Trump Takes a Swing at China with Tariffs

Donald Trump has once again turned to tariffs as a tool of economic warfare. On Friday, White House Press Secretary Karoline Leavitt announced that the president had imposed a 25 percent tariff on imports from Canada and Mexico and a 10 percent tariff on Chinese goods. The lower rate on Chinese imports might seem like a concession, but the numbers suggest otherwise. China accounts for nearly 17 percent of total U.S. imports, and these new tariffs, stacked atop those from Trump’s first administration, will hit with considerable force. For Chinese businesses and the government, this latest economic squeeze could have far-reaching consequences.

The White House has presented the move as a crackdown on illegal drugs and migration, but the broader aim is clear: bringing countries in line with American interests and pressuring U.S. trading partners to relocate operations to American soil, bolstering domestic industries—a strategy Trump views as essential to his vision of making America great again. Yet, the consequences won’t be confined to Beijing. American businesses and consumers are likely to feel the strain as well.

White House Press Secretary Karoline Leavitt said at a briefing that the tariffs were a response to the illegal fentanyl sourced and distributed into the U.S., which she claimed had killed tens of millions of Americans. She described the tariffs as necessary, arguing that Canada, Mexico, and China had failed to provide sufficient cooperation in addressing long standing domestic political issues—problems Trump had vowed to fix during his campaign.

Political experts argue that the tariffs are driven more by economic concerns and trade imbalances than by issues of drugs and migration. China, Mexico, and Canada remain America’s three largest trading partners, accounting for over $2.1 trillion in annual trade in goods and services in 2023, the most recent available data. The U.S. trade deficit with Canada nearly doubled, rising from $31 billion in 2019 to $72 billion in 2023, while the deficit with Mexico grew from $106 billion to $161 billion over the same period. However, the trade deficit with China fell to $279 billion in 2023, a decline of more than 25 percent from the previous year.

Despite the reduction in the trade deficit, U.S. imports continue to be heavily dependent on China. During his first term, President Trump imposed tariffs ranging from 7.5% to 25% on $300 billion worth of Chinese goods. As part of the “Phase One” trade agreement in 2020, China committed to purchasing an additional $200 billion in U.S. products over two years. However, Beijing fell short of meeting these targets, a shortfall attributed in part to the disruptions caused by the COVID-19 pandemic. Some conspiracy theorists suggest a connection between these unmet commitments and the lab leaked pandemic.

Asian shares declined on Monday morning following President Donald Trump’s implementation of tariffs on key trading partners. Investors are concerned about a potential trade war that could impact major companies’ earnings and global economic growth. Canada and Mexico have announced retaliatory tariffs, while China has pledged “corresponding countermeasures” and intends to challenge Trump’s actions at the World Trade Organization.

The U.S. auto industry is particularly vulnerable to the newly imposed tariffs, as major automakers like General Motors and Ford rely heavily on imports from Mexico and Canada. President Trump has suggested that these import taxes could prevent Chinese carmakers from using Mexico as a workaround for U.S. tariffs on electric vehicles from the mainland. However, such imports are already largely restricted by other trade barriers.

Even before Friday’s announcement, Canada and Mexico signaled retaliation. Reports indicate that Ottawa could target American exports like orange juice, toilets, and steel products. Mexican President Claudia Sheinbaum stated this week that she believed the U.S. would not impose new tariffs, despite White House Press Secretary Karoline Leavitt’s assertion the day before that February 1 was “still on the books.” In November, Sheinbaum warned that further tariffs would trigger greater retaliation and potentially endanger cross-border business.

Trump’s game of tariffs on key trading partners has sent ripples through the global economy, raising concerns about a potential trade war that could impact major companies’ earnings and global economic growth. By targeting both China and Canada, the administration signals that no nation is exempt from these economic measures. China, striving to recover from the pandemic’s economic impact, faces significant challenges due to these tariffs. While China plans to approach the World Trade Organization to contest the U.S. actions, the absence of formidable opposition suggests that the U.S. may secure favorable agreements with these countries in the near future. The effectiveness of these tariffs in reducing fentanyl-related activities remains uncertain, but their impact on global economics is undeniable.