Background introduction

In the process of deepening global economic integration, trade policy has always been an important lever for countries to regulate economic relations and safeguard their own interests. During the Trump administration, with ‘America First’ as the core orientation, the U.S. trade policy underwent significant adjustments, and its tariff policy became a focus of international economic attention. Since officially taking office as President of the United States in 2017, Trump swiftly initiated a series of tariff adjustment actions, imposing tariffs on imported solar panels and large residential washing machines, followed by targeting imported steel and aluminum. Especially in U.S.-China trade relations, on March 22, 2018, Trump signed a presidential memorandum announcing a significant increase in tariffs on goods imported from China, restricting Chinese companies’ investments and acquisitions in the U.S., officially ushering in the curtain of U.S.-China trade friction. In his second term, after being inaugurated on January 20, 2025, Trump continued and escalated tariff policies, signing an executive order on February 1 imposing a 25% tariff on imported goods from Canada and Mexico, and a 10% tariff on imported goods from China, followed by frequent aggressive measures, including announcing the imposition of ‘reciprocal tariffs’.

On April 2, 2025, local time, Trump signed an executive order at the White House concerning so-called ‘reciprocal tariffs,’ which had a significant impact, instantly igniting global economic public opinion. According to the executive order, the United States imposed a 10% ‘minimum benchmark tariff’ on all trading partners, effective April 5. At the same time, different and higher ‘reciprocal tariffs’ were imposed on countries and regions with the largest trade deficits with the United States, effective April 9. China was subjected to a 34% ‘reciprocal tariff.’ Additionally, Trump signed an order to cancel tariff exemptions for products from China valued at $800 or less. This series of radical tariff adjustments far exceeded market expectations, causing an unprecedented impact on the global trade order and once again plunging the U.S.-China trade relationship into the heart of a tense storm.

Image Credits:https://www.bbc.com/zhongwen/articles/c4g2z8vlr2yo/simp

Analysis of Trump’s Tariff Motives

(1) Attempt to Rebalance Trade Under Economic Interest Appeals

The Trump administration has always seen trade deficits as obstacles to the development of the U.S. economy, with the huge trade deficit between China and the U.S. being a major concern. Trump believes that imposing tariffs can raise the prices of imported goods, reduce their competitiveness, prompt American consumers to turn to domestic products, promote domestic industry development, increase employment, and achieve trade rebalancing. Taking Chinese textiles and furniture products as examples, after imposing tariffs, prices may increase, leading American consumers to switch to domestic products. However, the long-term adjustment of the U.S. industrial structure, the relocation of traditional manufacturing industries, and the difficulty in restoring production capacity in the short term, coupled with the challenge of changing consumer consumption habits and rigid demands, make the goal of trade rebalancing extremely challenging in practice.

(2) The influence of political elections on domestic interest groups

From a political perspective, Trump’s tariff policy is closely related to domestic political elections and interest groups. In the electoral political environment, he needs to seek the support of interest groups to consolidate his political position. Organizations such as the American manufacturing unions have influence in elections and face significant pressure from foreign low-cost products. Trump’s tariff protection policy caters to these interest groups, such as imposing tariffs on the steel and automotive industries, reducing the competitive pressure on American domestic companies, and gaining support from business owners and union members. In addition, Trump politicizes trade issues, shaping himself as a defender of American interests through tough trade measures to attract voter attention and support, and gain political capital.

The impact of Trump’s tariffs on China

(1) Export trade has been impacted, with orders lost and market share declining

Trump’s tariff policy has significantly impacted China’s export trade. As a major manufacturing country, China plays an important role in foreign trade with the United States. In traditional manufacturing industries such as clothing, toys, and furniture, the impact is particularly evident. Due to the substantial increase in tariffs, the price competitiveness of Chinese products in the U.S. market has been severely weakened, prompting many U.S. importers to shift orders to other countries such as Vietnam and India in order to reduce costs. According to relevant data, in 2024, China’s exports of clothing to the U.S. decreased by 15% year-on-year, and furniture exports decreased by 12%. In emerging industries such as new energy vehicles and electronic products, tariffs have also become a significant obstacle for Chinese companies looking to expand into the U.S. market. China’s advanced technology and cost-effectiveness in new energy vehicles are undermined by high tariffs in the U.S. market, limiting the expansion of market share. This not only affects the overseas revenue of companies but also hinders China’s international development strategy in related industries.

(2) The supply chain of related industries is blocked, and the operation of enterprises faces difficulties.

