US President Donald Trump said on Tuesday that he is considering imposing a 10% tariff on imports from China, which could go into effect as early as February 1.
It was President Trump’s latest trade threat against China, the world’s second-largest economy after the United States and Washington’s biggest geopolitical rival. During the campaign that ultimately led to his reelection, Trump escalated the ongoing trade war by threatening to impose tariffs of up to 60% on Chinese goods.
But if the intent of the proposed tariffs was to hurt Chinese exports in order to advance U.S. interests in the trade relationship, President Trump’s threat was — at least for now — counterproductive. It seems so.
China’s overall exports, including to the United States, have increased in recent months.
So why is President Trump threatening China with tariffs? How are China’s exports continuing to increase? What will happen to trade friction in the future?
Why is President Trump threatening China with increased tariffs?
On Tuesday, President Trump claimed that China is behind the supply of fentanyl to America’s neighbors, and in turn, that China is responsible for the nation’s deadly addiction crisis.
A day earlier, he said he was considering imposing 25% tariffs on Mexico and Canada for allowing “huge numbers of people” and fentanyl into the United States. He also announced the creation of a “Foreign Revenue Service” that would “collect customs duties, customs duties, and all foreign revenue.”
As 2024 draws to a close, exports from China to U.S. companies increased, increasing by 4% from November 2023 to November 2024.
But more broadly, President Trump has also accused China of unfair trade practices. China, the world’s largest exporter, has a significant trade balance advantage with the United States. In the first 11 months of 2024, China’s exports to the United States totaled approximately $401 billion, and China imported approximately $131 billion of goods from the United States.
Did President Trump’s tariff threats bring about change?
That appears to be the case, just not in the way the United States wanted. As President Trump’s inauguration approaches and the threat of tariffs on Chinese imports grows, U.S. companies have increased their purchases of Chinese goods to stock up before import costs soar.
According to the Office of Economic Complexity (OEC), China’s exports to the United States in November 2024 were $47.3 billion, up from $43.8 billion in November 2023. This is an 8 percent increase.
Meanwhile, China’s imports from the United States decreased by 11.2% from $14 billion to $12.4 billion in November 2024 compared to November 2023. Simply put, the US trade deficit with China has widened amid President Trump’s threats.
The U.S. government data differs somewhat from the OEC data, but it shows the same trends. From July to November 2024, U.S. imports from China amounted to approximately $203 billion, an increase of 6.8% from $190 billion during the same five-month period in 2023.
China’s overall exports are also doing well. China’s total exports hit a record high last month, rising 10.7% year-on-year in December, exceeding analysts’ expectations. Total exports in 2024 will reach $3.58 trillion, an increase of 5.9% from 2023.
China’s trade surplus soared to a record $992 billion in 2024, up 21% from a year earlier, Customs said on Monday.
And there may be even more bad news for the United States.
“While this influx temporarily accelerated China’s trade surplus, the broader trade relationship is being undermined by U.S. policy,” Carlos López, an associate fellow in Africa planning at Chatham House, told Al Jazeera. .
“The continued expansion of tariffs and unilateral measures could further deepen the erosion of trust in the global trading system, and encourage China to diversify its partners and expand into the U.S. market,” said Lopez, whose fields of expertise include international trade and China. “This could further encourage people to reduce their dependence on people,” he said. Said.
“While the current surge may bring short-term benefits to both economies, it highlights the fragility of a system increasingly dominated by trade wars and unpredictability.”
What is President Trump’s tariff war?
Since taking office, President Trump has announced plans for tariffs on China, Canada and Mexico, and many other countries around the world are preparing for similar measures.
During his first term, he launched a tariff war against China, and by 2018, the United States and China were imposing tariffs on each other.
A truce in the U.S.-China tariff war was announced in January 2020, but after Joe Biden won the 2020 presidential election, despite criticizing President Trump’s policies during the campaign, he ultimately continued President Trump’s policies.
In May 2024, the Biden administration revised Section 301 of the Trade Act and imposed high tariffs of 25 to 100 percent on some Chinese imports. Electric vehicles and solar cells are also among the affected products.
Manoj Kewalramani, Indo-Pacific Research Program Chair and China Studies Fellow at the Indian Public Policy Center’s Takshashila Institute, said: “The Biden administration’s levy raises restrictions on trade and technology with China, and President Trump It will be difficult to withdraw it.” he told Al Jazeera.
In 2019, three years after Trump was elected president in 2016, China lost its position as the United States’ largest trading partner to Mexico. As of November 2024, the United States’ largest trading partner is Mexico, with total trade worth $69.1 billion. transactions for the month. Canada, total trade worth $61.8 billion. And China, with a total trade worth $50.5 billion.
Kewalramani said, “President Trump believes that tariffs are important not only from an economic perspective, but also from a negotiation perspective,” and there is a possibility that similar tariff negotiations will take place around January 2020. he added. However, he added that it may not happen immediately. he said.
“The timing of tariffs is often determined by political maneuvering and administrative procedures, and the lack of transparency in these decisions undermines the predictability of the trading system,” Lopez said.
“Unilateral actions by the United States, 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 , weakening confidence in an already strained rules-based global trading order.”
The tariffs are aimed at getting the U.S. out of a $1.9 trillion deficit. But Lopez said, “We need more than tariffs and protectionist measures to get out of the deficit.” Strategic investments in technology, infrastructure and workforce development are required. ”
What will happen to US-China relations during Trump 2.0?
The United States and China are the world’s largest economies. According to World Bank data, the United States’ gross domestic product (GDP) in 2023 was $27.36 trillion, compared to China’s $17.79 trillion.
It is impossible to predict what will happen regarding tariffs during Trump 2.0. “We’ll have to wait and see whether we reach a number close to 60%,” Kewalramani said.
Of the 26 executive orders President Trump signed on Inauguration Day, one would delay a ban on TikTok, the popular short video app owned by Chinese company ByteDance, by 75 days. However, according to Reuters, he threatened to impose tariffs on China if it did not approve a potential US deal with TikTok.
President Trump invited Chinese President Xi Jinping to the inauguration ceremony, and Vice President Han Zheng also attended. Kewalramani assumed that Trump and Xi would continue to engage as well, despite the Biden administration’s sweeping restrictions on China.
“China has already demonstrated resilience by diversifying its trade partnerships and doubling down on domestic innovation.To maintain export competitiveness, China has expanded its Belt and Road Initiative (BRI) and “We are likely to make significant investments in advanced areas,” Lopez said.
One Belt, One Road is a network of highways, ports, and railways that China is building. This global infrastructure aims to better connect Asia with Africa, Europe and Latin America.
“Importantly, China positions itself as a champion of multilateralism and would benefit from a unilateral approach from the US as it creates new opportunities to fill the void left by the US in global trade leadership. Instead of isolating China, its actions risk encouraging its further integration into alternative economic networks and weakening the very influence the United States seeks to maintain.
How will consumers be affected?
“We do expect tariffs to increase, but probably not by as much as 60%,” Kewalramani said, adding that higher tariffs would represent “a significant cost explosion for U.S. consumers.”
According to the Congressional Budget Office (CBO), a nonpartisan federal agency, President Trump’s tariffs will raise inflation and shrink the economy, but there are caveats.
CBO’s December report on the impact of the tariff hikes found that inflation would rise by 1 percentage point by 2026, resulting in an annual It is estimated that the average cost could be $1,560.