Trump's Tariff Policies: Reshaping US-China Trade and Posing Challenges to the American Supply Chain and Social Structure
The Trump administration's high tariff policy has intensified the pressure on U.S. social welfare spending, impacting the retail supply chain and the import of auto parts, while progress in manufacturing reshoring remains slow. Walmart has notified Chinese suppliers to resume shipments, with the tariffs being borne by U.S. buyers. China is advancing the integration of domestic and international trade to help exporters pivot to the domestic market. This trade war is transforming the industrial and social landscapes of both the U.S. and China.
Key Updates
04/27 19:02
Trump's Tariff Policies: Reshaping US-China Trade and Posing Challenges to the American Supply Chain and Social Structure
The Trump administration's high tariff policy has intensified the pressure on U.S. social welfare spending, impacting the retail supply chain and the import of auto parts, while progress in manufacturing reshoring remains slow. Walmart has notified Chinese suppliers to resume shipments, with the tariffs being borne by U.S. buyers. China is advancing the integration of domestic and international trade to help exporters pivot to the domestic market. This trade war is transforming the industrial and social landscapes of both the U.S. and China.
The Interplay of U.S. Social Welfare Spending and Tariff Policy
The Trump administration continued and expanded the 2017 tax cut policy while promoting high tariff measures, which had a profound impact on U.S. social welfare spending. According to research by the Center on Budget and Policy Priorities (CBPP), extending tax cuts, reducing Medicaid spending, and imposing high tariffs will result in an average income reduction of $1,870 for U.S. households with incomes below 60% of the median, a $2,270 reduction for the bottom 20% of households, while the wealthiest 1% of households could gain a net benefit of about $25,500.
U.S. social welfare spending is substantial, with the federal government's social welfare budget reaching $3.88 trillion by 2025, covering programs such as Social Security, Medicaid, and food stamps, making it the largest portion of the total budget. As the population ages and healthcare costs rise, spending continues to increase.
Retail Supply Chain Hit, Walmart Resumes Shipments from Chinese Suppliers
High tariff policies have severely impacted the U.S. retail supply chain. Ninety-eight percent of apparel products in the U.S. rely on imports, with clothing prices expected to increase by 65% and shoe prices by as much as 87%.
As the largest U.S. retailer, Walmart faces the risk of shelf shortages. Last year, Walmart imported goods worth $49 billion from China, accounting for 11% of the U.S.'s total imports from China. Under tariff pressure, Walmart had previously suspended shipments from some Chinese suppliers but has recently notified suppliers to resume shipments, with the additional tariffs being borne by U.S. buyers. This resumption mainly targets holiday merchandise, while some daily necessities orders have been canceled.
Walmart China also announced that in response to China's integration policy of domestic and foreign trade, it has opened a green channel for eligible foreign trade enterprises, simplifying the entry process, speeding up approvals, and assisting exporters in expanding the Chinese domestic market.
Automotive Parts Imports Hindered, Manufacturing Repatriation Challenging
The automotive industry is one of the first to be affected. Detroit automakers note that while parts imported from Mexico and Canada are tariff-free, 80% of parts still need to be imported from China. The high tariffs have disrupted assembly lines and increased unemployment risks.
The Trump administration hoped to use tariffs to encourage manufacturing to return to the U.S., but practical challenges abound. A Goldman Sachs report indicates that if Apple were to move its iPhone production line back to the U.S., the price of each phone would soar to $3,500, which would be unacceptable to consumers. Former Intel CEO Paul Otellini also stated that rebuilding the U.S. electronics supply chain would take decades and lacks skilled technical workers.
Additionally, European small and medium-sized enterprises are adopting a wait-and-see attitude towards the U.S. market due to tariff policies, delaying expansion plans in the U.S., further weakening efforts to attract manufacturing back to the U.S.
China Promotes Integration of Domestic and Foreign Trade, Aiding Exporters in Domestic Sales
Facing the pressure of high U.S. tariffs, the Chinese government is actively promoting the integration of domestic and foreign trade policies. China's Ministry of Commerce convened relevant associations, large supermarkets, and distribution enterprises to discuss measures to assist foreign trade enterprises in expanding the domestic market. Walmart China is also cooperating with the policy by opening a green channel for foreign trade enterprises, simplifying the entry process, speeding up approvals, and assisting exporters in shifting to domestic sales.
Exporters like Hunan Xianfeng Ceramics and Guangdong Chaozhou Dongbao Group have rescheduled their shipping timelines and are beginning to consider exploring South American and Middle Eastern markets to diversify risks.
