Trump’s trade war immediately failed (Uncut) 04-16-2025

Trump’s trade war immediately failed: China is much stronger than USA thinks

U.S. President Donald Trump imposed high tariffs on countries all around the world, essentially declaring a global trade war on the 2nd of April, which he dubbed Liberation Day. Then just a few days later, Trump paused the tariffs that he imposed on most countries around the world, imposing a blanket tariff of 10% on all countries. But then he focused specifically on China, hitting China with tariffs of 145%.

This would have been catastrophic for the U.S. economy, given that the United States imports more goods from China than from any other country. And almost immediately after Trump declared what was essentially a nuclear trade war against China, he backtracked. He took a major step back and essentially he acknowledged defeat in the trade war that he initiated.

How so? Trump announced exemptions for Chinese exports of smartphones, computers, and other electronics to the U.S. This came after U.S. big tech corporations like Apple told the U.S. government they needed exceptions because without China, which plays a key role in global supply chains, they simply cannot produce the electronics goods that the 21st century U.S. economy relies on. So in the case of Apple, 80% of iPhones sold in the United States are made in China. So this exemption carried out by Trump is, as the BBC put it, quote, a significant trade war retreat, end quote.

I would go a step further and say that this is an acknowledgement indirectly by the White House that Trump’s trade war against China failed. Because if you look at China’s trade with the U.S., you can see very clearly that China’s largest exports to the U.S. are cell phones, computers, electric batteries, and other electronics. They make up over a third, around 40% of China’s exports to the U.S. And Trump just put exemptions on these goods, implicitly admitting that the U.S. is much more dependent on China than China is on the U.S. And this also raises a huge question because the Trump administration claims that it wants to use these tariffs to reindustrialize the U.S. But by exempting these crucial electronics goods, we have to ask, what products does the U.S. plan on manufacturing locally exactly? Because if you look at China’s other exports to the U.S., it includes things like toys, textiles, plastic products, Tupperware.

So does Trump’s plan to reindustrialize the U.S. mean that millions of Americans are going to go work in factories making plastic products and T-shirts and tennis shoes? Is that his grand vision for the reindustrialization of the U.S.? While China continues to make all of these advanced electronics, which now have exemptions. I think what this shows is that the Trump administration knows it’s not actually going to reindustrialize the United States. This is just rhetoric that Trump has used to try to win support.

But at the end of the day, he’s using tariffs as a political tool, not to reindustrialize the U.S., but one, to cut taxes on the rich and corporations and to replace the loss of revenue with tariffs, which are taxes. Trump falsely claims that other countries pay for tariffs. It’s not true.

It’s U.S. importers that pay for tariffs. Tariffs are taxes on imported goods, and they are a very regressive form of taxation because it is the majority of poor and working people in the United States, not the rich, who will bear the cost of those tariffs. So Trump is using tariffs to cut taxes on the rich and increase taxes on the poor and the working class.

And then the other major reason for Trump’s tariffs is to pressure other countries to pay tribute to the United States. This strategy was outlined by Trump’s top economic advisor, Stephen Myron, who said that Trump wants to use tariffs to force countries to help the U.S. pay for the global dollar system that benefits the U.S. and the constellation of hundreds of foreign military bases that the U.S. has around the world. Now, in my reports here at Geopolitical Economy Report, I have constantly emphasized that Trump’s tariffs are going to fail to reindustrialize the U.S. because the Trump administration does not have an actual industrial policy.

Every industrialized country has relied on government planning, targeting certain sectors and saying, we’re going to develop these industries, move up the value chain, the government’s going to invest in education and worker training and research and infrastructure and providing cheap loans and subsidies and other incentives to these manufacturing companies. Trump is not doing any of that. He’s simply relying on tariffs.

And this is why immediately after the U.S. president announced these tariffs on countries all around the world on so-called Liberation Day, I warned that this strategy was going to fail. But I didn’t think that it would fail in one week. I think I underestimated just how bad this policy was and how poorly thought out everything was.

There was basically no planning whatsoever. It was pure chaos. And just a few days later, the Trump administration basically admitted defeat.

