Have Trump’s tariff threats helped China increase its exports? , donald trump news
United States President Donald Trump on Tuesday said he is considering imposing a 10 percent tariff on imports from China, which may come into effect from February 1.
It was Trump’s latest trade threat against China, the world’s second-largest economy after the US and Washington’s biggest geopolitical rival. During the campaign that ultimately led to his re-election, Trump threatened to impose tariffs of up to 60 percent on Chinese goods, further escalating the ongoing trade war.
Yet, if the proposed tariffs were intended to harm Chinese exports in order to further US interests in their trade relationship, Trump’s threats – at least so far – have had the opposite effect.
China’s total exports, including those to the US, have increased in recent months.
So why is Trump threatening China with tariffs, how are Chinese exports still growing, and what’s next in their trade feud?
Why is Trump threatening China with increased tariffs?
On Tuesday, Trump argued that China was behind the supply of fentanyl to US neighbors, which he said was responsible for the deadly addiction crisis in the country.
A day earlier, he had said he was considering imposing 25 percent tariffs on Mexico and Canada, accusing those countries of allowing “large numbers of people” and fentanyl into the US. He also announced the creation of an “External Revenue Service” that would “collect our tariffs, duties and all revenues coming from foreign sources”.
As 2024 approaches, Chinese exports to US companies increased, increasing by 4 percent between November 2023 and November 2024.
But more broadly, Trump has also accused China of unfair trade practices. China, the world’s largest exporter, has a huge advantage in the trade balance with the US. In the first 11 months of 2024, Chinese exports to the US totaled about $401 billion, while China imported goods from the US worth about $131 billion.
Have Trump’s tariff threats made any difference?
It appears – not at all what America would have wanted. As Trump’s inauguration approached, and the threat of tariffs on Chinese imports increased, US companies increased purchases of Chinese goods to stock up before import costs rise.
According to the Observatory of Economic Complexity (OEC), Chinese exports to the US were estimated at $47.3 billion in November 2024, up from $43.8 billion in November 2023. That means an increase of 8 percent.
Meanwhile, sugar imports from the US declined by 11.2 percent to $12.4 billion from $14 billion in November 2024 compared to November 2023. Simply put, America’s trade deficit with China increased amid Trump’s threats.
Although the US government data differs somewhat from the OEC data, it points to the same trend. Between July and November 2024, US imports from China reached nearly $203 billion, up 6.8 percent from $190 billion in the same five months in 2023.
China’s total exports have also increased. Last month, China’s total exports hit a record high, up 10.7 percent in December from a year earlier, better than analysts’ estimates. Total exports to reach $3.58 trillion in 2024, an increase of 5.9 percent from 2023.
China’s trade surplus is set to swell to a record-breaking $992 billion in 2024, representing a 21 percent increase from the previous year, customs reported on Monday.
And there may be more bad news for America.
“Although this influx has temporarily boosted China’s trade surplus, broader trade relations have weakened due to US policies,” Carlos Lopes, Chatham House associate fellow in the Africa programme, told Al Jazeera.
Lopes, whose areas of expertise include international trade and China, said, “Tariff increases and the continuation of unilateral measures could deepen the erosion of confidence in the global trading system, forcing China to diversify its partners and tap the US market.” Can be motivated to reduce dependence on. Said.
“The current surge may provide short-term benefits for both economies, but it highlights the fragility of a system dominated by trade wars and unpredictability.”
What is Trump’s tariff war?
Trump has announced plans for tariffs on China, Canada and Mexico since taking office, but many other countries around the world are bracing for similar measures.
He initially started a tariff war on China during his first term and by 2018, the US and China were imposing tariffs on each other.
While a tariff war between the US and China was declared in January 2020, Joe Biden ultimately continued Trump’s policies after winning the presidential election in 2020 – despite his criticism of them during his election campaign.
In May 2024, the Biden administration reviewed Section 301 of the Trade Act and imposed higher tariff rates of 25 to 100 percent on some Chinese imports. Affected products included electric vehicles and solar cells.
“The Biden administration has imposed restrictions on trade and technology with China that will be difficult for Trump to roll back,” said Manoj Kewalramani, chair of the Indo-Pacific Research Program and China Studies Fellow at the Takshashila Institution, an Indian public policy center. , told Al Jazeera.
China lost its position as the US’s top trading partner with Mexico in 2019, three years after Trump became president in 2016. As of November 2024, the US’s top trading partner was Mexico, with a total value of $69.1 billion. trade that month; Canada, with total trade of $61.8 billion; and China, with total trade of $50.5 billion.
“Trump views tariffs as important not only from an economic perspective, but also from a negotiating perspective,” Kewalramani said. Tariff talks could take place around January 2020, he said. But they may not happen immediately. , He said.
“The timing of tariffs is often subject to political manipulation and administrative processes, and the lack of transparency in these decisions undermines the predictability of the trading system,” Lopes said.
“Unilateral US actions, without consultation with trading partners or adherence to multilateral norms, create uncertainty for businesses and investors. This unpredictability not only disrupts supply chains but also undermines confidence in the rules-based global trading system, which is already under pressure.
The tariffs are aimed at helping the US overcome its $1.9 trillion deficit. However, Lopes said, “Getting out of the deficit requires more than tariffs or protectionist measures; This demands strategic investments in technology, infrastructure and workforce development.
How will US-China relations look during Trump 2.0?
America and China are the largest economies in the world. According to World Bank data, the US’s gross domestic product (GDP) by 2023 was $27.36 trillion, while China’s was $17.79 trillion.
What will happen in terms of tariffs during Trump 2.0 is unpredictable. “We will have to wait and see if we reach a figure close to 60 percent,” Kewalramani said.
One of the 26 executive orders Trump signed on his Inauguration Day has delayed by 75 days the ban on popular short-video app TikTok, which is owned by Chinese company ByteDance. However, according to Reuters news agency, he has threatened to impose tariffs on China if it does not approve a potential US deal with TikTok.
Trump invited Chinese President Xi Jinping to his inauguration ceremony, which was attended by his deputy Han Zheng. Kewalramani said that despite all the sanctions imposed on China by the Biden administration, Trump and Xi will continue to talk like Biden and Xi.
“China has already demonstrated resilience by diversifying trade partnerships and doubling down on domestic innovation. It will likely expand its Belt and Road Initiative (BRI) and invest heavily in advanced sectors such as green energy and technology to maintain its export competitiveness,” Lopes said.
The BRI is a network of highways, ports and railways that China is building. This global infrastructure is set to better connect Asia to Africa, Europe and Latin America.
“Importantly, China will benefit from the US’s unilateral approach, as it positions itself as a defender of multilateralism, which will create new opportunities to fill the void left by the US in global trade leadership. Rather than isolating China, US actions risk furthering its integration into alternative economic networks, thereby undermining the advantage the US maintains.
How will consumers be affected?
“I expect a tariff increase, but probably not as big as 60 percent,” Kewalramani said. He said higher tariffs would cause a “significant cost explosion for American consumers.”
According to the Congressional Budget Office (CBO), a nonpartisan federal agency, Trump’s tariff policy will fuel inflation and shrink the economy, but there are some caveats.
A CBO report in December on the impact of the tariff increases projected a 1 percentage point increase in inflation by 2026, costing American households $500,000 per year, according to assessments by The Budget Lab, a non-partisan policy research center at Yale. An average loss of $1,560 could occur.
