The 2025 US Tariffs on China and their affects on both economies, the effects on the stakeholders involved

This paper investigates the economic and political consequences of the 2025 U.S.–China tariff war initiated under the Trump administration. Positioned as a measure to reduce trade dependence and reclaim industrial sovereignty, the new tariffs marked one of the most extensive protectionist policies in U.S. history—covering over $780 billion worth of imports and raising duties on Chinese goods to nearly 60%. Using an event-study methodology that tracks economic indicators before and after the tariff announcements, the research analyzes how these measures influenced key outcomes such as government revenue, public debt, employment, and firm closures between January 2024 and December 2025.

Through comparative analysis of both economies, the study situates the 2025 “Liberation Day” tariffs within a broader context of reciprocal trade barriers and retaliatory measures by China. Drawing on existing research from Cornell University, the Peterson Institute for International Economics (PIIE), and Ruiming Min’s empirical work, the paper synthesizes multiple perspectives—ranging from price effects and trade flows to firm-level behavior—to develop a comprehensive understanding of the tariff’s ripple effects. Findings suggest that while the tariffs temporarily increased U.S. revenue and reduced Chinese imports, they simultaneously raised domestic production costs, limited employment growth, and heightened economic uncertainty.

Ultimately, the research concludes that the 2025 tariffs represent a paradox of modern protectionism: though intended to revive American manufacturing and safeguard sovereignty, they instead deepened global interdependence through trade diversion and inflationary pressures. By linking microeconomic firm responses with macroeconomic policy outcomes, the paper offers a nuanced evaluation of how aggressive tariff strategies can reshape—not necessarily strengthen—national economies in an interconnected world.