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Explainer: Why are U.S. tariff hikes self-defeating?(Xinhua) 09:56, April 12, 2025
A trader works on the floor of the New York Stock Exchange in New York, the United States, on April 8, 2025. U.S. stocks closed sharply lower on Tuesday. (Photo by Michael Nagle/Xinhua)
"'America First' could again produce 'America Alone,' only more so as the fears of other countries that the United States could never again be a trustworthy friend, let alone leader, would seem confirmed," said the Carnegie Endowment for International Peace.
WASHINGTON, April 11 (Xinhua) -- Despite widespread criticism and high volatility in U.S. stock markets after tariff hikes, the White House clarified on Thursday that the total effective tariff rate on Chinese imports had climbed to 145 percent.
It is the latest in a series of escalating U.S. levies that Beijing called "a mistake on top of a mistake." Such "blackmail" harks back to Trump's first presidency, when he imposed aggressive tariffs on a wide range of Chinese imports as part of his "Make America Great Again" agenda.
While the Trump administration keeps touting tariffs as a means to bring back jobs and revive manufacturing, economists across the political spectrum never ceased to sound alarms: these "self-defeating" tariffs were "designed to backfire," pushing up costs for U.S. companies and consumers.
So, which side do the outcomes of his first-term policies validate? Who has been paying for these tariffs? Has Washington achieved its goal of reducing trade deficits and bringing manufacturing back through tariffs? And what does the future hold for the move?
The bubble chart shows the increase in U.S. tariffs on Chinese imports during Trump 1.0 under Section 301. Each bubble represents a product category on which a tariff has been placed, sized by the number of items within it. The tariffs were imposed on products worth about 34 billion U.S. dollars in July 2018 and expanded to about 550 billion dollars in September 2019. (Xinhua/Chen Wangqi)
HOW HAS U.S. RAISED TARIFFS ON CHINA?
In August 2017, Trump initiated an investigation against China under Section 301 of the Trade Act of 1974. From 2018 to 2019, he published four rounds of 301 tariff lists, with the first two targeting high-tech products and the other two focusing on intermediate goods, capital goods and consumer goods.
According to calculations by Chad Bown of the Peterson Institute for International Economics, average tariffs on Chinese products had surged from 3.1 percent in 2017 to 24.3 percent by August 2019.
As Trump 1.0 relied heavily on Section 301, it imposed tariffs ranging from 7.5 percent to 25 percent across four lists of imports totaling 550 billion U.S. dollars in value.
After Joe Biden took office in 2021, he retained most of the tariffs from Trump 1.0 and continued to escalate the "strategic competition" with China through tariffs and export controls, along with other measures.
In May 2024, the Biden administration announced its review of the Section 301 tariffs on China. Building on the existing tariffs, fresh tariffs were gradually imposed on Chinese-made products, including electric vehicles, lithium batteries, photovoltaic cells, critical minerals, semiconductors, steel and aluminum.
The U.S. government has also overstretched the concept of national security, politicized and weaponized economic, trade and technological issues, and abused export controls to suppress China.
In May 2019, the United States put Chinese tech giant Huawei on the Entity List, barring U.S. firms from selling it technology without government approval. In October 2022, the Biden administration escalated export controls on China in areas such as semiconductors.
The Biden administration didn't cease mounting pressure on China until the very last moment of its term. In December 2024, the United States updated its semiconductor export control regulations. In mid-January, new export controls related to artificial intelligence were also announced.
Since regaining power in late January, Trump has unleashed a series of tariff hikes on China, and Washington has made the path back to the negotiating table even harder to find.
The line chart shows the U.S. trade deficit in goods with China and the world. As the U.S. trade deficit with China decreases after the trade war, the deficit with the world grows. (Xinhua/Chen Wangqi)
WHO'S PAYING THE PRICE?
Numerous studies have shown that Washington's trade war with China has failed to address the structural issues in the U.S. economy. Instead, it has driven up prices, reduced economic output and employment, and harmed the overall economy. The primary costs of the trade war have been borne by U.S. businesses and consumers.