The tariff policy has triggered a chain reaction in the supply chains of related industries in China. In the upstream manufacturing sector, raw material suppliers are facing the pressure of shrinking demand. For example, the steel industry has seen a decrease in demand due to obstacles in exports to the United States by downstream industries such as home appliances and automotive, which has exacerbated the problem of overcapacity, leading to a decline in corporate profits and forcing some companies to cut production capacity. In the middle of the manufacturing process, companies are confronted with a dual dilemma of rising costs and unstable market demand. In addition to tariff costs, companies also need to manage inventory challenges caused by demand fluctuations, making production planning difficult to stabilize. Meanwhile, in response to the impact of tariffs, some companies have been forced to seek new sources of raw materials and adjust their production layout, which has undoubtedly increased their operating costs and management difficulties. In the service industry, logistics and finance sectors related to export trade are also affected. Logistics companies are experiencing reduced transportation volume and a decline in revenue, while financial institutions are scaling back credit and insurance services provided to export companies, thereby increasing business risks.

China’s response strategy

(1) Precise countermeasures to safeguard their legitimate rights and interests

In the face of the Trump administration’s unreasonable tariff policy, China has taken a series of resolute and forceful countermeasures. China announced an additional 34% tariff on all imports originating in the United States, sued the United States for its practices under the WTO dispute settlement mechanism, and placed several U.S. entities on export control control lists. These countermeasures have dealt a precise blow to related industries in the United States. For example, the imposition of tariffs on U.S. agricultural products has sharply reduced the market share of U.S. soybeans, corn and other agricultural products in China, and farmers’ incomes in U.S. agricultural producing areas have plummeted, and farmers have protested against the government’s trade policies. The imposition of tariffs on high-end manufacturing products such as automobiles and aircraft in the United States has also affected the global market layout and profitability of relevant American companies. China’s countermeasures have demonstrated to the United States its firm determination to safeguard its legitimate rights and interests, effectively curbed the United States’ impulse to further escalate trade frictions, and upheld the fairness and justice of the international trade order to a certain extent.

(2) Expand diversified markets and deepen cooperation on free trade agreements to reduce market risks

To reduce reliance on the US market, China actively expands its presence in various international markets. In recent years, China’s trade cooperation with countries along the Belt and Road Initiative has deepened. By 2024, China’s goods trade with countries along the Belt and Road Initiative is expected to reach $2.3 trillion, up 11% year-on-year. In Southeast Asia, China’s trade with ASEAN countries in areas such as electronics, machinery manufacturing, and agricultural products is growing closer, with ASEAN being China’s largest trading partner for several years. In Europe, China’s cooperation with countries like Germany and France in new energy vehicles and high-end equipment manufacturing continues to expand. Meanwhile, China is strengthening its free trade agreement cooperation. The Regional Comprehensive Economic Partnership (RCEP), which came into effect in 2022, further promotes trade liberalization and facilitation between China and countries in the Asia-Pacific region. China is also actively advancing free trade agreement negotiations with other countries and regions, such as making steady progress in negotiations with the Gulf Cooperation Council (GCC). Through free trade agreements, tariff barriers are reduced, market access is expanded, and more favorable conditions are created for Chinese companies to explore international markets, thereby diversifying the risks posed by US tariff policies.

Prediction of Trump’s Tariff Outlook

Trump’s tariff policy is full of variables in the future, and its sustainability is highly questionable. In the United States, consumers are suffering from soaring prices, businesses are struggling due to rising costs and disrupted supply chains, and some political forces are also concerned that economic downturn will affect their interests, leading to strong opposition to the policy. Internationally, the US tariff policy has been met with resistance from major global economies, prompting various countries to retaliate, further isolating it on the international economic stage. With internal and external pressures intertwined, maintaining Trump’s tariff policy in the long term is fraught with difficulties.

Trump’s tariff policy has profoundly affected the relationship between China and the United States and the global economy. The tension in Sino-US relations due to trade frictions has seriously damaged political mutual trust. Despite the high degree of economic interdependence, both countries have suffered significant losses due to the prolonged trade war. In terms of the global economy, it has disrupted the stability of industrial chain supply chains, hindered trade liberalization, and resulted in slowed economic growth. Countries are forced to reevaluate their trade policies and industrial layout, and the global economic landscape is facing a deep adjustment. In the future, China and the United States need to engage in dialogue and negotiation to resolve disputes, promote the return of the global economy to the right track, and the international community should work together to uphold the multilateral trading system, resist protectionism, and build a more fair, open, and inclusive global economic order.