From Trump 1.0 to Trump 2.0: Impact of Evolution of US Trade Policies and China’s Countermeasures by ZHAO Chunming and DING Yong

Only by integrating development and security and combining internal structural reform with external openness and cooperation can China effectively counter multi-dimensional U.S. strategic containment.

Welcome to the 49th edition of our weekly newsletter! I'm SUN Chenghao, a fellow with the Center for International Security and Strategy (CISS) at Tsinghua University, Council Member of The Chinese Association of American Studies, a visiting scholar at Paul Tsai China Center of Yale Law School in 2024 and Munich Young Leader 2025.

ChinAffairsplus is a newsletter that shares articles by Chinese academics on topics such as China's foreign policy, China-U.S. relations, China-Europe relations, and more. This newsletter was co-founded by my research assistant, ZHANG Xueyu, and me.

Through carefully selected Chinese academic articles, we aim to provide you with key insights into the issues that China's academic and strategic communities are focused on. We will highlight why each article matters and the most important takeaways. Questions and feedback can be addressed to sch0625@gmail.com.

Today, we have selected an article written by Zhao Chunming, and Ding Yong, which focuses on From Trump 1.0 to Trump 2.0: Impact of Evolution of US Trade Policies and China’s Countermeasures.

Edited by ChinAffairs+.

Summary

This paper systematically reviews the shift in U.S. trade policy from Trump 1.0 to 2.0 and examines the impact of this shift on China and the global economy. In the 1.0 era, the United States primarily applied a“three-in-one”approach—Section 301 tariffs, the Entity List, and industrial chain restructuring—to pressure China. These measures planted inflation risks in the U.S. domestic economy and intensified structural divergences between high-tech industries, traditional manufacturing, and the new energy sector.

In the 2.0 era, U.S. policy goals and tools have been comprehensively intensified. The United States has adopted “base tariffs and reciprocal tariffs”, technological decoupling, and rules-based competition, and expanded these tactics to the multilateral level. Trump 2.0 era policies have driven a continued rise in tariff burdens and accelerated the relocation of industrial chains from China. The cumulative tariffs on Chinese goods exported to the United States have reached about 145%. At the same time, the U.S. has promoted “nearshoring” and “friendshoring” to reshape value chains and technical standards centered on North America.

In view of these changes, this paper proposes that China should enhance supply chain resilience at both the government and enterprise levels, accelerate the development of a unified national market, and advance high-standard institutional opening. In addition, China should focus on independent innovation, digital transformation, and the internationalization of standards to build a comprehensive and robust system of response.

Why It Matters

In recent years, globalization has suffered clear setbacks, trade protectionism has been on the rise, and strategic competition among major powers has intensified. In particular, the“America First” trade policy has grown increasingly hardline. The Trump administration has employed tariff sanctions and technology blockades, while reshaping international rules, to safeguard U.S. interests and global dominance. Chin–U.S. economic and trade relations have become a key factor influencing the global economic landscape.

Against the backdrop of profound global shifts and increasingly complex China–U.S. relations, U.S. trade policy under Trump has shifted since his first administration. This marks a transition in U.S. strategy toward China from a focus on trade frictions alone to comprehensive, multi-domain competition, with the scope of impact expanding from bilateral trade to broader areas such as supply chain security, technical standards, and international rules.

For China, a thorough study of the evolution and impact of Trump’s trade policy will help it to more accurately appraise changes in the external environment and take early precautions against potential risks and will provide a basis for formulating pragmatic and effective economic and trade strategies toward the United States.

Key Points

1. Policy Measures and Economic Impact during the Trump 1.0 Era

• The “Three-in-One” sanctions approach

In the Trump 1.0 era, the United States targeted China with coordinated measures through tariffs, technology, and supply chains. Through the “Section 301” investigation, the U.S. imposed four rounds of high tariffs on Chinese goods. By the end of 2019, it had brought several hundred billion U.S. dollars’ worth of Chinese products under tariff coverage, spanning both intermediate goods and consumer products. To address concerns over technology, the U.S. created the “Entity List” and imposed strict export controls, restricting exports of key technologies such as semiconductors and artificial intelligence to China, which left China’s high-tech industries facing critical supply bottlenecks. Finally, the U.S. offered tax cuts and other incentives to encourage the reshoring of manufacturing, and urged allies to “decouple” from China in critical sectors, aiming to reshape supply chains to reduce dependence on China.

