Abstract
This paper examines the profound geoeconomic fracture triggered by the escalating US-China tariff regimes and the weaponization of global supply chains in the post-Trade War era. Tracing the evolution of US trade policy from the Trump 1.0 tariffs through the Biden "small yard, high fence" approach to the aggressive "total tariff war" of Trump 2.0—which culminated in cumulative effective rates of 145% in April 2025 before being partially rolled back to roughly 47.5% under the Geneva agreement of May 2025—the analysis highlights how bilateral confrontation has dismantled Bretton Woods norms of multilateralism, fragmented global trade and generated significant macroeconomic costs for both economies and third-party nations. The study evaluates China's robust industrial counter-strategies, including "Made in China 2025", the "dual circulation" model and the multi-phase Big Fund semiconductor initiative, which have materially advanced technological self-sufficiency. It then assesses the resulting financial market repercussions: heightened volatility in equity and bond markets, sovereign and corporate debt re-pricing, shifts in investor asset allocation towards safe-haven instruments and persistent systemic stress indicators. Further, the paper analyses the strategic weaponization of critical minerals, energy security risks (particularly around the Strait of Hormuz) and divergent sectoral performance, most notably China's dominance in New Energy Vehicles. Finally, it weighs the limits of de-risking versus outright decoupling and explores the emerging role of digital assets in financial stability. The analysis concludes that a multipolar world order demands a fundamental redefinition of financial strategy, one that systematically incorporates geopolitical risk premiums, prioritises resilience over pure efficiency and recognises China's deepening economic and technological hegemony.
