The Sino-American trade conflict in the Trump era:
impacts and prospects for international companies

Date	Event and chronology of key measures (2017-2025)
August 2017	The United States launches a Section 301 investigation against China, leading to a major trade conflict between the two great powers. Section 301 of the U.S. Trade Act dates back to 1974. It authorizes the Office of the Trade Representative to adopt measures against the trade policies of foreign countries, at the request of the US President.
May 2018	Tariffs of 25% on steel and 10% on aluminum imposed by the USA.
July 2018	Start of trade dispute with 25% on 34 billion USD of Chinese products.
2018 – 2019	Escalation of tensions. Several waves of tariff hikes and countermeasures between the two countries.
Janvier 2020	Signing of the so-called Phase 1 trade agreement, with increased purchasing commitments by China, which are then scarcely respected.
2022 et 2023	The Biden administration maintains punitive tariffs and forms techno-strategic alliances.
January 2025	Donald Trump begins his second presidential term.
February 2025	First 10% increase in US tariffs on Chinese products.
March 2025	Another 10% increase. China retaliates with 15% on agricultural products.
Apvril 2, 2025	Donald Trump announces a 34% increase (total 54%) + duties on certain European products.
April 4	China imposes 34% on all American products, effective April 10.
April 7	Trump's threat: +50% if China does not withdraw its measures.
April 9	China: tariffs at 84%. USA: 125% tariff, then 145% the next day.
April 11	China raises tariffs to 125% and suspends strategic exports (rare earths, gallium, germanium).
April 13	China raises duties to 125% and suspends strategic exports (rare earths, gallium, germanium).
April 15	The USA calls for China's economic isolation and mobilizes its allies.
April 16	China affirms it is not afraid of a trade war and calls for dialogue.
April 26	Beijing lodges a complaint with the WTO against US surcharges.
May 12	Following high-level negotiations in Geneva, the U.S. and China have agreed to a 90-day reduction in tariffs: the U.S. lowers tariffs on Chinese goods from 145% to 30%, and China reduces tariffs on U.S. goods from 125% to 10%.

 

2.1 Explanation of the American word “tariff”

The word “tariff” in American English resembles the French word “tarif”, but its main meaning is different, especially in international trade.

In American English, tariff = droit de douane. It's a tax applied to a product imported from abroad. It is paid at the border by the importer, when the goods enter the United States.

 

2.2 New Chinese legislation on customs duties

In early 2024, China adopted a reform of its customs regulations, creating a more flexible framework for targeted tariff hikes in response to foreign sanctions. It was still the Biden administration that governed the country. In hindsight, this reform seemed to respond as much to the possibility of a Donald Trump comeback as to American practices of escalating tariffs. With no real impact on China's trading companies, this tariff law is aimed above all at strengthening Beijing's trade retaliation tools against external threats.

2.3 Understanding import duties in the USA and China

In the United States, the calculation of ordinary customs duties is based primarily on the customs value of the product, to which are sometimes added “additional duties” such as those imposed by D. Trump. VAT, on the other hand, is not applied to imports. In other words, when a company in the USA imports a product from Europe or elsewhere into the USA, no VAT (value-added tax) is applied by the American authorities. The American tax system operates differently from that of the European Union.

China applies a standard customs duty based on the customs tariff (and HS product codes), to which is added import VAT (the general rate is 13%) and sometimes a consumption tax (on luxury goods, for example). Punitive - retaliatory - duties replace ordinary duties.

 

2.4 Customs and strategic issues: understanding and anticipating the rules

Sino-American tensions are forcing European companies to rethink their customs strategy. The key distinction between customs origin and provenance is essential to avoid surcharges.

 

The customs origin of a product is determined by its country of manufacture, according to the rules of sufficient transformation, independently of the country of dispatch (provenance). This has an impact on the application of punitive customs duties, if applicable, or quotas, for example. To illustrate, an American-brand product manufactured in a Chinese factory (of Chinese origin) and imported into Europe is subject to EU import duties applicable to a Chinese origin and nost to a US origin. For example, the case of Apple Iphone products.

 

A Chinese product exported via Vietnam does not lose its Chinese origin if, for example, the processing applied there is too minimal. These aspects of product origin, provenance and processing are part of well-thought-out customs strategies widely applied by the most advanced international companies.

Companies that have mastered the rules of inward and outward processing can optimize their supply chains. In this way, logistics and transport become critical variables, to be adjusted according to regional tensions.

 

2.5 The macroeconomic impact of the trade conflict on China and the United States

 

Consequences for China

Consequences for the United States

Pressure on exports: decline in export sales to the United States. In 2023, the United States accounted for around 15% of total Chinese exports. In 2018 (before the escalation of the trade war), this figure was closer to 19%. Accelerated repositioning towards other markets (ASEAN, Africa, EU). Increased development of domestic value chains.

Rising consumer prices and reduced imports of Chinese components (electronics, equipment). Tensions over production costs in the manufacturing industry. Inflation becomes a political trap: consumers expect prices to rise by 6.7%. FED forecasts 4% inflation in 2025 (above the 2% target). For US subsidiaries in China: increased regulatory complexity and risks of double taxation (ordinary and punitive customs duties are added) or non-tariff measures (inspections, standards).

