nullification Crisis of 1832, where South Carolina attempted to nullify federal tariff laws. The Smoot-Hawley Tariff Act of 1930, enacted during the Great Depression, is often cited as an example of how protectionist measures can exacerbate economic downturns by triggering retaliatory tariffs from other nations, leading to a contraction in global trade. The post-World War II era saw a move towards trade liberalization with the establishment of the General Agreement on Tariffs and Trade (GATT), the precursor to the World Trade Organization (WTO).

The article discusses the impact of tariffs imposed on China by the United States, particularly during the Trump administration. Contrary to expectations, the author argues that these tariffs have not significantly harmed the Chinese economy. The analysis suggests that China has been able to adapt and mitigate the negative effects of the tariffs through various strategies, such as diversifying its export markets and adjusting its domestic policies. The piece also touches upon the broader implications of trade wars and protectionist measures on global economic stability.

Latest Developments

Recent developments indicate a growing trend towards re-evaluating global supply chains and diversifying trade relationships. While the US-China trade tensions have somewhat cooled, many companies are still considering relocating production facilities to countries like Vietnam, India, and Mexico to reduce reliance on a single source. The Regional Comprehensive Economic Partnership (RCEP), a free trade agreement among 15 Asia-Pacific nations, represents a significant shift in the global trade landscape, potentially diminishing the influence of the United States in the region. Furthermore, the COVID-19 pandemic has exposed vulnerabilities in global supply chains, prompting governments to prioritize domestic manufacturing and strategic stockpiling of essential goods. The future outlook suggests a more fragmented and regionalized global trade system, with increased emphasis on resilience and national security.

Editorial Analysis

2 Key Concepts to Understand

This article covers important concepts like Tariffs, Trade War. Understanding these will help you answer exam questions better.

Ready to test your understanding?

10 practice questions available