Olga Ponomaryova: relations between China and the US can completely collapse with 245% tariffs

"In such conditions, trade ceases due to the absolute lack of its economic feasibility for market participants. Also in this case, the justification for increased tariffs from the point of view of fiscal policy and replenishment of the federal budget is lost, since the imports subject to tariffs will fall to zero values, as well as customs duties. A further increase in tariffs by the United States is a demonstration of its commitment to the chosen course of breaking trade relations with China as they were by the beginning of Trump’s second presidential term," Olga Ponomaryova explained.

She also noted that given Trump’s tariff policy, an additional 100 percentage point increase is possible, although it doesn’t make much sense. "In fact, as early as April, Trump brought tariff rates on Chinese imports into the prohibitive zone. An additional rate of 54% from the beginning of 2025 was added to the non-zero tariffs of the most-favored-nation regime, and for certain goods and to the remaining increased rates of the first stage of the trade war," the expert explained.

She also emphasized that much will depend on China’s response, especially with regard to supplies of rare earth metals, which are important to US companies. "The position and pressure from American companies will determine how long this tariff confrontation will last. It is quite difficult to project here, the key issue now is the uncertainty about the US trade policy. It cannot be ruled out that tomorrow Trump will introduce new exceptions, new pauses, and at the same time restrictions in trade policy of another kind," Olga Ponomaryova said.

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