US-led trade war against China broadens as Europe and allies add tariffs, subsidies and export controls
Thirteen months after Trump's 'Liberation Day' tariff announcement, the emerging trade conflict has shifted from bilateral US-China confrontation to a broader multi-front effort to end China's dominance in pharmaceuticals, critical minerals and advanced semiconductors, with the EU, Canada and others now evaluating their own tariffs, subsidies and export controls alongside the American measures. The economic costs are concrete on all sides: higher consumer prices in tariff-imposing countries, dearer Chinese-sourced inputs for Western manufacturers, Chinese exporters locked out of key markets, and China retaining the threat of cutting off the critical-mineral and commodity supply chains it near-monopolises as a retaliatory lever. Analysts describe Trump's scattershot protectionism — raising tariffs across the board without targeting China's specific chokepoints — as undermining the natural alliances needed to sustain a durable economic campaign against Beijing.
The trade war is no longer a bilateral US-China affair. More than a year after Donald Trump's 'Liberation Day' tariff announcement, the structural aim has shifted: the dominant imperative is now stopping China's export dominance in pharmaceuticals, critical minerals, and the advanced semiconductors that power industries from defence to automotive — not restoring the pre-2025 open trading architecture, which most analysts now regard as unrecoverable.
The European Union, which rushed to finalise its long-stalled trade agreement with South America's Mercosur bloc in the months following Liberation Day, has since opened its own policy toolkit — evaluating tariffs, domestic production subsidies and export controls against Chinese goods and inputs in sectors including clean energy, electric vehicles and strategic materials. Canada's prime minister, Mark Carney, travelled to Beijing to build closer bilateral ties as a hedge. China, meanwhile, deepened its existing trade agreement with south-east Asian nations.
The economic costs are already being felt across multiple parties. Consumer goods prices are rising in countries that have imposed barriers on Chinese imports. Manufacturers in the US and Europe face higher costs for Chinese-sourced components and inputs. Chinese exporters are finding fewer markets for goods no longer welcome in Western economies. And exporters outside China risk being locked out of Beijing's domestic market as retaliation.
The highest systemic risk, in the assessment of analysts tracking the conflict, is China's potential use of its near-monopoly control over critical commodities — lithium, cobalt, rare earths, pharmaceutical precursors — to cut off supplies to countries applying economic pressure. China has deployed this leverage before in sectoral disputes and retains it as its strongest retaliatory instrument.
Trump's approach has drawn sharp criticism even from those broadly sympathetic to the strategic goal. His scattershot protectionism — applying broad tariff increases without targeting China's specific bottlenecks — risks alienating partners in Europe and elsewhere that would be natural allies in a sustained campaign. Those partners are instead hedging: the EU-Mercosur deal, the South-east Asia-China deepening, and Carney's Beijing trip are each adaptations to a world in which alignment with the United States can no longer be assumed.