Source: New Straits Times    Published: 2025-02-09

By Wang Wen

Three days after President Trump announced a 25 percent tariff on Canadian goods and a 10 percent tariff on Chinese goods, Canada acquiesced to Trump’s demands in exchange for a one-month suspension of the tariffs.

China responded with four countermeasures: First, it imposed a 15 percent tariff on US coal and liquefied natural gas and a 10 percent tariff on crude oil, agricultural machinery, large-displacement vehicles and pickup trucks. Second, Beijing implemented export controls on rare earth elements such as tungsten and tellurium. Third, China included PVH Group and Innolux on its unreliable entities list. Fourth, Beijing launched an antitrust investigation into Google.

Unlike Canada, China did not back down. Instead Beijing introduced tougher, more precise and diversified countermeasures. The fundamental reason is that after nearly eight years of trade conflict, China has grown more confident, strategic and resilient.

Since Trump 1.0 launched a trade war against China in 2018, Chinese exports to the US have consistently faced tariffs of about 19 percent. By now the Chinese public is well accustomed to trade disputes and an extra 10 percent tariff hardly comes as a shock.

Looking at the long-term impact, the objectives Trump set out to achieve in 2018 have largely gone unmet.

Compared with 2018, China’s total trade volume grew by 44 percent in 2024, trade between China and the US increased by 8 percent and China’s trade surplus with the US expanded by 13 percent. Rather than decoupling the two economies, the trade war has widened China’s trade advantage.

Another key metric is the share of US-China trade in China’s total trade, which has dropped from 14 percent in 2018 to 11 percent in 2024. This decline underscores the decreasing importance of the US market to China.

Not only have tariffs failed to curb China’s growth, they have also inadvertently strengthened China’s internal strategies, particularly in manufacturing and technology. US technology restrictions, for instance, have accelerated China’s push for technological self-sufficiency.

By 2024, China’s share of domestically produced chips used in its technology sector reached 30 percent, double the 2018 level, while Huawei achieved full self-sufficiency in chip production. Huawei’s revenue has rebounded to surpass 2018 levels and new Chinese tech giants such as TikTok and DeepSeek have emerged.

The first Trump administration failed to defeat China, and after eight years, the country has only grown stronger. The second Trump administration looks even less likely to succeed. While Trump’s tariff threats may intimidate Canada, Mexico or Europe, they hold little sway over China, which now has nearly a decade of experience countering such policies.

China’s confidence stems from its formidable manufacturing sector, which has been the world’s largest for 15 consecutive years.

In 2024, China accounted for 31.6 percent of global manufacturing output, roughly double that of the US (15.9 percent) and five times that of Japan (6.5 percent). Chinese manufacturers dominate industries with over 50% of the world's market share, including but not limited to steel, cement, textiles, personal electronics, household appliances, 5G base stations, high-speed trains, and consumer drones.

China’s primary exports to the US include electrical machinery, furniture, toys, plastics and textiles: industries that are highly competitive and integral to American consumers’ daily lives.

For instance, 70 percent of mobile phones in the US are made in China and 95 percent of the country’s top-selling toys are imported from China.

Tariffs on these goods will ultimately raise prices for American consumers as the costs are passed down the supply chain.

Even more concerning is the composition of US exports in 2024. The country has increasingly shifted toward resource exports. Refined petroleum ($133.6 billion), crude oil ($115 billion) and natural gas ($95 billion) were the top three US exports, collectively accounting for a quarter of total US exports ($1.44 trillion).

In contrast, the US exported just $57 billion in automobiles and $50.8 billion in integrated circuits, both of which are less than half of China’s export figures for the same products: By 2024, China’s automobile exports reached $117.4 billion, while its chip exports totaled $159.5 billion. These figures highlight China’s growing export competitiveness and the relative decline of US manufacturing.

It should be obvious that the US, which relies on selling natural resources for a quarter of its exports, does not have sufficient export competitiveness.

Trump’s tariffs since 2018 were presented as a strategy to revive US manufacturing. In reality, they have weakened it, driven up consumer prices and failed to achieve their goals. The president is talented at positioning himself as tough on China for electoral gain, but this is little more than political posturing.

Rather than addressing the root causes of US manufacturing decline, Trump 2.0 is using tariffs as a political tool, scapegoating foreign competitors while ultimately harming American consumers and businesses.

If countries such as Canada, Mexico, China and the European Union retaliate with their own tariffs on US goods, America’s resource exports will suffer, inflation will rise and the US economy could face severe consequences.

His tariff strategy reflects a shift in the US from a global leader to a regional power embroiled in trade conflicts and economic instability. From this perspective, Trump’s policies are most certainly not making America great again. In fact, they are accelerating its decline.

(The author is the dean and professor of Chongyang Institute of Financial Studies at Renmin University of China and the executive director of the China-US People to People Exchange Research Center).