• The two-way impact of sanctions

The trade sanctions of the Trump 1.0 era created inflationary risks in the U.S. and triggered economic shocks in China. On the U.S. side, large-scale tax cuts and tariff hikes drove up import and labor costs, forcing companies to raise prices to pass on these costs. This pushed up consumer prices, while upstream supply shortages and corporate stockpiling further amplified inflationary pressure. Even with Federal Reserve rate hikes, the inflation rate surged to over 7% in 2022. On China’s side, the growth of its export-oriented economy slowed. Tariffs raised the cost of exports to the U.S., pushing some companies to withdraw from the U.S. market and squeezing profits in traditional manufacturing. From 2017 to 2020, China’s GDP growth rate fell from double digits to below 3%. Declining external demand forced China to accelerate the expansion domestic demand and industrial upgrading to mitigate the shock.

• The threefold logic of industry impact

U.S. sanctions had differentiated effects across Chinese industries. First, in high-tech industries, core technology supplies were cut off, stalling innovation in some areas. External pressure also pushed firms to seek independent breakthroughs. The U.S. ban on the sale of lithography machines and other equipment created temporary technology gaps in China’s semiconductor sector, prompting domestic firms to intensify R&D efforts and gradually achieve technological substitution. Second, in traditional manufacturing, low value-added industries suffered the most from tariffs. For example, China’s share of textile exports to the U.S. fell from 11.3% in 2017 to 9.9% in 2021. Many companies shifted production to zero-tariff countries such as Vietnam for re-export, though this raised concerns over industrial hollowing-out. Third, in the green energy sector, the U.S., as a result of the “Section 201” investigation, imposed a 30% tariff on imported photovoltaic products, temporarily weakening China’s solar exports. Chinese companies responded by setting up factories in Southeast Asia to bypass tariffs and expanding their domestic market. From 2017 to 2021, China’s solar cell exports grew from around USD 10 billion to nearly USD 30 billion. In this case, U.S. sanctions actually accelerated the further development of China’s green energy technology and China’s global production layout, forming a new paradigm for industry development.

2. The Evolution and Features of Policy in the Trump 2.0 Era

• Greater policy objectives

In the Trump 2.0 era, U.S. competition with China has expanded from purely economic interests to encompass national security and social issues, taking on a stronger political dimension. The policy focus shifted from short-term trade adjustments to long-term institutional restructuring, emphasizing the consolidation of U.S. hegemony through domestic technological innovation, industrial adjustment, and rules-based competition.

• Enhanced policy tools

Building on measures such as tariffs and the Entity List, the U.S. has adopted a more aggressive policy mix. First, it has strengthened executive centralization. The seeds of this centralization can be seen in the Heritage Foundation’s “Project 2025,” signaling planned administrative reforms to eliminate influence of the establishment and further centralize power to introduce more radical new policies. Trump quickly formed a cabinet, disbanded certain federal agencies, expanded presidential powers under states of emergency, and established a “Department of Government Efficiency” led by business magnates to streamline the bureaucracy. Second, it leveraged cross-sector policy tools. In the energy sector, the U.S. significantly expanded oil and gas production to lower global oil prices, undermining the fiscal revenues of rival states and increasing pressure on China’s clean energy transition. In the technology sector, it promoted alliances between major tech companies and defense contractors to build a “tech-defense complex,” accelerating breakthroughs in defense technology and tightening U.S. control over high-tech supply chains.

• Expanded scope of sanctions

The scope and targets of sanctions broadened significantly in the Trump 2.0 era, shifting from specific countries to nearly all U.S. trade partners. In early 2025, Trump issued an executive order imposing a uniform 10% base tariff on all countries exporting to the U.S., along with additional tariffs on multiple countries, effectively restructuring the tariff system under a “reciprocity” framework. Sanctions also expanded beyond economic issues to cover social domains.

• Intensified competition international rules

In the Trump 2.0 era, the U.S. moved beyond merely withdrawing from international organizations to actively shaping systems of global rules in its favor. On one hand, it sought to amend multilateral trade rules, eliminate special treatment for developing countries such as China under the WTO, and push for reciprocal market access, using gradual legislation to advance the decoupling of China from global supply chains. On the other hand, Trump attempted to court countries such as Russia to jointly counterbalance China, creating a “digital iron curtain” to split the global technology system and exclude China from standards and ecosystems.

3. Challenges and Risks Facing Chinese Industries

• Tariff shock and production relocation

At present, almost all Chinese exports to the U.S. are subject to both “base tariffs” and “reciprocal tariffs,” with combined rates for most goods reaching as high as 145%. China’s exports to the U.S. have suffered, and although efforts to expand into ASEAN, the EU, and other markets have intensified, they have not been able to fully offset the loss of the U.S. market. The U.S.’s high tariffs, applied globally, have also undermined China’s ability to reroute exports via third countries. Chinese companies have been forced to accelerate overseas factory construction to diversify production, but infrastructure and labor bottlenecks in Southeast Asia and Mexico have reduced the effectiveness of such capacity shifts.

