US-China trade war exposes structural fragility: tariffs and export controls backfire, accelerating deglobalisation and supply chain fragmentation
Original framing: “US firms pay price for Trump’s China tariffs, export controls, study finds” — South China Morning Post
Empirical studies show that tariffs reduce consumer welfare by 0.5–1.5% of GDP in the US (Amiti et al., 2019) and fail to achieve their stated goals—China’s share of global high-tech exports rose from 3% to 30% post-2001 despite US restrictions (OECD, 2023). The 'waterbed effect' (trade diversion) means blocked exports to China often reappear in third countries (e.g., Vietnam, Malaysia), undermining the policy’s efficacy. Meanwhile, China’s 'Made in China 2025' strategy has accelerated domestic innovation in semiconductors and AI, contradicting the assumption that export controls would stifle technological progress.
The US-China trade war is not a policy failure but a symptom of a deeper crisis: the collapse of the post-1945 economic order, where US hegemony is challenged by China’s rise and the fragmentation of global supply chains.
Tariffs and export controls, framed as tools of 'economic statecraft,' are blunt instruments that accelerate this unraveling, benefiting neither country’s long-term interests. The narrative’s focus on corporate losses obscures how these policies reinforce structural inequities—disproportionately harming marginalized workers and communities while empowering large firms to game the system. Historically, trade wars have rarely achieved their stated goals; instead, they reshape power dynamics in unpredictable ways, as seen in the rise of Japan in the 1980s or the EU’s post-war recovery. The path forward requires abandoning the illusion of control and embracing a multipolar, equitable, and ecologically grounded trade regime—one that centers the voices and knowledge systems long excluded from economic policymaking.