US President Donald Trump is set to impose 10% duties on all US imports and 60% on goods from China as part of his second-term trade agenda. The move aims to reduce the massive goods trade deficit with China and rebuild America’s industrial base.
Data from Trump’s first term show that tariffs have shifted US imports away from China to other countries, including Mexico and Vietnam. However, the US trade deficit continued to grow, reaching $1 trillion over the last four years, and factory employment has remained flat despite an overall jobs boom since the COVID-19 pandemic.
China remains the dominant supplier of US consumer technology imports, with companies facing a difficult choice on how to replicate its scale and efficiencies in sectors such as electronics and toys. Trump’s tariffs did not cause a spike in consumer price inflation, but they limited scope and caused only one-time price increases.
The shift in trade patterns has come at a cost, with China retaliating with tariffs of 25% on US soybean exports and shifting aircraft purchases away from Boeing to Airbus. The impact on US whiskey distillers was also significant, but exports rebounded when the EU lifted their metals tariffs.
The US remains highly dependent on China for technology imports, including smartphones, laptop computers, and video game consoles. A 60% duty on these goods would raise costs considerably. Trump’s pledge to pay down US debt with tariff revenues has been met with skepticism, with estimates suggesting a vast increase in revenue would be needed to make a dent in US deficits.
The move is expected to have significant implications for global trade and the US economy, with some estimating that a 10% universal Trump tariff would raise $1.7 trillion over 10 years.
Source: https://www.reuters.com/markets/us/trump-upended-trade-once-aims-do-so-again-with-new-tariffs-2025-01-16