The barrage of tariffs unleashed by the US last week rattled global markets. The new tariffs were not unlike an artillery barrage which pounds the ‘enemy’ position into submission before the infantry moves in for the kill. Only in this case, the people moving in to mop up will be suave negotiators with fancy briefcases.
While some countries rightfully adopted a wait-and-watch attitude, China announced retaliatory tariffs, prompting another round of impositions by the US, with the overall total going up to 104 per cent. On 9 April, the US announced a 90-day pause on ‘Liberation Day’ tariffs for all countries except China.
With Beijing showing no signs of buckling under the tariff threat, will this trade war be confined to the negotiating table, or are there chances of it escalating? Will hostile acts be limited to the non-kinetic domain, including information warfare and cyber attacks, or will they spill over to the kinetic domain, with actual missile barrages? Only time will tell.
A Thucydides Trap
While trade wars have often escalated tensions between countries, these are usually diplomatic devices rather than direct pathways to military conflict. However, several factors could heighten the risk of conflict if the trade rivalry intensifies. Notably, domestic economic travails often feed into nationalistic bombast as countries become more defensive or aggressive about their interests. Trade disputes may potentially escalate into geopolitical tensions, which could lead to territorial or military confrontations. This is particularly relevant if issues such as trade imbalances, market access, strategic resources—especially rare earth metals, on which China has announced a blanket export ban—and technology become points of contention.
The trade war between the US and China is also deeply connected to broader geopolitical competition. The US views China’s rise as a strategic challenge to its global dominance. China’s pursuit of technological and economic power, especially through programmes like the Belt and Road Initiative (BRI), complicates this. The US is concerned that China’s economic rise could translate into military power, while China sees the US as trying to contain its growth—a typical Thucydides Trap.
A trade war between the US and China may lead them to bolster their military presence to protect economic interests or territorial claims. Military tensions in the South China Sea and around Taiwan are already areas where economic and strategic interests clash and overlap. While a tariff war by itself is unlikely to lead to a shooting war, the economic competition can set the stage for these proxy conflicts, which only need a trigger to escalate. When a rising power like China threatens to displace an established power like the US, the resultant stresses, as articulated by American political scientist Graham T Allison, make a violent clash mostly inevitable. What does history have to say?
Also read: Trump’s economic coercion to secure US hegemony feels like it’s 1940s all over again
Resonance from history
There are certain similarities between the current US-China stand-off and the situation that led to war between the US and Japan. In the decades leading up to World War 2, Japan’s imperial ambitions in Asia clashed with US interests in the region. Japan’s aggressive expansion into Southeast Asia, alongside a growing desire for resources such as oil, rubber, and minerals, led to rising tensions with the US. In response, the US imposed trade restrictions, including oil and steel embargoes, in an effort to curb Japan’s expansionist ambitions.
Feeling threatened by the US sanctions and restrictive trade policies, Japan sought to expand its territorial holdings in the Indo-Pacific to secure access to resources. This ultimately led to its pre-emptive attack on Pearl Harbor in December 1941.
Similar to Japan’s imperial ambitions, China’s growing economic and military power is being seen as a direct challenge to US global influence. Beijing’s push into technological leadership, its growing military presence in the South China Sea, and its territorial ambitions, particularly over Taiwan, resonate with Japan’s expansionist goals in the pre-World War 2 era.
The emerging US-China trade war revolves around issues of technology transfer, intellectual property, and market access—issues similar to the economic sanctions placed on Japan targeting strategic resources and technology. Just as Japan saw the US embargo as a direct threat to its expansion, China views US policies that limit its access to advanced technology and markets as strategic hurdles in its long-term plan of global dominance. Like Japan’s military incursions into Southeast Asia, China’s increasing assertiveness in the South China Sea has become a major area of tension with the US and its Quad allies.
A naval exercise featuring live-fire drills was held by the PLA Navy in February 2025 in the Tasman Sea, which separates Australia and New Zealand. This was described as “unusual and provocative”. While these provocations have not yet led to fighting, there are inherent risks of such incidents escalating into broader encounters, especially if the US views them as challenges to its regional allies and interests.
What lies ahead? Do US concessions on tariffs hold the key, since historically, economic warfare has preceded most modern-day conflicts? As of now, with the hardline stance taken by both countries, trade concessions could only embolden Beijing further. China’s rise has been largely driven by its long-term economic strategy, which aims to assert dominance in key sectors. In case the US concedes to China by lifting tariffs or offering preferential market access, it is all the more likely that China will interpret this as weakness. It could even encourage it to take a more aggressive stance over Taiwan, technology, and flexing its military muscle, as it did in the Tasman Sea. It remains to be seen who blinks first, lest the two countries be inexorably drawn into a conflict which neither wants.
General Manoj Mukund Naravane PVSM AVSM SM VSM is a retired Indian Army General who served as the 28th Chief of the Army Staff. Views are personal.
(Edited by Prasanna Bachchhav)
May not. America accounts for 13% of global trade. It has antagonised almost the entire residual 87%, agnostic to friends and adversaries. They will find ways to work together. Expect the EU to discover that it can co exist peacefully, do good business with China, as it has in the past. It takes a real genius to destroy the relationship with Canada.