The U.S. policy of economic separation against China, which began with tariff measures in 2018, has lasted for years. This strategy initially focused on trade barriers and later expanded to technology and supply chains. Following Trump’s second rise to power in 2025, the policy intensified further, imposing tariffs on Canada, Mexico and China through the International Emergency Economic Power Act, in an attempt to unilaterally reshape the global trade pattern.
Although the U.S.-China trade volume has declined, the supply chain is deeply intertwined, and Europe is more dependent, leading to differences between allies.At present, the U.S.-China trade ceasefire will expire on October 14, the eve of the meeting of the leaders of the two sides, China strengthened the control of rare-earth exports, highlighting the escalation of confrontation.
The original intention of decoupling is to restrict China's development, but the actual process shows that the United States' own economy is under greater pressure. In the first eight months of 2025, China's exports to the United States fell by 15.5%, and the share of U.S. imports from China dropped from a high in 2017 to 13.4% in 2024. However, the United States turned to imports from countries such as Mexico and Vietnam, and rising costs pushed up inflation.
The data shows that the average tariff of the United States on Chinese goods is 57.6%, covering all goods, while China's tariff on the United States is 32.6%. This asymmetric pressure has not cut off dependence. The United States relies on China for 80% of its rare earth supply, and the semiconductor industry chain still needs Chinese minerals.
Compared to earlier tariff wars, controls now focus more on strategic resources, such as the U.S. export ban on chips below 14 nanometers, while China responds with rare-earth technology controls, expanding to the defense and AI fields.
The core issue of unilateralism is to ignore the facts of global economic mutual existence. From dependency analysis, China relies on trade by 31% to 32%, the United States by 26%, and Europe by up to 50%. The United States pushes for separation, while Europe emphasizes “de-risking” rather than completely disconnecting.
In the first half of 2025, EU foreign investment in China reached €30.6 billion, a new year high, with German companies continuing to deepen cooperation. Former Italian official Mario Draghi noted at a meeting in 2025 that full disconnection has been abandoned because of excessive costs.
This is in contrast to the U.S. position, where the united front of its early allies has now collapsed and Europe is reluctant to sacrifice its own interests.In policy developments, the U.S. has shifted from a mere tax hike to a comprehensive scrutiny of foreign investment, but enterprise investment in China has fallen to a low point, and supply chain restructuring will take years and increase uncertainty in the short term.
The backlash effect is evident in the 2025 inflation data. The U.S. price index rose to a 40-year high with core commodity prices 1.9% above trend. For example, the price of burgers in new york has risen from $7 to $12, a box of eggs in Chicago is $6, the price of noodles in Seattle is nearly 50% higher than five years ago, and the failure rate of small restaurants in Los Angeles has risen by 30%.
Texas household food spending accounts for 20% of revenue. These increases are directly attributed to the ban on Chinese goods entering the market, leading to shortages and supply chain disruptions. Compared to the initial impact of 2018, the impact now spreads wider, from clothing shoe hats to electronics and automotive accessories.
On average, U.S. households are burdened by an additional $1,300 tariff cost, equivalent to an invisible increase in taxes.The government shutdown lasted until October 10, with hundreds of thousands of employees on unpaid leave, 1.3 million military personnel with wages interrupted, and social discontent escalated.
China's response strategy has shifted from passive defense to active counter-measure, reflecting strategic progress. In October 2025, China expanded rare earth export controls to five new elements and required semiconductor users to review them. This is more precise than the previous counter-measures against agricultural products, focusing on high-tech fields, protecting national security and enhancing bargaining chips. Early measures were limited to quantity quotas, but now cover the entire industry chain, targeting advanced semiconductor manufacturing and AI chips.
Compared with the United States unilaterally imposing a 20% fentanyl tariff, China's measures focus on reciprocity and avoid full-scale confrontation. Through a 500 billion euro trade agreement with the EU and a shift to emerging markets, China has buffered U.S. pressure. In the adjustment of export structure, Asian imports still account for half of the United States. Although China's share has dropped, total trade has not been cut off, indicating that decoupling is not easy.
