Trump’s New Tariff War With China Begins to Backfire, as Chinese Suppliers Refuse to Lower Prices—Spiking U.S. Inflation Risks

In the wake of new prices of new prices on Chinese imports announced by President Donald Trump, American companies run to avoid raising price increases for consumers. But their efforts seem to hit a brick wall. Many press their Chinese suppliers to reduce prices in order to compensate for additional tariff costs.

The answer was largely the same: no.

“If you have already reduced your prices in the past for your American customers, you probably don’t have much space to do it again and again,” said Jonathan Chitayat, CEO of Genimex Group, a company that manages production abroad for American companies. “You can do it for an order or two, but the next time your customer will ask you for a price, you will work on reality that you must be a profitable business. You cannot continue to lose money.”

Chitayat’s company helps American companies make products such as kitchen utensils and electronics through factories in Asia, especially China. He said that navigation on Trump’s renewed prices has now become a regular part of the conversation of the supply chain. But the margins are so thin and the government’s support is so lacking that many factories simply have no room for negotiating.

“There is no subsidy that we know that the government in China gives manufacturers,” he said. “So they don’t do it for the most part – or have very few margins to give.”

The refusal of Chinese companies to move, now say analysts, signals a disturbing perspective for American consumers: inflation could return faster and more with force than expected.

Trump Ratchets Up Tariff Fight, China is back

The climbing of prices occurs while Trump, in a wave of posts and public appearances, said that the prices on China now total 145%. He also announced a temporary suspension of 90 days of new prices for more than 75 countries which had not responded with reprisal measures. This stay did not extend to China, which he accused of showing a “disrespect” for the world markets.

Writing on Truth Social, the American president said that the prices were “immediately” and necessary because “China took advantage of the American good will for too long”.

China has not taken the plunge lightly. His Ministry of Finance increased the existing 125% prices in retaliation, saying that American products had lost “market acceptance” in the Chinese economy. The agency also accused Washington of using trade policy as a frank tool to fuel domestic policy, calling the United States a “joke” on the world scene.

Consumers will pay the price, warn the experts

The consequences of this back and forth are already clear. Without margin in the supply chain to absorb costs, economists say that American consumers are then online.

“There was historically this pressure to understand who will eat the price, and I do not think there is a lot of room to continue now,” Willy C. Shih, professor at the Harvard Business School at Bi, told. “China is already hyper-competitive. Many products struck by prices – such as televisions, monitors and technological components – have never been made in the United States to start. There is no backup. “

Shih explained that if a weakening of the Chinese yuan could help compensate for part of the tariff burden, it will not be enough to protect consumers from higher prices.

“You can distribute parts of the price among all parts of the supply chain,” he said, “but these figures are so large now that they will have to be transmitted to consumers.”

Analysts claim that warning panels are already flashing in sectors depending on Chinese manufacturing, including electronics, clothing, car parts and household items. Prices that had only recently started stabilizing after the disturbances of the pandemic era could once again start to increase – this time supplied not by the bottlenecks of the offer but by political decisions.

China’s economic difficulties leave no room for maneuver

Meanwhile, the Chinese manufacturers themselves are in a precarious position. Internal demand in China has weakened, and the former real estate sector of the country for a long time, an important engine of its GDP, has collapsed, reduces local government revenues and limiting Beijing’s ability to provide support.

“Chinese manufacturing companies have faced a drop in margins in part due to the decline in domestic demand,” said Sara HSU, an associate professor of supply chain at the University of Tennessee in BI. “There is already a weakness in this sector of last year, and the new prices only add to this pressure.”

Andrew Necklier, principal researcher at the Mossavar-Rahmani center of Harvard Kennedy School, said the Beijing options were limited.

“XI [Jinping] Facing the pressure of unemployed workers, unhappy owners and small businesses. He may want to help exporters, but he has very little budgetary space to maneuver, “he said.

The opposite winds of inflation can undermine Trump’s economic message

For the United States, timing could not be worse. Inflation, although the drop in recent months, remains a fundamental concern for households, and any policy that increases the cost of living could quickly erode public support.

Lisa Suwen, the commercial consultant, warned that price increases could arrive on the market before the summer shopping season.

“What makes it dangerous is that these prices do not come after a trade war that is cooled-they come after a period when consumers are just recovering years of inflation,” she said. “If inflation suddenly comes back because of this, it could lead to rapid deterioration of purchasing power.”

She added that most large retailers have already started to discuss prices adjustments, especially on imported technology and home products.

“The Chinese will not lower prices, and the Americans do not eat the cost. This leaves only one option: priced hikes. ”

A familiar dead end with more issues

Trump’s trade policies have always put a political weight, especially when they are intended for China. But analysts say that this last series of prices is different – not only in the scope but also in its potential to destabilize fragile economic recovery efforts.

Even if Trump positions prices as a defense of American manufacturing, many argue that many targeted goods simply have no domestic substitute.

“These are not jobs that are coming back. These are price increases,” said Shih.

Unless the two sides are retreating, a scenario that seems unlikely, American consumers could soon pay the price of a trade war without a clear outing ramp.