The Impact of Trump’s Tariffs Extends Beyond Expectations, Including the Trump Team
The China-U.S. trade war that unfolded with the imposition of Trump’s tariffs in 2018 and 2019 has produced unexpected results. Contrary to initial concerns, the tariffs have limited Chinese power, had little impact on American consumers, and benefited Mexico and other developing countries. They may have even played a role in reducing illegal border crossings. The effects of these tariffs have surprised many and have far-reaching implications.
When the Trump administration first imposed tariffs on China six years ago, their goal was to pressure Beijing to address unfair trade practices. These practices included subsidies for domestic Chinese producers, patent theft, and the requirement for American businesses in China to transfer proprietary technologies and trade secrets to Chinese partners. At the time, there was widespread concern about the cost of the tariffs to American consumers and businesses, and skepticism about whether Beijing would actually change its trade policies.
In reality, Chinese policy has not changed significantly, but the cost to American consumers has been minimal. The depreciation of the yuan against the dollar has offset the price increase of Chinese goods, keeping them in line with overall inflation rates. This unexpected outcome has challenged the initial consensus and demonstrated that the tariffs did not burden American consumers as initially feared.
Even though President Biden has maintained the tariffs imposed by his predecessor, Beijing has remained steadfast in refusing to change its trade practices. In fact, Biden has further intensified the pressure on China by blocking the sale of advanced semiconductors and semiconductor manufacturing equipment and prohibiting American investment in Chinese technology. He has also subsidized domestic semiconductor manufacturing and threatened additional tariffs on Chinese imports. It is clear that President Biden aims to go beyond trade policy changes and hinder China’s overall development.
Interestingly, the original Trump tariffs have indirectly contributed to slowing down Chinese economic development. To avoid the cost of tariffs, Chinese industries have shifted their operations to other Asian countries and Latin America. Mexico, in particular, has emerged as an attractive destination due to its business-friendly policies and proximity to the U.S. market. Capital investment in Mexico has surged, with foreign manufacturing, including Chinese-owned facilities, booking sites around the U.S. border until 2027. Mexican exports have also risen, and in 2023, Mexico became the largest trading partner of the United States, surpassing China.
While these facilities in Mexico remain under Chinese ownership, Beijing has limited control over them compared to domestic Chinese factories. Even if Beijing were to order Chinese owners to abandon their Mexican operations, it is unlikely that the facilities would return to China. Instead, other operators would seize the opportunity to run the factories, benefiting Mexico’s economy and contributing to its development.
In addition to benefiting Mexico and other developing economies, the tariffs may have unintentionally helped address the illegal immigration crisis at the U.S. southern border. The improved economic opportunities in Mexico and other Latin American countries reduce the incentives for their populations to migrate to the United States for economic reasons. While it is challenging to measure the exact impact of the tariffs on illegal immigration, they may have provided some relief by indirectly improving economic conditions in Mexico.
The results of Trump’s tariffs were not anticipated by anyone, including Donald Trump himself. They deviated from the initial goals of the tariffs but have become a reality. China’s loss has translated into gains for developing economies like Mexico, without imposing any additional costs on American consumers.
It is important to note that the views expressed in this article are the author’s opinions and do not necessarily reflect the views of The Epoch Times.
