The ongoing tariff wars between the two most powerful states of the international system, i.e. the US and China, have multiple complex implications for the fight against poverty and environmental protection, to name just two. The trade and tariff-based conflicts create economic ripple effects that influence global poverty alleviation efforts and environmental policies. Increased consumer prices and greater economic burdens on low-income households in particular become harsher realities. Tariffs, such as the 25% on Canadian and Mexican goods, or up to 145% on certain Chinese products, raise the cost of imported goods, which gets passed on to consumers. China, leveraging its vast labour pool, revalued Yuan and export supporting policies since 1978, emerged as the manufacturing platform of the world, which in turn ensured that every single country in the world relies on it for cheap intermediate or finished products. To offset that reliance in particular and to Make America Great Again (MAGA), the second term of Donald Trump in the US sees extreme attempts to renegotiate the role the US has traditionally played, i.e. that of a stability provider of the international system, which creates economic dependencies of other States on itself.

While on paper, the plan looks great, fact is that till the goal of MAGA, through tariffs and trade wars, is accomplished, the ordinary consumer, even in the US is likely to undergo immense strains. According to a study by the International Monetary Fund, US consumers bore the brunt of tariffs during the 2018-2019 US-China trade war, with increased prices for essentials such as food, clothing, and basic electronics. As per estimates from The Tax Foundation, the 2025 tariffs amount to an average tax increase of $ 1,300 per US household, straining budgets for the poor. In the case of developing countries that are reliant on exports to the US such as Mexico, tariffs can slash up to 16% of Gross Domestic Product (GDP), reducing income and deepening poverty. For China, the US tariffs are expected to reduce China’s GDP by roughly 0.8- 2.4% in 2025. Over 2025- 2027, the cumulative reduction could reach 2.5% in high tariff scenarios. A reduction in Chinese GDP by 1-2% will cut tax revenue by around 440-660 billion yuan, straining fiscal resources for social programmes and by increasing reliance on debt. Poverty will increase, with 5-19 million people at risk of falling below the poverty line due to job losses, higher living costs and reduction in welfare spending.

The climate crisis, which affects the poorest of the poor much more than other segments of society has the potential to wreak greater havoc. Higher costs of green tech could delay renewable energy adoption, undermining environmental protection efforts. Tariffs induced economic slowdowns also reduce government and private resources for environmental initiatives. In the US, an estimated $ 911.8 billion loss from a global tariff war could strain budgets for climate programmes.

In developing countries, economic growth reduction due to reduced exports limits the funding for environmental protection, such as those of reforestation or pollution control. Also, the tariff war will delay China’s 2030 carbon peak and 2060 neutrality targets by one to two

years, particularly if Chinese fiscal priorities shift to traditional industries. China is the world’s largest coal user in any case, as it consumes more than half the world’s coal with its demands only increasing. China’s coastal provinces like Guangdong for example, facing export revenue losses may ramp up polluting industries, leading to further worsening of local air and water pollution. Textile production, for example, generates about 20% of China’s wastewater pollution. Pollution, thus could only worsen in the country.

As the established international order comes under severe strain owing to the US renegotiating its role, countries, unfortunately, will have to rely more on themselves to shield themselves from the impacts produced. The social stability in countries of the international system will be affected, and a retreat to self-reliance could well be only way forward.

This article is authored by Sriparna Pathak, professor, China Studies and International Relations, Jindal School of International Affairs, OP Jindal Global University, Sonipat.