Trump "softens" on tariff reductions? The new chess game of global competition in 2025

Trump hints at dropping tariffs on China, with inflation, votes, and Supply Chain games hidden behind. China breaks the deadlock with technology, rare earths, and trade networks. Who will dominate the global chessboard in 2025?

From April 17 to 18, 2025, a statement from Trump stirred up global markets. According to reports from foreign media such as Bloomberg, Trump expressed at the White House his intention to drop tariffs on China, stating, “I don’t want tariffs to keep pushing prices up and hinder trade.” As soon as this remark was made, international oil prices soared by 3% in a single day, and stock markets in the Asia-Pacific region collectively rose, leading to an instant reversal in market sentiment. However, this seemingly “soft” stance is actually a triple game of inflation, ballots, and Supply Chain restructuring in the context of the U.S. election year. Meanwhile, China is quietly laying out its strategies in energy, technology, and diversified trade networks, responding steadily to this psychological tariff battle. This article will analyze the new chess game of the global economy in 2025 from four dimensions: the truth behind Trump’s “softening” stance, the calculations behind it, China’s strategies for breaking the deadlock, and future risks.

1. The Truth Behind Trump’s “Softening”: The Dual Dilemma of Inflation and Supply Chain

Trump’s statement this time is not a spur of the moment, but rather a concentrated reflection of internal and external pressures. In March 2025, the core CPI in the United States rose by 2.8% year-on-year, and used car prices surged by 18%. The 145% tariff imposed on China on April 10 further pushed up prices, increasing the average annual expenditure of American middle-class families by about $5,200. If tariffs continue to escalate, inflation may surpass the threshold for the Federal Reserve’s interest rate hikes, severely impacting Trump’s “Tax Reduction 2.0” plan and his prospects for re-election.

A deeper crisis comes from the Supply Chain. On April 11, the United States exempted tariffs on 20 categories of Chinese goods, including smartphones and chips, because 75% of the global chip packaging and testing capacity is concentrated in China, and the US F-35 fighter jet is highly dependent on Chinese rare earths. The Trump team gradually realized that forcibly “decoupling” would not only fail to weaken China but could instead cause the US technology industry to regress by a decade. Under the dual pressure of high inflation and the fragility of the Supply Chain, Trump had to adjust his strategy, using tariff reductions to gain political breathing space.

2. The Precise Calculation of Elections and Capital: The Behind-the-Scenes Manipulators of the Triple Game

2025 is the year of the U.S. presidential election, and Trump’s tariff stance is essentially a “three birds with one stone” political and economic maneuver, precisely leveraging votes and capital:

The political magic of swing states: Manufacturing states like Ohio have profited significantly from tariffs on China, with a 30% increase in profits for the steel industry. However, high tariffs have also led to rising prices for auto parts, resulting in layoffs of 12,000 workers at local auto plants. Trump’s phased “unbinding” of tariffs can create the illusion of manufacturing returning while also soothing unemployed voters to stabilize swing state votes.

The capital frenzy on Wall Street has allowed Apple to save $3.8 billion annually due to tariff exemption policies, while Intel’s stock price rose 7% in a single day. According to Goldman Sachs data, hedge funds are positioning themselves with “tariff options” for short-term rebounds and long-term strangulation strategies. If the policy fluctuates after 30 days, cross-border capital will complete a round of perfect arbitrage.

Inflation and the management of interest rate cut expectations. Lowering tariffs can temporarily suppress CPI, paving the way for the Federal Reserve’s interest rate cut in June. Interest rate futures show that the probability of a rate cut has risen from 41% to 67%, directly benefiting the U.S. stock earnings season. Trump uses this to stabilize market confidence, gaining points for the election campaign.

China’s Way to Break the Deadlock: Four Cards to Secure Victory

In the face of Trump’s psychological warfare on tariffs, China has calmly laid out its plans and strategic foresight, revealing four trump cards to firmly take the initiative:

Energy Dark Line: Global Breakthrough in RMB Settlement On April 18, the trading volume of Shanghai crude oil futures surged by 28%, with Middle Eastern countries accepting RMB settlement for crude oil contracts for the first time. This move effectively hedges against the impact of US tariffs on energy pricing power, consolidating China’s voice in the global energy market.

Rare Earth Nuclear Bomb: Precision Strike on the US Military Industry In early April, China initiated rare earth export controls, with each F-35 fighter jet requiring 417 kilograms of Chinese rare earths, while the Pentagon’s stockpile is only sufficient for 6 months. This move directly hits the lifeline of the US military industrial Supply Chain, forcing the US side to be more cautious at the negotiation table.

Technological Breakthrough: Hardcore Countermeasures of Independent Innovation. Huawei’s smart driving chip shipments exceed 2 million units, with market share in North America growing against the trend to 17%; SMIC collaborates with domestic companies to advance 2-nanometer technology research and gradually breaks the “chokehold” restrictions from the United States. The technological gap makes tariff measures gradually ineffective.

Supply Chain Reconstruction: The Firewall Between Southeast Asia and Central Europe. Companies like Xiyin and Temu are accelerating the transfer of production capacity to Vietnam and Mexico, with the Central Europe Railway’s operating volume exceeding 20,000 trains, and ASEAN’s trade volume increasing by 18%. The capacity of Chinese-funded auto factories in Mexico has grown by 340% in three years, while the occupancy rate of Chinese industrial parks in Haiphong, Vietnam, exceeds 90%. The “Second Supply Chain” in Southeast Asia has become a solid barrier for China against tariff shocks.

The three major variables in the eye of the storm: Potential flashpoints in the global turmoil.

While the current situation seems to be easing, three major variables could trigger new uncertainties in the future:

Black Swan in Agricultural Products: The century-old floods in the Midwest United States have caused soybean futures volatility to hit a record high. If Trump restarts tariffs to secure votes from agricultural states, global food prices may soar again, driving up inflation.

The digital currency undercurrent is intensifying. With the Bitcoin halving approaching, if the US uses tariffs to suppress the RMB, cryptocurrencies may become a new channel for capital flight, disrupting the global financial order.

The US-Europe game intensifies as Germany has initiated an anti-dumping investigation into US liquefied natural gas. If a full-blown tariff war erupts between the US and Europe, the global Supply Chain will face a “nuclear explosion level” impact, and the Asia-Pacific market is likely to be affected.

Conclusion: The breaker becomes the chess player.

Trump’s tariff “concession” is the opening whistle for the global capital game in 2025. The apparent compromise is, in fact, a precise calculation of inflation, votes, and the reconstruction of the Supply Chain. However, China has already built a strong countermeasure relying on energy, rare earths, technology, and a diversified trade network. In this smoke-free war, the big stick of unilateralism will ultimately be abandoned by history. Only countries that understand the undercurrents of capital and master core technologies can secure victory in the midst of chaos.

While the United States is still wielding the tariff lever, China has quietly completed its global layout. History has repeatedly proven: those who build walls ultimately become trapped by them, while those who break the deadlock become the players. In the global chessboard of 2025, China is confidently and wisely writing a new chapter.