Trump tariffs: China is a manufacturing powerhouse- can tariffs change that?

US President Donald Trump has hit China with a second tariff in as many months, which means imports from there now face a levy of at least 20%.

His most recent attack on Beijing is that country already faces steep US tariffs, which range from 100 % on Chinese-made electric vehicles to 15 % on clothes and shoes.

Trump’s tariffs target the brain of China’s production boom, a network of companies, assembly lines, and provide chains that produce and deliver a wide range of products, including everything from fast clothing and toys to solar panels and electric vehicles.

China’s trade surplus with the world reached a record$ 1 trillion ($ 788 billion ) in 2024 thanks to strong exports ($ 3.5 billion ), which overshadowed its import ($ 2.5 billion ) growth.

China has long been the largest manufacturer in the world, and it has grown ever since it first opened its doors to international trade in the late 1970s thanks to cheap labor and express investment in infrastructure.

How much could Trump’s trade conflict affect China’s ability to succeed in developing?

Taxes are taxes levied on imports from other nations.

The buyer is typically the one who pays the taxes, which are typically set at a fraction of the value of the goods.

A product imported to the US from China would therefore be subject to an additional$ 0.40 charge if it were to be subject to a 10 % tariff.

In order to encourage consumers to purchase less expensive home goods, companies should increase the price of imported goods, helping to promote their own economy’s growth.

Trump sees them as a way of growing the US economy, protecting jobs and raising tax revenue. But economic studies of the impact of tariffs which Trump imposed during his first term in office, suggest the measures ultimately raised prices for US consumers.

Trump has stated that his most recent tariffs are intended to pressure China into more to prevent the US from receiving the narcotic.

He also imposed 25 % tariffs on Mexico and Canada, claiming that the country’s leaders were not doing enough to stop the flow of illegal drugs across borders.

Well, experts assert.

Exports have been China’s” saving kindness,” according to Harry Murphy Cruise, an analyst at Moody’s analysis, and if the income continue, exports to the US may drop by a third to a second.

Due to China’s imports, which account for a fifth of the country’s earnings, the sheer volume of which means a 20 % tax could undermine international demand and reduce the trade deficit.

The tariffs may harm China, according to Alicia Garcia-Herrero, general analyst for Asia-Pacific at Natixis in Hong Kong, to the BBC. They must perform a lot more, they say. They must “boost local need,” as Xi Jinping has already said.

That is a tall task in an economy where the property market is slumping and disillusioned youth are struggling to find high-paying jobs.

Chinese people have not been spending enough to recharge the economy – and Beijing has just announced a slew of stimulus measures to boost consumption.

According to analysts, tariffs may slow down or change Chinese manufacturing, but they can’t do so quickly.

” Not only is China the largest producer, it can also be the single supplier like solar panel. You can only get thermal panel in China, according to Ms Garcia-Herrero.

Before Trump became president, China had already started transitioning from making clothes and shoes to advanced tech like robotics and artificial intelligence ( AI ). And that has given China an “early movers” benefits, as well as the size of creation in the second-largest sector of the world.

According to Shuang Ding, general China analyst at Standard Chartered, Chinese factories may produce high-end technology in large quantities at a low cost.

” It’s truly difficult to find a replacement,” he said.” China’s position as a market leader is quite difficult to overtake.”

China has responded with counter tariffs of 10-15% on US agricultural goods, coal, liquefied natural gas, pick-up trucks, and some sports cars.

Additionally, it has announced an anti-monopoly analysis against Google and issued export restrictions to US companies in the fields of aircraft, defense, and technology.

From Trump’s second word, China has also had to spend years adapting to taxes. For example, some Taiwanese manufacturers have relocated their businesses away from the country. And because exporting from there without paying taxes, supply stores are increasingly dependent on Vietnam and Mexico.

However, according to Ms Garcia-Herrero, Trump’s new tariffs on Mexico won’t hurt China too much because Vietnam is a bigger loophole for Chinese products.

Vietnam is the answer, they say. I believe it will be very difficult if taxes are imposed on Vietnam, he said.

Experts believe that US limits on advanced chips predominate over China’s concerns.

These restrictions have caused China to face significant opposition from the two nations, but they have also fueled its desire to invest in separate, domestic technology.

It’s why Chinese AI firm DeepSeek shocked Silicon Valley and unnerved Washington when it released a chatbot that rivals OpenAI’s ChatGPT. The firm had reportedly stockpiled Nvidia chips before the US began cutting off China’s access to the most advanced ones.

Although this might have an impact on China’s profitability, I don’t believe that would have an impact on China’s position as a fabrication power, according to Mr. Ding of Standard Chartered.

On the other hand, any surface China can gain from innovative technology manufacturing will raise its high-value exports.

According to experts, it occurred as a result of state aid, an unparalleled supply chain, and cheap labor.

The Economist Intelligence Unit analyst Chim Lee told the BBC,” The combination of globalization, as well as China’s pro-business policies and marketplace potential, helped to get the first wave of international investors.

The government then doubled down, investing heavily in creating a enlarging system of docks and bridges to import raw elements and export Chinese-made products to the earth. A robust exchange rate between the US dollars and the Chinese yuan also helped.

According to experts, a change in recent years toward advanced technology has made sure that it will continue to be related and forward of its competitors.

China currently has a lot of financial clout as a leader in the manufacturing sector. However, Trump’s tariffs also present a political option because they upend America’s relationship with other countries.

China must stand out as a strong international pressure and a proponent of free business, according to Mr. Cruise of Moody’s.

But that is not easy, given Beijing has been accused of flouting international trade norms, such as imposing a tariff of more than 200% on imports of Australian wine in 2020.

China must look beyond the US, which is still the main export place, according to researchers. After Canada and Mexico, the US export industry is the third-largest.

China’s business with Latin America, South East Asia, and Europe has been expanding, but it’s difficult to believe that the two biggest economies in the world you stop relying on one another.