US President Donald Trump hit China with another tariff in just as many months, which means imports from there Now face up at least 20%.
This is his latest bakery salvo, which is already facing steep American tariffs, from 100% on a Chinese electric vehicle up to 15% on clothing and shoes.
Trump’s tariffs hit the center of Chinese production juggernaut – Internet factory, prefabricated lines and chains of supply that produce and deliver almost anything, from fast fashion and toys to solar panels and electric cars.
The Chinese trade surplus with the world has increased to a record $ 1 (£ 788 billion) in 2024, on the back of a strong export ($ 3,5), which surpassed its import account (2.5 DOTM).
China has been a worldwide factory for a long time – it has managed to have its economy since its economy in the late 1970s.
So how much would Trump’s trade war be bad to harm Chinese success in production?
What are tariffs and how do they do?
Tariffs are taxes charged on goods imported from other countries.
Most tariffs are set as a percentage of the value of goods, which is mostly an importer to them.
Thus, a 10% tariff means that the product imported to the US from China would face $ 0.40 with an additional $ 0.40.
Increasing the price of imported goods is intended to encourage consumers to buy cheaper domestic products instead, helping to increase the growth of their own economy.
Trump sees them as a way of growing American economy, job protection and increasing tax revenues. But economic studies on the impact of tariff that Trump imposed during his first term in power, suggest measures finally Increased prices for US consumers.
Trump said his latest tariffs focused on the pressure on China to do more to stop the flow of Opioid fental in the United States.
He also imposed 25% of tariffs to American neighbors Mexico and Canada, saying that his leaders do not make enough to break the cross -border illegal drug trade.
Can Trump’s tariffs harm Chinese factories?
Yes, analysts say.
Exports was the “saving grace” of Chinese economy and if taxes are retained, exports to the US could fall for a quarter, for BBC Harry Murphy Cruise, an economist from Moody’s Analytics.
The whole value of Chinese exports – which makes a fifth of earnings in the country – means that a 20% tariff of 20% could weaken demand from abroad and reduce trade excess.
“Tariffs will harm China,” she told BBC Alicia Garcia-Herrero, the main economist for the Asian-Pacific in Natixis in Hong Kong. “They really need to do a lot more. They have to do what XI Jinping has already said – increase home demand.”
It is a high task in an economy in which The real estate market is falling and Disappointed youth fights to find highly paid jobs.
The Chinese have not spent enough to fill the economy – and Beijing is just announced a number of stimuli measures increase consumption.
Although tariffs can slow down Chinese production, they cannot stop it so easily, say analysts.
“Not only is China a big exporter, sometimes it is the only exporter like solar panels. If you want solar panels, you can only go to the cinema,” said Ms. Garcia-Herrero.
China began to turn from making clothing and shoes to advanced technology such as robotics and artificial intelligence (AI) long before Trump became president. And that gave China the advantage of a “early driver”, not to mention the extent of production in the second largest economy in the world.
Chinese factories can produce top quality technology at large quantities at low price, said Shuang Ding, the chief economist in the Chartered Standard.
“It’s really hard to find a replacement … Chinese status as a market leader is very difficult to overthrow.”
How does China react to Trump’s tariffs?
China has answered counter tariffs From 10-15% on American agricultural goods, coal, tidied by natural gas, trucks and some sports cars.
And aimed at US Air Force, Defense and Technology with export limit and announced an antimonopol investigation against Google.
China also spent years adapting to Tariffs from Trump’s first term. For example, some Chinese manufacturers have moved factories from the country. And the supply chains relied more on Vietnam and Mexico with exports from there to bypass the tariffs.
Yet, Trump’s recent tariffs to Mexico would not hurt China too much, because Vietnam is a bigger rear door for Chinese goods, said Ms. Garcia-Herrero.
“Vietnam is the key here. If the tariff is imposed on Vietnam, I think it will be very difficult,” she said.
What relates more than tariffs in China, say analysts, are American limitations on advanced chips.
These limitations were the main point for adherence between the two countries, but also encouraged the determination of China to invest in home technology that is independent of the West.
That’s why Chinese company AI Deepseek shocked Silicon Valley and Nervous Washington when published by Chatbota, which Openai -is Chatgpt. The company allegedly launched Nvidia chips before the United States began to reduce the Chinese approach the most advanced.
Although this could “affect China’s competitiveness, I don’t think it would affect China’s status as production powers,” said Mr. Ding of Standard Chartred.
On the other hand, any ground floor of China gets in advanced technological production will increase its high -value exports.
How did China become a manufacturing superpower?
It happened because of state support, an unrivaled supply chain and cheap labor, analysts say.
“The combination of globalization, as well as Chinese business policies and market potential, has helped attract the initial wave of foreign investors,” analyst told BBC Chim Lee, an analyst from an economic intelligence unit.
The government then doubled, investing a large in the construction of a spacious road and port network to bring raw materials and take the goods of Chinese products to the world. What also helped was a stable course between Chinese Juan and US dollar.
Change in recent years, according to advanced technology, has ensured that it will continue to be relevant in front of its competitors, analysts say.
China already has a lot of economic influence from the production of a power plant. But there is also a political opportunity because Trump’s tariffs increase an American relationship with the world.
“The doors are fine for China to position herself as an advocate of free trade and stable global forces,” said Mr Cruise of Moody’s.
But this is not easy, given that Beijing is charged with flotting international trade norms, such as Tariff’s imposition more than 200% About the import of Australian wine in 2020.
Analysts say China must also look beyond now, which is still a major destination for its exports. China is the third largest market of American exports, after Canada and Mexico.
Chinese trade with Europe, Southeast Asia and Latin America is growing, but it’s hard to imagine that the two largest economics worlds can stop relying on each other.
