INTRODUCTION: The “Coward’s Game” of Modern Economic Warfare
On April 9, 2024, the world witnessed an unprecedented tariff exchange. The U.S. government announced 104% tariffs on Chinese goods, and China reciprocated with retaliatory tariffs of over 100%. The scale of this economic confrontation far exceeded the tariff war triggered by President Hoover in 1930 (when the average tariff rate was only 20%) and pushed the global economy into uncharted territory. This is not just a contest of economic strength, but a game of chicken – whoever retreats first loses the initiative.
I. Historical Comparison: From Hoover to Trump
1. Lessons from the Great Depression of 1930
The 20% tariffs implemented by the Hoover administration led to a 65% plunge in global trade, indirectly triggering the global economic crisis. Nearly a century later, the Trump administration’s proposed 104% tariff rate directly quintuples the intensity of economic confrontation and completely breaks through the realm of conventional economic warfare.
2. Specificity of modern tariff wars
China has established a global supply chain network (known in the industry as the “bathing crab” system) seven years in advance, enabling it to quickly adjust the export path of commodities. This resilient defense system gives China a unique advantage in a tariff war.
II. Dramatic Turnaround: 24 Hours of Policy Changes
1. Lightning Policy Reversal
The U.S. suddenly changed its tune less than 24 hours after announcing 104% tariffs:
- Global tariffs uniformly lowered to 10% (except for China and Europe)
- Tariffs on China boosted to 125%
- Suspension of Export Restrictions on Nvidia’s AI Chips
2. Policy Domino Effect
Vietnam, Israel, and other countries that had voluntarily zeroed out their tariffs were suddenly pardoned, and China’s hardcore counterattacks unexpectedly became a “tariff umbrella” for small and medium-sized countries around the world. This geopolitical chain reaction has led to serious damage to the credibility of the United States.
III. China’s Strategic Response
1. Resilient Defense System
The “Bathing Crab” network covers 20+ countries such as Vietnam (46% tariff amnesty), Cambodia (49% tariff amnesty), etc., and can “reroute” goods within 72 hours. For example:
- 3% increase in re-export cost of electromechanical products through Vietnam
- 5% increase in re-export cost of textiles through Cambodia
2. Precise Countermeasures
- Simultaneous tariff hikes to demonstrate tough stance
- Retaining room for negotiation (“Talk, the door is wide open; fight, we’ll go all the way”)
- Symbolic countermeasures in the field of culture (reducing imports of U.S. movies)
IV. Trump Administration’s Decision-Making Dilemmas
1. Policy The Economic Cost of Swing
U.S. Dow Jones after policy announcement:
| Timing | Index Volatility | Market Capitalization Evaporation |
|---|---|---|
| April 9, 10:00 | -7.2% | $2.8 trillion |
| After Policy Reversal | +9.5% | $3.1 trillion |
| Final Close | -4.1% | 1.7 trillion |
2. Triple whammy of strategic blunders
- Angering both Chinese and European economies
- Breaking faith with countries on their knees (Japan and South Korea failed to deliver on their zero-tariff promises)
- Allowing domestic businesses to inflate prices ($4 milk tea sells for $26.99 in the U.S.)
V. Resilience test for the global supply chain
1. Limit of pressure on entrepot trade
Penetration capacity of Chinese commodities through the “bathing crab” channel:
- Electronics products: -7.2% | 2.8 trillion | – After the policy reversal Penetration capacity of Chinese goods through “bathing crab” channel:
- Electronics: switch of origin in 7 days
- Machinery and equipment: component restructuring in 15 days
- Textiles: 72 hours cross-border transshipment
2. Hedge strategies of multinational enterprises
Apple, Tesla and other US companies accelerate localization in China:
- Increase production capacity of Shanghai’s super-factory to 95%
- Increase inventory of key components to 6 months’ usage
- Set up a parallel supply chain system (dual paths in China/Southeast Asia)
VI. Underlying Logic of the Economic Game
1. Application of “Payback for Payback” Strategy
- Round 1: Showing Goodwill (China retains room to fight back with 25% tariffs)
- Round 2: Precise Countermeasures (Simultaneous Tariff Increases)
- Round 3: Reserving for Wonkiness (Holding off on the Chip Ban)
2. An Arms Race in the Speed of Decision-Making
- U.S. Policy Cycle: 24 hours on average
- China’s Speed of Response: 12 hours of pre-planning
- Market reaction time: <30 minutes (87% of high-frequency trading in U.S. stocks)
VII. Formation of a New Global Economic Order
1. Strategic Awakening of Small and Medium-sized Countries
- Monitoring of Internet Public Opinion in 154 Countries:
- 78% of netizens recognize China’s role as a “flag-bearer”
- 92% think the U.S. credit rating should be downgraded
2. The Emergence of a New Economic Union
- BRICS trade monolith:
- BRICS trade surges by $12bn in a single day
- ASEAN urgently launches currency swap deal ($240bn in size)
- China-Europe liner cargo volume up 37% in a single week
Conclusion: Certainty in an Age of Uncertainty
This tariff game exposes the essential character of modern economic warfare:
- Winning or losing depends on supply chain resilience rather than on tax rate numbers
- Policy credentials have become a core national competency
- The global economic landscape is undergoing the most profound restructuring since World War II, and China is writing new rules in the midst of this change.
