Uncertainty is the only certainty in global power politics. Under U.S. President Donald Trump, this uncertainty has reached its epitome. The swiftly shifting rhetoric and reality in his everyday statements, make it difficult for states to predict policy actions and their impact. The imposition of U.S tariffs has echoed across global capitals, raising crucial inquiry into why these tariffs matter in global power politics, and what implications they have in the long run. Certainly, the only known factor is the dependence of future implications on how and to what extent tariffs will be imposed. What has complicated the situation for global economies is the centrality of U.S. tariffs across its key policy sectors- economic, foreign and trade. This indicates a deliberate and strategic use of tariffs to fulfil different purposes, making tariffs not just economic tools.
The re-escalation of the U.S-China Trade war raises concerns of the possibility of an elongated economic war which can lead to a drastic reorganisation of the global economy. This can mark a shift from political-security-driven to economic security-driven reorientation of power politics, which can further result in recursive amplification. During the U.S.-China trade war under Trump’s first Presidency, South Asian economies experienced economic growth as they emerged as alternate trading blocs for the redirection of diversified supply chains. The newer escalation of the trade war under Trump’s second Presidency raises the question of whether this unintended empowerment of South Asia has the potential to reshape regional and global power politics. If the new tariffs persist for long with a higher magnitude, these alternative trading bloc economies could reach the potential of wielding geopolitical leverage to reshape the geopolitics. And if this comes to transpire, tariffs will not just be viewed as economic tools, but rather powerful tools to reshape the dynamics of global power politics. But if this rivalry escalates into military posturing, it can also swipe these economies under the great power rivalry.
A U.S-China Trade War: Power Politics of Strategic Tariffs
Within the first month of taking office, U.S. President Trump signed a record number of executive orders reflecting his election manifesto, Agenda 47, and Republican Parties’ official manifestos key points. On February 1, 2025, Trump issued an executive order announcing the imposition of a 10% Tariff on China, Mexico, and Canada, effective February 4. While the tariffs on Canada and Mexico were put on hold till April 1, the Tariffs on China were further raised to 20% on all goods overall. Noteworthy is the point that tariffs against China is not a new development, but rather a continuing U.S. policy. Trump’s first Presidency brought it to the centre of global power politics. The Biden administration affirmed the continuation by upholding, and expanding these tariffs, reflecting a bipartisan consensus. Over the years, these concerns have only amplified with policymakers warning against China’s growth as a potential threat to America’s economic and geopolitical dominance.
The two broad objectives are- (i) the dual aspect of reducing dependence on China, and strengthening its economic and military power through domestic manufacturing, (ii) To weaken/checking China’s economic rise and its technological ambitions by focusing tariffs on semiconductors and Electronic Vehicles. However, to achieve the above objectives, it requires broad and massive tariffs. Section 301, U.S. Trade Act, 1974, which allows for investigation of whether foreign country’s trade practices have negatively impacted U.S. commerce, formed the legal basis of President Trump’s tariffs against China. A series of investigations initiated by the U.S. Trade Representative (USTR) in 2018, resulted in the imposition of tariffs on a wide range of Chinese products. In 2024, the USTR four-year review of Section 301 tariffs resulted in amplified tariffs with the exclusion of certain products. This included an increase in the tariff rates to 100% in electric vehicles, 50% in semiconductors and 25% in Lithium-ion batteries from China. With the targeting of EVs and semiconductors, Trump’s tariffs are moving beyond the traditional sector by targeting emerging sectors which are critical for future power politics. This expansion has the potential of turning into full-scale rivalry between great powers. The final nail in the coffin of this growing rivalry is possible if Trump goes ahead with his aim to impose 100% tariffs on China’s all key electronics sectors.
China’s Response: A delicate balancing between Retaliation, adaption and Strategic limitations
With the hike of U.S. tariffs to 20%, China announced a series of retaliatory tariffs and non-tariff measures. These broadly included 10-15% retaliatory tariffs on agricultural products, suspension of export permits of certain US soybean producers, import of US logs, additional sanction designations on 10 US companies, and other restrictions. China’s targeting of U.S. farmers through tariffs reflects its attempt to target Trump’s political voter base, which could result in domestic pressure from these. The provision to exempt or waive off was removed which was not the case during Trump’s first Presidency, indicating stronger retaliation.
Further, both countries have engaged in accusations, symbolic legal battles and even targeted WTO itself. China accused U.S. tariffs in violation of WTO’s trade rules, it has already raised a legal dispute settlement case against the U.S on the grounds of inconsistency with US most-favoured-nation obligation and its tariff obligations under Article I.1 and II.1 of the General Agreement on Tariffs and Trade, 1994. Whereas, the U.S. has accused China of misusing the MFN status, and criticised WTO for promoting biased trade policies, especially indicating its inability to address China’s trading practices. U.S. concerns over China’s unfair trade practices started building during the Bush and Obama administrations, including accusations of intellectual property theft, inflexible exchange rates and subsiding prices of steel and aluminium, also resulting in anti-dumping investigations. Under Trump, WTO has come under direct criticism, along with attempts to replace its established international trade norms to the extent of making them redundant.
