The U.S. depends heavily on imports of intermediate goods from China and replacement would not be quick.

The deficit in the US trade balance with China, the European Union, Mexico, Vietnam, among other countries, has been one of the arguments presented by US President Donald Trump to justify the implementation of what he called “reciprocal tariffs” , which will come into effect on Wednesday.

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For Chinese economist Ding Yifang, however, the United States cannot reduce its trade deficit through tariffs, due to rigid demand in the US market for Chinese intermediate consumer goods. “There is no theory of international trade that can explain the purposes for which these so-called reciprocal tariffs can be applied,” he told Brasil de Fato .

Trump said on Sunday (6) that he is not willing to make a deal with China on tariffs “unless the trade deficit of over US$ 1 trillion is resolved”. The speech was made at a press conference on the presidential plane. The United States has had a trade deficit with China since 2001, the year the Asian giant became a member of the WTO.

Last year, the U.S. trade deficit with China was $295.4 billion. Ding also questioned the calculation for the tariff percentage. That calculation has been widely criticized because it treats the percentage of the trade surplus of U.S. trading partners as “tariffs” that countries would impose on the United States.

In the case of China, for example, China’s trade surplus in 2024 was 67.2% of the value of what the US imported ($439.9 billion). The Trump administration is calling this percentage “tariffs levied on the US.” This percentage is then divided in half (as a “discount”), and results in the final tariff. Since Trump had already imposed two 10% tariffs on all Chinese goods, the tariffs on Chinese goods have now reached 54%. “It’s a kind of unilateral sanction,” says Ding Yifang.

Reindustrialization will not happen with tariff policy

Ding says that such a measure might have made some sense until the 1980s, “because most international trade was based on consumer goods, manufactured goods or raw materials.” After the intensification of globalization from the 1990s onwards, most international trade has been based on the global supply chain, the economist argues.

When asked about the logic of introducing tariffs to stimulate reindustrialization, the Chinese economist states that rebuilding an entire supply chain would take 10 to 20 years. “The US economy would not be able to survive this type of shock therapy,” he explains.

This policy “might have been reasonable in the 19th century,” says the economist. “Back then, the basis of international trade was the exchange of consumer goods. At that time, you could stop importing consumer goods from foreign markets and build your industry to replace imports, but today that is not the case,” he concludes.

Currently, 20 to 30% of what China exports to the United States are goods destined for final consumption, the rest are intermediates, that is, materials or inputs that will be used to manufacture final products.

A study by researchers at the New York Fed Reserve Bank showed that U.S. businesses and consumers would be the ones to pay for the first Trump administration’s tariffs on Chinese goods, worth $40 billion a year.

Ding Yifang, a senior researcher at the Taihe Institute, says U.S. consumers and importers bear 92 percent of the cost of the tariffs. “So China only bears 8 percent, that’s nothing, it’s U.S. companies that pay all these tariffs,” the economist says.

Chinese government meets with US companies operating in the Asian country

On Sunday (6), China’s Vice Minister of Commerce, Ling Ji, organized a roundtable with representatives from 20 US companies, including Tesla, GE Healthcare and Medtronic.

China’s Commerce Ministry said at the meeting that it will “provide protection for foreign-invested enterprises in China, including U.S. companies, protect the legitimate rights and interests of foreign-invested enterprises in accordance with the law, and actively promote the resolution of problems and demands of foreign-invested enterprises.”

Representatives from the companies that participated said the meeting sent a positive signal and raised questions about their investments and current operations.

Strategy failed in first Trump administration

Trump expanded his tariff policy in his second administration, but it had already been initiated in his first term. In his first administration, Trump’s team demanded that the Chinese government reduce the trade deficit by $200 billion (at the time, this represented 60% of the deficit) by the end of 2020. Trump implemented a series of tariffs on different types of Chinese products, which totaled $550 billion at the time. China responded with retaliatory tariffs.

Finally, by the end of his first term, the trade deficit with China had increased, from US$481 billion in 2016 to US$679 billion in 2020.

During the 2020 presidential campaign, then-Democratic Party candidate Joe Biden said he would eliminate Trump’s tariffs on Chinese imports, as they were imposed on US consumers and businesses.

However, it not only maintained them but also expanded trade restrictions, banning exports of some products, such as advanced chips, to China, and limiting certain Chinese companies from doing business with the North American country.

On Monday, Trump said that “if China does not withdraw its 34% increase”, the United States will impose additional tariffs on China of 50%, starting April 9. China responded to Trump with 34% tariffs on American products, at the end of last week.

In the announcement made on the social network Truth Social (founded by Trump himself), he also said that “all negotiations with China regarding requested meetings with us will be terminated.”

teleSUR/ MAURO RAMOS

Source: teleSUR

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