Tariffs as weapons: How America is rewriting the rules to counter China

In global trade, few actors have dominated the stage with as much unpredictability and bravado as Donald Trump. His return to the spotlight, this time with even sharper elbows, signals a deeper recalibration of America’s economic playbook — one that goes well beyond protectionism or electoral posturing. It is now clear that tariffs are not just a policy preference; they have become Washington’s weapon of choice in its campaign to counter China.

In the past, great powers have used military coalitions, ideological blocs, and economic alliances to tilt the balance of power. Today, the United States is attempting something different: reshaping global influence by taxing trade itself. Tariffs are being used to isolate China economically, trigger supply chain shifts, and apply direct pain to Beijing’s manufacturing machine — all under the guise of defending American jobs or levelling the playing field. But make no mistake: this is a coercive strategy, not a corrective one.

The latest salvo — a temporary 90-day suspension of new tariffs on most countries, while Chinese goods face duties as high as 125 per cent — is not a pause. It is a provocation. It tests who will fall in line, who will hedge, and who will resist. Countries are being forced to audition, not align: flatter Washington, distance from Beijing, and pray that your exports aren’t caught in the next tariff tantrum. This isn’t economic leadership; it’s a loyalty test disguised as trade policy.

The irony runs deep. The same United States that once led the creation of a liberal global trade order — with institutions like GATT, the WTO, and Bretton Woods — is now its most active saboteur. Multilateral norms are being replaced by unilateral diktats. Global trade, once governed by rules, is now at the mercy of moods.

While tariffs are front and centre, the US has deployed a broader arsenal of secondary instruments to contain China: military posture through alliances like AUKUS and the Quad, export controls on advanced semiconductors and AI chips, influence campaigns in international forums, and pressure on allies to decouple from Chinese tech ecosystems. Yet, all these serve as support acts. Tariffs remain the main event — visible, blunt, and immediate.

China, for its part, has not responded with panic but with preparation. It is doubling down on self-reliance, insulating its core sectors, and accelerating investments in strategic technologies. Despite sweeping restrictions from the West, China has made quiet but notable gains in generative AI, quantum computing, and advanced semiconductors — often through workarounds and sheer scale. It is the only nation to span all 41 industrial sectors defined by the United Nations — a fact that allows it to absorb shocks, reconfigure quickly, and keep long-term goals in sight.

This is why America’s tariff-first doctrine is as much a gamble as it is a gambit. It may bleed Chinese exporters, but it also shakes the very scaffolding of global trade. Supply chains, already fragile post-pandemic, are being rerouted in haste. Smaller economies find themselves caught in the crossfire — either as collateral damage or as pressured intermediaries. The global south, in particular, faces an impossible choice: align with one superpower and risk isolation by the other, or chart a middle path with no guarantees of protection.

India must read this moment with strategic calm and sovereign clarity. Yes, it must keep the US in good humour — for reasons ranging from defence ties and tech cooperation to capital access and diaspora strength. But that realism cannot come at the cost of reduced autonomy or short-term appeasement.

India’s true diplomatic strength has never been about being an enemy’s enemy. It has always been about being a fair partner — predictable, principled, and capable of speaking with clarity even in chaotic times. That voice will be critical in the decade ahead.

Rather than overreact to tariff tremors, India should turn the current volatility into leverage. As companies across the world look to rebalance away from China, India must present itself not as a fallback, but as a future-forward alternative — with regulatory clarity, scale, and a strong rule-of-law foundation. Strategic trade agreements with blocs like the EU, ASEAN, and Africa should focus not just on tariff cuts, but on shared access to rare minerals, clean tech, and intermediate goods.

The United States, in its aggressive tariff strategy, seems remarkably indifferent to the collateral damage inflicted on the global economy — including on its own friends and allies. Rather than lead through consensus, it appears determined to punish the most influential or self-reliant nations as a way to intimidate the rest into submission. For a country that has long positioned itself as the world’s economic steward — a self-appointed big brother to the liberal trade order — this coercive approach risks fraying the very fabric of global cooperation. History shows that when dominant powers abandon fairness for force, they may win compliance but lose trust — and over time, their influence. But then again, does the current Trump administration even pretend to care about fairness or friendship?

(Views are personal; Dr Srinath Sridharan is Corporate Advisor & Independent Director on Corporate Boards, and author of ‘Family and Dhanda’)