For more than two decades, China witnessed tremendous economic rise making it the second largest economy, undertaking many ambitious projects such as the Belt and Road initiative, the Asian Infrastructure Investment Bank and Made in China 2025, with the potential to wield geopolitical dominance. To maintain this and mitigate the impact of U.S. tariffs, China is swiftly looking more inward- domestically and regionally. China is a manufacturing giant based on the export model, therefore tariffs on its exports directly impact its economy. To avoid this, China is promoting domestic consumption while maintaining export competitiveness. One of the most vulnerable areas for China is its dependency on U.S. technology. To reduce this China is increasing budgetary funding for semiconductor R&D. Regionally, China is relying on its many started projects to be able to absorb the shifting of supply chains and become its market for exports. China is diversifying its supply Chains, and strengthening trade partnerships through Regional Comprehensive Economic Partnership (RCEP), increasing investments in BRI projects to recover losses in case of supply chain disruptions. By accelerating its infrastructure investments in the Global South, China is also aiming to reduce reliance on Western countries. But these are long-term goals, which for now demand stability in the region. By doing this, China aims to build regional trade networks as an alternative to U.S.-dominated trade networks.
However, there are still strategic limits to China’s mitigation measures as it is impossible to redirect everything which requires years to build, exposing the drawbacks of the export-driven model, and high dependence on U.S technology which cannot be reversed with research at this moment, and as much as the regional aspect provides a safer transition option, it has the potential of strengthening countries that may challenge China’s dominance regionally.
For a long time, China has retaliated swiftly, but as Trump has threatened to impose extensive tariffs, it poses a challenge to China’s long-term economic ambition. These tariffs threaten China’s economic and technological ambition. But with the increase in the magnitude of U.S. tariffs with clear intentions expressed to curtail China, the response for China can lead to escalating rivalry
South Asia’s rise amidst great power trade war
The ripple effect of the U.S.-China war triggered what Japanese economist, Kaname Akamatsu called the wild geese flying pattern of economic growth. Here, the lead goose, i.e., China is replaced by the next-in-line geese i.e. South Asian countries. As the economic spillover opened opportunities for South Asian economies, they were quick to grab them. These economies positioned themselves as alternate trading hubs, with vast markets of low labour and production costs, and the potential to fill the export-import void created by tariffs. But what implications could this unintended empowerment have on South Asian economies? Or is it going to be a temporary outcome of the rivalry?
In South Asia, India and Bangladesh emerged as the key beneficiaries. They were quick to offer adjusted tariffs for importing goods from the U.S. as they became expensive to import from China. In South Asia, India ranks among the top 10 trading partners of the U.S., which has a diversified industrial base, a large expanding domestic market, and skilled labour at low cost, making it the next-in-line alternative to China, hence the next geese in line. This was evident as multinational companies under their China +1 strategy of diversifying manufacturing and supply chains viewed India as the reliable +1 option from South Asia. While Vietnam was the key beneficiary of this strategy, India picked on by launching schemes like the Production Linked Incentive (PLI) in 2020. A financial incentive for foreign companies to set up in India. Bangladesh also saw an increase in its exports, especially in the garments sector which accounts for 80% of its exports. Since 2014, Bangladesh has been taking over Pakistan’s status of being the second biggest exporter in South Asia. Pakistan and Sri Lanka struggled to benefit due to unstable political systems, crumbling infrastructure, along amounting to inflation, thereby missing the golden aspect of relocation in business, i.e., the right environment for effective and efficient functioning.
How did these countries navigate the trade war without getting caught in between? These countries recognise that both the U.S. and China bring unique benefits to their economic growth goals. China is seen as necessary for the regional economy but also requires cautious strategising against China’s unsustainable and opaque lending policies, unfair trade practices etc. to also avoid the situation the U.S. is in with respect to China. On the other hand, the U.S. offers what these countries view as highly needful, and cannot be sidelined. So, rather than siding with one or being passive victims caught between great powers’ trade war, these countries are exploiting the rivalry to further their own national interests. By reaping the benefits of U.S tariffs but also engaging with China to enhance regional cooperation and economic acceleration through platforms like SCO and BRICS. Therefore, strategic political neutrality and maintaining economic stability become the most viable option.
Geopolitical risks for South Asia in the ongoing Trade War At present, South Asia is not being pushed to enter into the Cold war like scenario of alliances or coercion. This is because South Asian economic stability and political neutrality is essential for both China and the U.S., to realise their strategic ambitions. South Asia is important to maintain their presence in the Indo-Pacific, to secure sea lines of communication and Trade, and as an alternative bloc to fulfil the import-export imbalance. China seeks stability to enhance its status as the Asian hegemon, and neutrality to counter India’s influence and presence in the region. Whereas for the U.S., empowering South Asian economics offers an opportunity to push back China. But this does not do away entirely with the vulnerable position where these countries may be pushed to take sides. This gets us back to the central question of- are these economic gains temporary or can be sustained in the longer run to be able to make a geopolitical shift in power politics? Given that Trump’s intention is to fully curtail China’s rise against China’s intention to maintain its economic and geopolitical aspirations along with strategic posturing through retaliatory tariffs, indicates that the tariffs will only increase in their magnitude. Given that the earlier trade war resulted in the growth of South Asia, an escalation is going to positively impact South Asian economies.
But with the increase in magnitude, the areas of rivalry diversify also, which means an increased economic rivalry runs the risk of turning into military rivalry. This also increases the possibility of great power rivalry being played out through regional power as was the case during the Cold War. This raises the question if these countries will be able to maintain their agency in this power struggle. Thus, South Asia’s rise is susceptible to shifting power politics. The risk of economic empowerment turning into economic insecurity is possible, given the regional players would want to have regional dominance. South Asian economies should focus on adopting incentivising policies to translate economic gains insight into long-term strategic advantages. This is possible by introducing structural economic reforms, sustained investments and diplomatic agility to attract multinational corporations and countries that are looking beyond China now. Therefore, exploiting the void of great power rivalry should be carefully balanced to manage future vulnerabilities.
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