The sharp escalation in US-China trade tensions will lead to increased prices of electric vehicles (EVs), wind turbines, and semiconductors, warns Global Trade Research Initiative (GTRI) in its latest report.
The think tank’s analysis followed US President Donald Trump’s announcement of the imposition of an additional 100 per cent tariff on Chinese imports, effective November 1, 2025, which will take the overall tariff rate on Chinese goods to a massive 130 per cent, approximately.
Trump made the threat on October 10 through a post on Truth Social, marking a new low in trade relations between the world’s two largest economies ever since the original tariff war began in 2018. The latest escalation comes in response to new export controls by China on its rare earth elements, which are crucial for US defense, electric vehicles, and clean-energy industries.
“The impact will be felt quickly. Prices of EVs, wind turbines, and semiconductor parts are expected to rise, while the US will try to ‘friend-shore’ its mineral supply chains to Australia, Vietnam, and Canada. China, meanwhile, is likely to redirect supplies toward its non-Western partners to strengthen alternative industrial networks,” said the report by GTRI, which publishes analysis on international trade and economic issues.
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The report highlights America’s heavy dependence on China for electronics, textiles, footwear, white goods, and solar panels, thereby leaving it exposed to retaliation. While noting the strategic importance of rare earths to US industries, the GTRI also added that Washington may soon have little choice but to reach a new deal with Beijing since its knee-jerk reactions may not work against China’s more deliberate, controlled, and prepared diplomatic responses.
As prices surge once the new tariffs take effect, Trump could struggle to contain inflation and production costs and his ‘tough-on-China’ strategy could backfire, leading to US consumers getting hurt and his broader economic agenda receiving a backlash.
“As prices surge once the new tariffs take effect, President Trump could struggle to contain inflation and production costs,” the report said.
GTRI also cautioned India to be careful in its dealings with the US, since “no deal with the US is ever final”.
For instance, the much-publicised US-China “Phase One” trade deal of 2025, which capped US tariffs at 30 per cent and China’s at 10 per cent, has already been overtaken by the new 100 per cent duty order.
The think tank has suggested India to negotiate on equal terms with the US so as to ensure reciprocity and preservation of strategic autonomy.
Rather than relying on shifting US promises, it advises New Delhi to focus on building self-reliance in critical technologies and minerals to help insulate the economy from future trade shocks while allowing India to leverage its neutral position to strengthen ties with both Western and BRICS economies.
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