US Economy Data Shows Why Trump Is Going After China Trade Deficit
The United States could escalate its trade war with China within 10 days as President Donald Trump intensifies efforts to shrink the trade deficit with the country.
Newsweek reached out to the Chinese Foreign Ministry by email with a request for comment.
Why It Matters
China’s meteoric rise to become the world’s second-largest economy in recent decades has been driven by its manufacturing prowess and exports. Under the “Made in China 2025 initiative” the country aims to complete its shift in focus from labor-intensive to high-tech manufacturing.
This transition has been largely successful, with China now leading in a range of strategic industries of the future, with China’s BYD last year supplanting Elon Musk‘s Tesla as the top electronic vehicles manufacturer.
The U.S., European Union and others have accused China of dumping its heavily state-subsidized goods and have responded with tariffs to safeguard local industries.
President Donald Trump speaks in the White House’s Roosevelt Room on January 21, 2025, in Washington, D.C.
Julia Demaree Nikhinson/Associated Press
What To Know
Chinese Vice Premier Ding Xuexiang on Tuesday pushed back against these criticisms. “In terms of foreign trade, we don’t seek trade surplus; we want to import more competitive quality products and services to promote balanced trade,” he told attendees at the ongoing World Economic Forum in Davos.
Ding pointed out that China, the world’s second-largest importer for seven consecutive years, has a relatively low overall tariff rate of 7.3 percent. He pledged China will continue its green transition and “open the door even wider” to foreign business.
China’s manufacturing sector remained the world’s largest in 2024 for the 15th consecutive year, with value-added industrial output totaling about $5.65 trillion, the country’s industry ministry said Tuesday.
The total value of manufactured products China exported reached $1.81 trillion in 2023—a more than 30-fold increase since 2002, after China joined the World Trade Organization, data from the global agency shows. The U.S.’s global trade deficit exceeded $1.2 trillion in 2023.
In 2024, the U.S. imported $270 billion more goods from China than it exported to the country, its third-largest trade partner, according to U.S. Census Bureau data.
Trump has taken a strong stance against the deficit. The president told reporters on Tuesday that he is now considering a general 10 percent tariff on all Chinese imports as soon as February 1—significantly lower than the rate of up to 60 percent he threatened on the campaign trail.
The comments followed the executive order Trump signed soon after taking office on Monday, directing cabinet representatives to look into what’s causing the trade deficit, ways to improve current trade agreements and to share recommendations on the creation of an External Revenue Service to collect trade duties and other trade-related revenues.
Asked during the Chinese Foreign Ministry’s regular press conference about Trump’s looming tariff hike, spokesperson Mao Ning warned on Wednesday that there is “no winner” in trade wars and said China has always firmly upheld its national interests.
The Biden administration last year retained trade duties from Trump’s first term and increased them on various Chinese goods, though some—like EVs—were largely symbolic due to minimal U.S. market penetration.
What People Are Saying
David Roche, strategist at the geopolitical risk advisory Quantum Strategy, told CNBC: “The fact that [tariffs were] not actually put in there, as a minute in point [sic] to be enacted tomorrow, is taken by markets as being a sign that he [Trump] has gone soft on tariffs.
“I think he’s going to go to Xi [Jinping, China’s president] as soon as he can because it’s kind of seen as being the art of the deal… but I don’t think it will really change the fact that he wants China to actually plug its trade deficit with the United States—there’s no way China will do that or agree to do it.”
The Center for Strategic and International Studies think tank said: “In the United States and many other developed economies, consumers have enjoyed cheaper products as a result [of imports]—but their manufacturers have struggled to compete.”
U.S. President Donald Trump: “Americans benefit from and deserve an America first trade policy. Therefore, I am establishing a robust and reinvigorated trade policy that promotes investment and productivity, enhances our nation’s industrial and technological advantages, defends our economic and national security, and—above all—benefits American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.”
What’s Next?
Trump’s next round of tariff increases could start as early as February 1.
In addition to proposed 10 percent rate on Chinese goods, he has threatened 25 percent duties on Canada and Mexico, a move aimed at restricting the flow of the deadly opioid Fentanyl over U.S. borders.