 

 

5. Challenges, tactics and outlook

Although the United States is stepping up its trade war this year, it partially reversed this decision on April 13, exempting Chinese electronics products such as smartphones and semiconductors. This measure, taken under pressure from American technology giants, aims to avoid excessive price rises, particularly for iconic products such as the iPhone, whose price could double - in the USA - due to surtaxes. Inflation is becoming a political challenge for the USA, as consumers anticipate a sharp rise in prices. China, under the leadership of Xi Jinping, is responding to the USA with a strategy of escalation and reciprocity. It is targeting not only American products, but also sectors of strategic importance to the United States, such as rare earths. Less dependent on the United States, it is diversifying its sources of supply, particularly in agriculture. The United States, on the other hand, remains heavily dependent on China for products such as toys and semi-conductors.

China, under the leadership of Xi Jinping, is responding to the United States with a strategy of escalation and reciprocity. It is targeting not only American products, but also sectors of strategic importance to the United States, such as rare earths. Less dependent on the United States, it is diversifying its sources of supply, particularly in agriculture. The United States, on the other hand, remains heavily dependent on China for products such as toys and semi-conductors.

The hostility between the two powers goes beyond trade issues and extends to geopolitical questions, notably Taiwan, and international alliances. China, although in economic difficulty, has taken steps to prepare for US sanctions. Beijing has put in place policies to promote technological self-sufficiency and limit its dependence on the United States. What are the benefits for the EU?

 

		China is seeking to strengthen its ties with Europe. It is using events such as the fiftieth anniversary of EU-China relations to try to restore its trade relations with Brussels. It is also looking to relaunch negotiations on a framework investment agreement with the European Union, and put back on the table a project that dates back to December 2020. Planned to come into force as early as 2022, it had been frozen in the European Parliament following tensions between China and the EU, notably over the treatment of Uighurs.
The EU is reacting cautiously and remains wary, despite Beijing's efforts to woo certain European countries. The 27 EU countries fear an influx of Chinese products onto their markets. Geopolitical tensions, including China's support for Russia, complicate relations with Europe.

Geopolitical and economic challenges: China is seeking to improve its economic relations with Europe while overcoming differences on political issues, such as human rights and state subsidies that support certain key sectors of Chinese industry, such as electric vehicles. These differences create obstacles to deeper economic cooperation.

A differentiated approach among EU member states: Xi Jinping is attempting to strengthen relations with certain EU countries that are more open to cooperation with China, such as France, Serbia and Hungary. Depending on one's point of view, Beijing's strategy is either to favor bilateral relations with European states, or to exploit internal divisions within the EU to advance its own interests.

 

 

6. Developments and impact for European companies

A global agreement is unlikely. The crisis has shifted to the technological arena, as illustrated by the exclusion of Huawei and the semiconductor war. Today, the United States is embarking on an almost total decoupling, with perhaps unrealistic objectives, such as mass relocation of production. This conflict is redefining global balances. For European companies, this is less a distant conflict than a structural shift that must be integrated into their import-export strategy, prompting a rethink of their sourcing, supply chains, and investment approaches.

Punitive tariffs are likely to remain in the short term. However, a reorganization of value chains is intensifying towards third countries such as Vietnam, India and Mexico.

For international companies, this means reviewing their supply chains. This war also offers strategic opportunities for EU companies. Geopolitical uncertainty creates a favorable environment for European companies looking to invest in China or other countries in the Asia-Pacific region. Beijing is encouraging foreign investment in key sectors, and companies can take advantage of this openness while limiting their dependence on the USA through regional trade agreements such as RCEP or CPTPP. This gives them access to new markets with advantageous fiscal and commercial conditions.

Towards new opportunities in China and Asia: Tensions are creating business opportunities for companies that know how to adapt. The Middle Kingdom continues to promote foreign investment, and in particular to offer excellent services within China's free trade zones. International companies can adapt their business development in Asia and reduce their dependence on the dollar through de-dollarization.

 

Check rules of origin carefully. Changes in customs strategies also offer an opportunity to review processing and value-adding practices. By adapting to new regulations and optimizing value chains, companies can position themselves more flexibly, while exploring alternative solutions such as free-trade zones or rethinking the logistics equation with other regions not or less affected by surcharges. This enables companies to strengthen their global competitiveness, even in the face of tariff increases.

In addition, European companies can take advantage of changing consumer dynamics. For example, as prices rise for certain products, new consumer sectors are emerging in Asian markets, notably in advanced technologies and sustainable consumer products. This offers opportunities to diversify products and capture growing demand, particularly in Southeast Asia.

Finally, although geopolitical tensions are high, they are also paving the way for increased cooperation between Europe and China. Negotiations on investment agreements and Chinese support for international partnerships are enabling European companies to diversify their investments and position themselves in markets less dependent on the United States, notably in Asia and Africa.

 

In conclusion, while the trade war represents a danger, it offers worldwide based companies a unique opportunity to rethink their sources of supply and transformation. It also enables them to strengthen their presence in emerging markets, and to develop more robust and competitive strategies in the face of the positions already taken in China by American companies.

 

• Identification and pre-selection of production and assembly sites.
  
  
• Comparative analysis of storage options. Logistics solutions for warehousing and distribution of temperature-controlled, hazardous, chemical, toxic or regulated products.
  
  
• Ongoing regulatory monitoring, strategic positioning analyses and competitive mapping.
  
  
• Strategic assistance in the event of denunciations and disputes with the authorities.
  
  
• Consulting services for the search and selection of distributors.
  
  
• Set-up: feasibility studies and comparisons of the attractiveness of Chinese industrial zones.
  
  
• Preparation of technical files with a view to approval for the Chinese market.
  
  
• Assistance with registration and licensing procedures for foreign-owned companies and subsidiaries in China.
  
  

[ Contact a specialist advisor in China to discuss these topics ]