China’s Economic Struggles Heighten Risk of Conflict Amid Ongoing Tariff Dispute
Economic Tensions With China Echo Historical Path to Conflict
Throughout history, economic pressures have been a primary driver of conflict—and today’s growing tariff standoff with China could be no exception. President Donald Trump’s push for "reciprocal" trade measures is now more sharply focused on Beijing, just as the Chinese economy faces mounting financial stress.
This standoff raises a sobering question: Could this be a modern example of what Prussian general Carl von Clausewitz famously described as "war as the continuation of politics by other means"?
Former Treasury Secretary Scott Bessent recently accused Beijing of being a "bad actor," claiming the latest tariff hikes were prompted by "their insistence on escalation." Many experts agree that the U.S.–China trade relationship is deeply imbalanced, worsened by years of growing hostility that have transformed Beijing into a strategic rival.
While rising trade barriers don’t automatically lead to war, history offers cautionary lessons. Economic needs—particularly access to resources like oil and industrial minerals—have often sparked military conflict. Japan’s attack on the U.S. in 1941, driven largely by access to such resources, stands as a stark reminder.
Trump’s Tariff War with China Is Just One Front in a Broader Strategy to Protect U.S. Interests
Japan’s decision to industrialize in the late 19th century set it on a path toward imperial expansion. In 1931, driven by a need for raw materials to fuel its growing industries, Japan invaded Manchuria and soon established the puppet state of Manchukuo. By 1937, full-scale war had broken out with China.
As the conflict dragged on, Japan’s demand for resources only intensified. Seeking to sustain its war effort, Tokyo expanded its reach across Asia, occupying territories rich in oil, rubber, and minerals. In response, the United States imposed steep tariffs, sanctions, and embargoes, aiming to cut off Japan’s access to these critical supplies—moves that threatened to cripple its economy.
By early 1941, diplomatic negotiations between Tokyo and Washington had stalled. Faced with mounting economic pressure and few alternatives, Japan made a fateful choice: to go to war with the United States. Its strategy hinged on a surprise attack at Pearl Harbor, intended to neutralize the U.S. Pacific Fleet and secure free access to the natural resources of Southeast Asia and the Pacific.
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China’s Economic Turbulence and the Risk of Escalation
While modern China is not pre–World War II Japan, it stands as a clear example of how economic pressures can shape a nation’s geopolitical behavior. Today’s Beijing faces mounting financial challenges that could constrain its global ambitions and test the Communist Party’s grip on power.
President Xi Jinping is caught between difficult choices. He can accept a deteriorating economy—risking domestic unrest and instability—or attempt to offset lost Western markets by drawing U.S. trading partners closer to China. A more perilous option would be to resort to military action, using nationalism and external conflict to distract from internal troubles and potentially reboot economic momentum. Moves such as a forceful push toward Taiwan or territorial expansion in the region cannot be ruled out.
What is certain is that China’s economy slowed significantly in 2024. A prolonged property crisis, mounting local government debt, and persistent youth unemployment continue to erode confidence. Adding to this pressure are former President Trump’s proposed 145% tariffs, which could strip China of over $500 billion in annual revenue. The consequences could be severe: millions of lost jobs, further weakening of the yuan, and a spike in social unrest.
President Xi now faces the daunting question of how to replace or preserve access to the American market, which is central to China's export-driven economic model. Domestic consumer spending—already half of pre-pandemic levels—cannot absorb the surplus, and foreign investment is increasingly hesitant due to geopolitical uncertainty.
Trump’s tariffs have arrived at a moment of deep vulnerability for China’s leadership. Xi’s next move could be to pursue sweeping economic reforms or tighten his grip through strategic distraction. If he fails to stabilize the economy, rising discontent may begin to chip away at the regime’s control.
Still, Xi is a political survivor. He held onto power through the pandemic, even as millions of Chinese lost their livelihoods. That resilience makes it difficult to predict how Beijing will respond. There is an outside chance that Trump’s intensifying trade war could escalate into real hostilities—or that Xi, calculating carefully, will simply try to wait him out.