• Technological decoupling and innovation challenges

In the Trump 2.0 era, U.S. technology restrictions on China have escalated from selective measures to full supply chain “decoupling.” The U.S. has expanded its export control list, introduced customized technology restrictions targeting China, tightened the monitoring of export destinations, and coordinated with allies to strictly limit the supply of advanced equipment such as chips and lithography machines. It has even prohibited U.S. enterprises from providing computing power to Chinese AI companies. Chinese firms face the risk of losing access to core technologies and key components, forcing them to speed up self-developed technologies and supply chain substitution. However, in the short term, breakthroughs in critical areas remain difficult.

• Multilateral pressure and competition over rules

In the 2.0 era, the U.S. has withdrawn from multiple international mechanisms, including the Paris Agreement and the World Health Organization, weakening the authority of the global multilateral governance system. China has been compelled to fill the governance vacuum left by the U.S., taking on greater responsibilities in areas such as climate change and public health. In addition, China must confront Western ideological and rules-based containment. It faces the dual challenge of upholding the UN-centered multilateral framework while resisting exclusionary rule systems led by the U.S., a task that is highly demanding.

4. China’s Response Strategies Under New Conditions

• Governmental level

China should strengthen the resilience of industrial and supply chains by establishing dedicated funds to support critical weak links and prevent chain disruptions. It should also advance the development of a unified national market, strengthen antitrust enforcement, improve infrastructure connectivity, eliminate local protectionist barriers, and increase the efficiency of free flow for factors and products. Finally, it should actively participate in global economic governance and cooperation, strengthen cross-border regulatory coordination and trade facilitation, mitigate external risks, and safeguard supply chain security.

• Enterprise level

Enterprises can turn external pressure into an opportunity for transformation by formulating sector-specific strategies. High-tech industries should adhere to independent innovation and industry–academia research collaboration, make break throughs in “chokepoint” technologies, improve intellectual property portfolios, and enhance product value-added and global competitiveness. Traditional manufacturing should accelerate digital and smart transformation, upgrade export products, improve quality and brand influence, and reduce reliance on the U.S. market. Green energy companies should leverage China’s first-mover advantages to actively “go global,” bypassing trade barriers by participating in Belt and Road Initiative new energy projects and engaging in joint local production, thereby expanding overseas markets. Enterprises should also strengthen compliance and risk awareness, plan overseas patent layouts in advance, and engage in collective overseas expansion to counter the impact of U.S. Entity List sanctions and trade barriers.

Conclusion

The transition of Trump’s trade policy from 1.0 to 2.0 marks an escalation in the U.S.’s containment of China from from a focus on trade frictions alone to comprehensive competition spanning economic, technological, security, and regulatory domains, posing systemic challenges to China’s economic development. Against this backdrop, China must ground its response in continued reform and opening, strengthening the resilience and technological autonomy of its industrial and supply chains under external pressure, optimizing its domestic market and industrial structure, and actively engaging in international cooperation and rule-shaping to form a balanced strategy of offense and defense. Specifically, at the government level, it should enhance policy support and improve the market environment, such as by establishing a supply chain resilience fund and accelerating the development of a unified national market. At the enterprise level, firms should enhance innovation capacity and global positioning by advancing digital transformation, building independent brands, and cultivating Belt and Road markets to jointly mitigate the impact of evolving U.S. trade policies. Only by integrating development and security and combining internal structural reform with external openness and cooperation can China effectively counter multi-dimensional U.S. strategic containment, safeguard high-quality economic growth and national security interests, and enhance its initiative and voice in a new round of global competition. This is not only a strategy to address current challenges but also the necessary path to achieve China’s own high-quality development.

About the Author

赵春明 Zhao Chunming: Dr. Zhao Chunming is a professor and doctoral supervisor, a recipient of the State Council Special Government Allowance, former vice dean of the School of Economics and Business Administration at Beijing Normal University (BNU). He currently serves as chair of BNU’s Teaching Steering Committee and chair of the Academic Committee of the School of Economics and Business Administration. His research interests include the world economy, international trade, international investment, strategic management, and comparative studies of the Chinese and foreign economies.

About the Publication

The Chinese version of the article was published by Journal of International Economic Cooperation (《国际经济合作》). The academic journal founded in 1970, is published by the Institute of Chinese Academy of International Trade and Economic Cooperation (CAITEC) of the Ministry of Commerce. It publishes authoritative news on external economic cooperation, along with research on both the practice and theory of international economics and trade. The journal is intended for all those engaged in or interested in international economic cooperation. Main sections include: Research & Exploration; Observer’s Notes; Utilization of Foreign Investment; Trade & Economic Practice; Management; Perspectives & Approaches; World Economy Watch and Finance.

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