China halts all liquified natural gas purchases from the United States.
Two days ago China stopped buying US Oil.
The U.S. economy faces mounting strain as China’s abrupt halt of liquefied natural gas (LNG) and near-total cessation of oil imports collides with structural vulnerabilities, escalating trade hostilities, and domestic instability. This convergence exaggerates recession risks, weaken the dollar’s global standing, and expose critical supply chain frailties.
Energy Trade Collapse and Tariff Escalation
China’s LNG imports from the U.S. have ceased for over 10 weeks, with the last shipment arriving in February before Beijing imposed a 49% tariff1. Concurrently, U.S. oil exports to China plummeted 90% since 2023, displaced by record Canadian crude shipments via the Trans Mountain Pipeline expansion. These moves mirror tactics from the 2018-2020 trade war but now occur alongside broader retaliatory measures: China has blocked 90% of U.S. beef exports, restricted Hollywood films, and dismissed U.S. tariffs as a “numbers game”. The Trump administration’s reciprocal tariffs—some exceeding 200%—have backfired, with economists forecasting a 0.9% GDP contraction and 2.3% inflation spike in 2025.
Debt and Dollar Vulnerabilities
The U.S. debt crisis looms larger as Treasury yields surge, with 10-year notes hitting 4.59% amid a sell-off partly driven by China divesting $760 billion in holdings.
Interest payments are projected to exceed $1 trillion in 2026, outpacing defense and Medicare spending. Concurrent de-dollarization efforts have accelerated, with the dollar index falling 6% year-to-date as nations diversify reserves.
While no currency (except gold) yet rivals the dollar, its share in global reserves will continue to decline sharply if trade conflicts persist
Structural Weaknesses: Workforce and Manufacturing
The U.S. remains ill-equipped to reshore production despite tariffs. A dire manufacturing skills gap persists, with 43% of firms restructuring supply chains away from China but struggling to find domestic workers trained in automation and AI.
Only 80% of U.S. companies in China report profitability, yet reliance on Chinese pharmaceuticals remains acute: 90% of antibiotic ingredients and 75% of essential medicines are imported. This dependency leaves hospitals vulnerable if China restricts medical exports—a tactic previously deployed during diplomatic spats.
Cascading Domestic Crises
Commercial Real Estate: A $534 billion “maturity wall” threatens office and retail properties in 2025, with distress sales likely as refinancing costs soar.
Tech Sector: Over 45,000 tech workers were laid off in 2025 as companies like Amazon (-27% YTD) pivot to AI automation amid sluggish consumer demand.
Consumer Impact: Tariffs have already pushed retail prices up 33% for apparel and 4.5% for food, squeezing households and reducing discretionary spending.
Strategic Implications
The interplay of these factors creates a self-reinforcing downturn. Rising Treasury yields increase federal borrowing costs, limiting stimulus options. Workforce shortages prevent tariff-driven manufacturing revival, while supply chain disruptions inflate prices. As China redirects energy purchases to Russia and Canada, U.S. LNG projects face delays, eroding a key geopolitical lever. With recession probability at 45% and global trade volumes contracting, the tariff war’s costs increasingly outweigh its perceived benefits.
This multipronged crisis underscores the fragility of an economy grappling with decades of offshoring, underinvestment in vocational training, and reliance on debt-fueled growth. Without strategic coordination between policymakers, educators, and industries, the U.S. risks entrenching stagnation while accelerating the dollar’s decline as the anchor of global commerce.