On the third day after Donald Trump announced the imposition of 25% and 10% tariffs on imported Canadian and Chinese goods respectively, Canada yielded and co-operated with Trump’s demands, in exchange for a one-month suspension of the agreement by the US.
But China quickly introduced four countermeasures: first, imposing a 15% tariff on US coal and liquefied natural gas, and a 10% tariff on crude oil, agricultural machinery, large displacement vehicles, and pick-up trucks; Secondly, it implemented export controls on various rare earths such as tungsten and tellurium. Thirdly, China included PVH Group and Innolux in the list of unreliable entities. And finally, Beijing opened an anti-monopoly investigation into Google.
It is obvious that China did not surrender like Canada did, but instead introduced more severe, precise, and diverse countermeasures. The fundamental reason is that after nearly eight years of trade war, China has become more confident, smarter, and resilient.
Since Trump 1.0 launched a trade war against China in 2018, China’s exports to the US have maintained tariffs of about 19% for a long time. The Chinese people have been accustomed to trade wars, and adding 10% does not seem to be a big deal.
From the effects of the trade war over the past eight years, it is clear that the goals that Trump 1.0 wanted to achieve have been missed. Compared to 2018, China’s total trade volume increased by 44% in 2024, the total trade volume between China and the US increased by 8%, and China’s total surplus with the US also increased by 13%. The trade war not only failed to decouple trade between China and the US, but also widened China’s trade gap.
Another interesting fact is that the proportion of China-US trade volume to China’s total trade volume has decreased from 14% in 2018 to 11% in 2024. The importance of the US to China is decreasing.
More importantly, the technology embargo imposed by the US on China promotes China’s independent technological innovation. By 2024, China’s chip self-sufficiency rate has reached 30%, double that of 2018. Huawei’s chip self-sufficiency rate has reached 100%. Huawei’s revenue has rebounded and exceeded that of 2018. In addition, more new high-tech companies have emerged in China, such as Tiktok, DeepSeek, and so on.
Trump 1.0 did not defeat China. Eight years later, China has become even much stronger, and it is even more difficult for the Trump 2.0 era to defeat China. Trump’s tariff threat can only intimidate Canada, Mexico, or Europe, but it cannot intimidate China, which has eight years of successful experience.
China’s confidence comes from its strong manufacturing industry. The overall scale of China’s manufacturing industry has remained the world’s largest for 15 consecutive years.
In 2024, China’s manufacturing share accounted for 31.6% of the world’s total, about twice that of the US (15.9%) and about five times that of Japan (6.5%). Chinese manufacturing accounts for more than 50% of the world’s industries, including steel, cement, textiles, synthetic fibres, personal computers, mobile phones, automobiles, refrigerators, air-conditioners, washing machines, LCD panels, televisions, microwave ovens, wind power installations, 5G base stations, high-speed trains, consumer drones, industrial drones, power generation, medical raw materials, and more.
The main products exported by China to the US include electromechanical goods, furniture and toys, plastic products, textiles, and other products in highly competitive industrial sectors. They are also consumer sectors that directly affect the daily lives of American people. For example, 70% of American mobile phones are made in China and 95% of the best-selling toys in the US are imported from China.
When the tariffs imposed by Trump are transferred to the game between Chinese exporters and American importers, Chinese exporters will have more bargaining power, forcing American importers to pay additional tariff fees, and ultimately the latter will pass on the tariff costs to the price increase of domestic consumer goods in the United States.
Even worse, looking at the structure of US exports in 2024, it is surprising to find that the US has increasingly degenerated towards becoming a resource exporting country. In 2024, the top three commodities with the highest export value in the US are refined oil (export value of $133.6 billion), crude oil ($115 billion), and natural gas ($95 billion), accounting for one fourth of the total export value of the United States ($1.44 trillion). The total export value of the United States is only 40% of China’s (3.6 trillion US dollars).
In contrast, the United States’ export strengths of automobiles ($57 billion) and integrated circuits/chips ($50.8 billion) are only ranked fourth and fifth. Both of these are less than half the export amount of similar products in China.
By 2024, China’s automobile exports reached US$117.4 billion, while integrated circuit/chip exports reached $US159.5 billion. This is a concentrated manifestation of China’s strong export competitiveness and a typical reflection of the decline of the US manufacturing industry.
From this perspective, Trump’s tariff policy appears to be aimed at saving the US manufacturing industry, but in return, it has only resulted in a declining US manufacturing industry and sustained price increases. Trump is simply trying to show American voters that he is tough on China. This is undoubtedly a political fraud.
Trump 2.0 did not look for the domestic reasons for the decline of the manufacturing industry. Instead, it used tariffs to look for scapegoats abroad, which was obviously political manipulation and deception, and ultimately punished the Americans themselves.
It is obvious that the US, which relies on selling natural resources for 1/4 of its exports, does not have sufficient export competitiveness. Once the world sees through Trump 2.0’s bluff, such as Canada, Mexico, China, and the European Union joining forces to deal with the United States and jointly raising tariffs on American products, US energy exports will be damaged, and domestic products will once again suffer from severe inflation due to tariffs, and the US economy may even collapse.
From this perspective, Trump will not make America great again, but it will only continue to decline. Trump’s 2.0 tariff policy once again reflects that the US is no longer the world’s leading country, but an ordinary regional country, becoming a troublemaker that creates bilateral conflicts and global disorder.
Wang Wen
Wang Wen is the dean of Chongyang Institute of Financial studies, Renmin University of China, and the executive director of the China-US People to People Exchange Research Centre.