China’s Economy under Pressure from U.S. Trade Policies

Intermediate Level | May 4, 2025

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Tariffs Tighten the Screws on China

In May 2025, China’s economy is under pressure from newly expanded U.S. trade policies. The Trump administration has sharply raised tariffs on Chinese goods, especially in tech and manufacturing. These measures aim to reduce America’s reliance on Chinese imports—but they’re also squeezing China’s exports and economic growth.

The latest round of tariffs includes a 145% duty on certain electronics and tools, along with new taxes on consumer goods. This has made Chinese-made items more expensive in the U.S., leading many American retailers to look for suppliers in Vietnam, India, and Mexico instead.

Slower Growth and Rising Concerns

China’s economy was already slowing down due to real estate troubles and lower demand from Western countries. Now, trade friction with the U.S. is adding more pressure. Exports to the U.S. fell by 22% in April alone, and factory output has dropped to its lowest level since 2020.

To boost its economy, Beijing is encouraging domestic consumption and trying to trade more with countries in Africa, Southeast Asia, and the Middle East. Still, many experts say China will need to adapt quickly or risk a longer-term slowdown.

Global Ripple Effects

These trade tensions don’t just affect China—they’re changing global supply chains. Companies that once relied on China for cheap manufacturing are now moving to new locations, causing shifts in jobs, prices, and production timelines.

Meanwhile, U.S. consumers could also feel the impact. Higher tariffs on Chinese goods mean higher prices for electronics, clothing, and home items. Some economists warn that these price increases could push U.S. inflation higher in 2025.

Vocabulary

Tariff (noun): A tax on goods imported from another country.
- Example: The U.S. imposed a 145% tariff on Chinese electronics.
Export (noun): Goods sold and shipped to another country.
- Example: China’s exports to the U.S. have declined.
Rely (verb): To depend on something or someone.
- Example: Many U.S. companies rely on Chinese factories.
Factory output (noun): The amount of goods produced by a factory.
- Example: Factory output in China has decreased.
Inflation (noun): A rise in prices over time.
- Example: New tariffs could raise inflation in the U.S.
Supply chain (noun): The process of making and delivering products.
- Example: Trade changes are affecting global supply chains.
Consumption (noun): The use of goods and services.
- Example: China wants to boost domestic consumption.
Trade friction (noun): Tension or conflict in trade between countries.
- Example: Trade friction with the U.S. is hurting China’s economy.
Adapt (verb): To change in order to deal with new conditions.
- Example: China must adapt to new global trade rules.
Duty (noun): Another word for a tax on imports.
- Example: The duty on Chinese tools has increased.

Discussion Questions (About the Article)

Why did the U.S. raise tariffs on Chinese goods?
How are these tariffs affecting China’s economy?
What steps is China taking to respond to the trade pressure?
How could this situation affect global supply chains?
Why might U.S. consumers pay more because of these policies?

Discussion Questions (About the Topic)

Do you think trade tariffs are a good way to protect local industries?
Should countries rely less on global supply chains?
How do trade conflicts affect small businesses in your country?
What other actions could the U.S. or China take to resolve the conflict?
How has inflation affected your shopping habits?

Related Idiom

“A double-edged sword”
Meaning: Something that has both positive and negative effects.
Example: The new tariffs are a double-edged sword—protecting U.S. jobs but raising prices.

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📰 This article was inspired by reporting from Bloomberg, The Wall Street Journal, and The Financial Times (April–May 2025).