As is well known, success is often a question of perspective, as is the case in this case: The delivery of Chinese goods to the USA has fallen significantly since the imposition of high import tariffs by former President Donald Trump, at times by a good 20 percent, in some individual areas even by more than 50 percent. So was the trade war with which Trump held the business world in suspense for two years before the outbreak of the Corona crisis a success for the United States?
If you asked the initiator himself, the answer would be clear, because the head of state, who has meanwhile been voted out of office, has always described the high US trade deficit with China as a disgrace and elevated the dismantling to the rank of a national task. However, he did not achieve his goal of bringing the production of many goods back to the USA with the help of the tariffs. On the contrary: Many American companies are still dependent on their Chinese suppliers today and grudgingly pay the fines when importing. Between March 2020 and March 2021 alone, the government in Washington received around 66 billion dollars in this way.
Other companies, on the other hand, are now foregoing imports from the People’s Republic, but instead buy in Vietnam, South Korea or Ireland. The result is that the US overall trade deficit has not decreased but has actually increased since the China tariffs were imposed. In other words: Trump may be able to celebrate a political success, but overall this is a pretty expensive zero-sum game for the country at best.
According to the data service Trade Data Monitor, which the Wall Street Journal China’s US exports totaled around $ 529 billion in the twelve months ended July 1, 2018. As a result, punitive tariffs of up to 25 percent came into force in several steps, which in the end comprised a good two-thirds of all Chinese deliveries to the United States.
The beneficiary of Trump’s furor is Vietnam in particular
Initially, primary and intermediate products such as semiconductors and computer accessories were affected, and later consumer goods such as furniture and shoes. By March 2020, the month in which global trade flows completely disrupted due to the Corona crisis, twelve-month exports from the People’s Republic to the United States fell to $ 422 billion – a decrease of around 20 percent. US imports have been rising again since the outbreak of the pandemic, but without Corona the downward trend would have continued.
The beneficiary of Trump’s furor is still the Republic of Vietnam, which has doubled its annual exports to the USA from $ 47 billion at the time to $ 86 billion today since the outbreak of the trade war. The export hits include semiconductors and furniture. The socialist one-party state now ranks sixth among all countries in which the United States shops. Vietnam also benefits from the fact that many US companies were looking for new, alternative production locations even before the tariff conflict began because of the steep rise in wage costs in China.
Despite all disputes, the number one US importing country is and will remain China, followed by Mexico, Canada, Japan and Germany. Unlike competitors from Ireland, South Korea, Malaysia and India, for example, the German export industry was unable to capitalize on the political disputes between Washington and Beijing.
The question that concerns managers and economic politicians around the world is what Trump’s successor Joe Biden intends to do with the punitive tariffs. So far, the new president has been maneuvering because he is in a difficult situation: on the one hand, he has repeatedly criticized the imposition of tariffs as a mistake in recent years, on the other hand, Trump’s confrontational course towards China has many supporters well into the ranks of the Democrats.
Biden’s trade representative, Katherine Tai, did not want to be committed to any specific statement on the future of tariffs at a recent hearing in parliament. She only promised to review the previous regulations “from head to toe”. US companies that suffered from the criminal charges could also report to the authorities. Between the lines, however, Tai let it be known that a quick lifting of the tariffs is not to be expected. On the contrary, in one point the experienced commercial lawyer sounded almost like Trump: “No negotiator in the world,” said the 47-year-old, “simply gives such leverage out of hand.”