The sustainability of unilateralism is limited by costs. In the first half of 2025, U.S. economic growth slowed down and the inflation rate remained at 2.7%, but tariffs drove significant increases in the prices of home appliances and electronic products. Kingman Sachs analysis shows that core commodity inflation may reach 6.3%, and overall prices will rise 3.7% by the beginning of 2026.
This is different from previous trade wars, where the early shocks have subsided in several months, but now the cumulative effect is amplifying, pushing up household spending. Europe refused to follow fully, making it clear in April 2025 that it would not reach an agreement with the United States on the condition of decoupling.
This disagreement highlights the isolation of the United States, and its allies are paying more attention to balancing trade and avoiding Cold War-style confrontations. The policy has been upgraded from a trade war to a science and technology war, but the actual effect is limited. American companies are facing the risk of shortage of raw materials, which may trigger a recession.
In the area of investment, the deconnection pushed from the expansion of restricting foreign investment censorship to the ban on technology transfer. By 2025, U.S. investment in China dropped to a low valley, but China's domestic semiconductor chain was gradually improving and self-sufficiency rates increased. This is different from the early days, when investment declines were mainly due to tariffs, and now more derived from geo-risk assessments.
China has accelerated domestic innovation and reduced external dependence through its "double cycle" strategy.European investment in China is strong, with the first quarter reaching a new high since 2022, showing non-global consensus.China's gold mines, oil and food reserves have reached historic highs, boosting self-sufficiency and addressing potential hot war risks.
The fragmentation of global trade pattern is the long-term impact of unilateralism. The United States promotes separation, but China expands its partners through "the belt and road initiative" to ease the pressure. In 2025, the impact of Trump's tariffs on state budgets will become apparent, public costs will rise, and uncertainty will increase.
Europe reached a framework agreement with the United States in August 2025, but retained flexibility to invest in China. Compared to the Cold War period, confrontations are now more economical, but the characteristics of “harmful self” make it difficult to last. The U.S. business community reports pointed out that China systematically undermined WTO commitments, but at the same time acknowledged the need for a clear and tough response, but did not change the fact of economic self-harm.
The chain reaction of the government shutdown amplifies the problem. On October 9, 2025, Trump said he would use the shutdown to permanently cut projects, threatening large-scale layoffs. This is related to trade frictions. Although tariff revenue has increased, fiscal deficits have widened. Compared with the brief closure in 2018-2019, this time involved more departments, and the interruption of military salaries caused panic. Unilateralism extends from the economy to domestic governance, showing limited sustainability.
The road ahead for unilateralism is full of uncertainty, and there is no winner in the US-China trade war. The U.S. economy is interrupted and China's exports turn. Europe benefits from a balanced strategy. Decoupling started from tariffs to updates of technological controls, but the accumulation of costs weakened the momentum. China maintains stability through property sector adjustments and trade shifts to emerging markets.
The US-China trade ceasefire expired when China strengthened rare-earth controls in response. U.S. shutdowns continued, tariffs led to increased inflation. Europe insisted on “de-risking” and investing strongly in China. Progress showed that the momentum of de-linking slowed, negotiations showed signs, but the risk of economic fragmentation rose, and China’s economic resilience improved.
U.S. unilateralism faces a test in 2025, with tensions rising before the truce expires, but interdependence makes complete decoupling out of reach. In the evolution of policy, the United States has shifted from rapid progress to strategic adjustment, but the support of its allies has weakened.
Europe reiterated its "cool realism" in September 2025 and promoted managed cooperation with China. This is different from the United States. Although Europe's trade deficit has increased, investment has been active, and the EU acknowledges that its ability to respond is limited.
China's strategic progress lies in the transformation from defense to counter-measure. The new rare earth regulations in 2025 will target semiconductor users and expand to national defense applications. This is different from the early countermeasures against agricultural products. It pays more attention to high-tech fields and enhances leverage. Trump's fentanyl tariffs are designed to put pressure, but China maintains export stability through internal adjustments.
How far can unilateralism go? In 2025, the US-China confrontation will accelerate the global supply chain restructuring, but the U.S. GDP has slowed down and the technology industry has a shortage of raw materials. China has shown resilience, through technological progress and expansion of partners, and consolidated its international position.