Trump’s China Trade War Threatens U.S. Economy—No Deal Means Pain Ahead

Tariffs as economic policy? More like a self-inflicted wound. The U.S.-China trade war—still smoldering in 2025—risks tipping America into recession without a substantive resolution.

Key pressure points:

- Supply chain chaos just got upgraded from ’disruption’ to ’permanent damage’

- Inflationary pressures could make the Fed’s 2% target look like a nostalgic meme

Wall Street’s coping mechanism? Pouring another $9B into blockchain ETFs while Main Street eats the tariffs. Some things never change.

Trump Wants a Trade Deal, But On His Terms

Trump claims China is desperate. He says their economy is “collapsing” and insists the U.S. won’t back down first. Chinese officials, on the other hand, say the U.S. requested the meeting. Both sides want to save face. That’s why progress is slow.

The White House says Trump won’t ease tariffs unless China makes real concessions. Beijing is under pressure, too. Factories are sitting on unsold stock. Exporters are scrambling for buyers. But even with the pain, neither side is blinking—yet.

Trump’s position is firm: tariffs stay unless a trade deal gets signed. That deal, however, is nowhere in sight. Without one, the trade war grinds on, and the risk of recession grows.

The Last Trade Deal Didn’t Stick—Will This One?

This isn’t the first round of U.S.-China trade deal drama. Back in 2020, they signed a “Phase One” agreement. It was supposed to ease tensions. China agreed to buy more U.S. goods. But COVID hit, and those promises fell apart.

Now Trump is pushing again. He wants more than just purchases. He wants China to stop subsidizing tech firms and stealing U.S. trade secrets. That’s a big ask. And China has shown little willingness to change those policies.

If a new deal happens, it won’t solve everything. But even a partial rollback of tariffs could cool the economic pressure on both sides. For now, though, it’s just talk.

Without a Trade Deal, Recession Fears Grow

The trade war is already shaking up the U.S. economy. GDP shrank this year for the first time since 2022. Inflation is creeping up. Businesses are struggling with higher import costs. Some are warning of product shortages as pre-tariff stock runs out.

Markets are jittery. Investors once feared a DEEP recession. Lately, those fears have eased—slightly. But that calm depends on the hope of a trade deal. If negotiations fail, tariffs will bite harder. Consumer prices will rise. And growth could stall further.

Goldman Sachs now predicts just 0.5% GDP growth in 2025. That’s down from 2.4% earlier this year. Without a deal, this trade war could freeze the recovery.

Can Trump Walk Back His Own Trade War?

Trump’s team has hinted at dialing back some tariffs. He’s already delayed some on Swiss and British goods. But with China, he’s holding the line. The tariffs started as leverage. Now, they’re a political tool. Trump says they protect American jobs. But many U.S. industries say they’re causing more harm than good.

Some analysts think Trump might eventually ease up—quietly. His track record shows he’s willing to shift if it helps markets. But for now, he’s doubling down.

If a trade deal finally comes together, it could calm inflation and restore growth. Without one, both the U.S. and China risk pushing each other—and the world—closer to recession.