A. Irawan J. Hartono, Ph.D, Specialist in International Political Economy, PACIS Unpar
The global economy has been facing uncertainty since early February 2025 when President Trump announced the imposition of reciprocal tariffs on foreign imports into the United States. China is one of the primary targets of the US in this trade war during Trump’s second presidential term. The following is the perspective of A. Irawan J. Hartono, an expert in International Political Economy at PACIS Unpar, as presented during the “Point of View” discussion on International Political Economy at the PACIS Corner on May 22, 2025.
The Importance of Placing the Tariff War in the Context of the US Strategy to Remain a Global Leader
First and foremost, we need to place this trade war in a broader context. In my opinion, although this trade war is being waged in the form of tariffs, it is actually part of a much larger scheme. What is that? Rivalry between major countries.
I refer to several important works, such as those by Organsky and Susan Strange. These international political economists explain that the dominance of these countries is determined by several factors. First is their supremacy in the military sphere, second in the economic sphere, third in the sphere of values or diplomacy, and fourth in the sphere of technology.
In this context, I view trade wars not merely as tariff wars or mere rivalry in the field of trade, but as a struggle by a major country, in this case the United States, which once occupied the highest position in the global power distribution, a position that was relatively secure, but which now feels threatened by the emergence of increasingly powerful challengers.
The recent intensification of tariff wars is not merely a trade competition but part of the United States’ strategy to remain a global leader.
Will the United States succeed in maintaining its dominance in the global economy? Specifically, will the US emerge victorious from its tariff war with China?
This is a very important question. There are projections from international economic analysts that China will become the strongest economy in the future.
Let me flashback a little to how China became what we see today.
We know that China in the past was an example of economic failure. However, since Deng Xiaoping led the country, MNCs from outside China entered and became the basis for their economic growth, especially in the field of production, which was then exported to various global markets with great success.
What Deng Xiaoping did or initiated was nothing short of a miracle. Why a miracle? Because China experienced two decades of economic growth averaging around 10%, something no other country has ever achieved.
China’s growth has come as a shock to the United States today. The United States views China’s progress as a result of China copying technologies from developed nations and thereby committing various copyright infringements. However, the United States cannot do anything about it due to China’s massive market expansion capabilities.
China’s further development occurred under the leadership of Xi Jinping. Xi Jinping has taken China even further in the global economy. While Deng Xiaoping merely opened China to foreign investment, which brought in capital and technology, which were then copied and developed by China.
Through the Belt and Road Initiative in 2015, Xi Jinping successfully brought Chinese technicians, experts, and companies to expand massively through various Belt and Road Initiative projects (including in Africa, Europe, Asia, Indonesia, and the Jakarta-Bandung High Speed Railway). We can see that China has expanded its influence, no longer looking inward and strengthening itself, but looking outward and strengthening itself.
I feel this is a nightmare scenario for the United States, as China is doing this on a massive scale. While there have been various criticisms of Chinese investments, such as the creation of debt traps and other issues—some of which may be valid—we can see that many countries have responded positively to Chinese investments. This positive response is evident in many African nations.
This is a positive development for China.
As China grows, the US faces significant challenges, such as the financial crisis of 2008. This crisis undermines the notion of the perfection of the US/liberal economy.
“As China grows, the US experiences economic weakness.”
So, economically speaking, on the one hand, the United States is experiencing a slowdown, but on the other hand, China is experiencing growth. This is a fact.
Donald Trump, both during his first term and now in his second term, has remained consistent in his perception of China as an enemy of the United States that could take its place at the top of global power.
Therefore, President Trump has launched various strategies, including raising tariffs on Chinese imports into the US. Initially, the tariffs ranged from 10-25 percent and were only targeted at China. However, the tariff policy was later extended to other countries such as the European Union, Mexico, and Indonesia, although China remains the primary target.
What President Trump is doing is an effort by a bleeding hegemon, which is experiencing weakness, but is still trying to raise its position by preventing its strongest rival, China, from advancing even faster.
“What President Trump is doing is an effort by a bleeding hegemon…”
Both the US and China will suffer damage from the tariff war
What will the outcome be? The outcome is still somewhat unclear, but we can see that both sides will suffer damage.
First, we can see that there are 33 or 50 companies in China that have left the country. The departure of these companies is an indication that the tariffs began to take effect during the first trade war.
At that time, we expected that some of the 30 or so companies would move to Indonesia, but that did not happen. Instead, 24 of them chose Vietnam.
Second, what damage did China suffer? We can see that China experienced several crises. One of the crises that occurred was the housing crisis, Evergrande and Sydney Gardens, which had a significant collateral effect in China itself.
Third, there was a weakening of the Chinese economy, including exports and economic growth.
However, it seems that if we look at recent developments, the aggressive tariffs imposed by Donald Trump have backfired on the US itself. The US has had to acknowledge that its economy is highly dependent on goods from China. The availability of essential goods in the US has begun to be disrupted, and the threat of a recession is growing stronger. China’s response to the high US tariffs has also weakened the US economy. For example, by imposing equally high tariffs on US exports to China (reducing US trade profits), refusing to purchase Boeing aircraft as one of the US’s flagship commodities (reducing US trade revenue), and selling off large quantities of US government bonds (eroding global market confidence in the US’s financial condition).
We can see that the threat of recession and inflation is already a reality.
Here, I see that, at least from today’s assessment, we can see that the damage is being felt more by the United States than by China.
What lies ahead?
Although it is still not entirely clear, it is certain that China will increasingly align itself with the economic position of the United States.
“That China will increasingly approach the economic position of the United States is something that may happen.”
There are efforts to weaken the US economy from China. For example, by selling bonds that could cause distress to the US economy. Then there is the rejection of Boeing, China’s rejection of Boeing products, China, Boeing United States, as well as the rejection of agricultural products from the United States.
China’s boldness in opposing US tariff policies (extreme tariff increases, refusal to purchase Boeing aircraft, refusal to purchase US agricultural products, and large-scale sales of US bonds), and the negative impact this has had on the US economy, demonstrate that US unilateral policies (trade wars) have not yielded significant results capable of weakening China. The U.S. and the world seem to need to prepare for the emergence of a “multi-polar global economy,” where multiple global economic power centers (including, of course, the U.S. and China) coexist alongside various rules and differing trends. It will require hard work from various parties (including Indonesia) to strengthen the global economy based on multilateralism (which has weakened due to the trade war), where consensus, not just economic power, plays a role.
May common sense prevail in these uncertain times!
Adelbertus Irawan J. Hartono, Ph.D., completed his undergraduate studies at Parahyangan Catholic University, his master’s program at the University of Leeds in the UK, and his doctoral program at the University of Groningen in the Netherlands. He teaches courses on International Political Economy and Government, Business, and Society in the International Relations program and the Master’s program in International Relations at Unpar.