Now, Trump has tried to save face publicly for PR reasons. And on his website, which is a copy of Twitter, he claimed that there was no tariff exception announced for Chinese goods. But then in the next line, he did note that there actually was an exception for these products because Trump put 145 percent tariffs on all goods for China.

But what he’s announcing is that now Chinese electronics goods like smartphones and computers and chips are only tariffed at a rate of 20 percent, not 145 percent. So there was an exception. But while Trump claims that the media misreported his executive order, he called them the fake news.

He said there were no exceptions announced. But if you read the executive order that was signed by Trump and posted by the White House, it’s available to the entire world to see, it says very clearly in the title exceptions. These are exceptions.

Now, Trump claims they’re not exceptions, but they are exceptions. The text of the executive order says very clearly that Trump declared a so-called national emergency in response to large and persistent U.S. goods trade deficits. By the way, keep in mind, they say goods trade deficits, because as much as Trump complains about the U.S. deficit, the U.S. actually has a trade surplus in services with the rest of the world.

The U.S. exports more services than it imports. What it does have is a massive trade deficit in goods. It imports many more goods than it exports.

But the point is, is that Trump issued an executive order declaring this trade deficit to be a, quote, unusual and extraordinary threat, end quote, which is language used by the U.S. president so they can carry out executive action without approval of Congress. And then in this executive order, the new one, he says that certain goods are not subject to the tariff rates that were announced in the other executive order. And as an example of products that have exceptions, he included semiconductors, and he specifically named the People’s Republic of China.

And then later, the executive order had a list with many different numbers of products listed under U.S. tariff law that says that these products are exempted. And if you go to the official website of the U.S. government’s harmonized tariff schedule, as it’s known, and you look up the numbers that were listed in this Trump executive order, you can see it includes products like smartphones and computers and semiconductors. So in other words, Trump’s trade war on China almost immediately failed in the most important area, which is electronics.

Trump says he wants to make all of these electronics at home. He wants to build factories to make smartphones and computers and semiconductors in the United States. But then he immediately issued exceptions for these products made in China because he knows that U.S. companies cannot make those products in the U.S. at a reasonable price.

It would take many years, if not decades, to develop all of the infrastructure and build the factories and train the workers needed to actually create those products in the U.S. and they would be significantly more expensive. And honestly, this whole situation is so embarrassing and frankly hilarious because Trump has constantly been making these comments, complaining that China’s President Xi Jinping doesn’t want to call him. And he’s like, I just want to talk to Xi.

Please call me President Xi. I really want to talk to you. And China says no.

China is standing up for itself and saying, we will talk to you when you stop waging trade war against us, when you lift these unilateral aggressive tariffs, which Trump falsely claimed were reciprocal. They were not reciprocal. They were unilateral.

And many officials in the Trump administration claimed that the U.S. has so much leverage over China. China has no cards. China is going to be begging the U.S. And either China comes to the table with Donald Trump or they don’t.

But let’s be clear, we are their biggest client by far, by far, by far. The American consumer buys everything from China. They can’t afford to be without us.

But it’s actually Trump who’s begging China’s president to return his phone calls. Meanwhile, President Xi has been visiting Southeast Asia, boosting China’s relations with Vietnam and other countries in the region, which is crucial because the United States has been militarizing Southeast Asia. The U.S. military now has at least nine bases in the Philippines.

And Washington has been trying to divide Vietnam and China. And yet now the Trump administration is pushing Vietnam and China closer together. When President Xi visited Vietnam, China and Vietnam signed 45 agreements, including on issues like expanding rail lines to connect the countries and on supply chains and trade.

So while Trump has been claiming that he’s going to use all of the leverage that the U.S. supposedly has over China to force Beijing to make a deal, meanwhile, China and Vietnam have actually been making deals. And Trump is complaining about their lovely meeting, as he put it. And he complained that China and Vietnam are discussing, quote, how to screw the United States of America, end quote.

So all of this is bolstering a point that I have constantly repeated here in my reports, which is that the United States is actually much more dependent on China than China is on the U.S. And this was detailed in a great report in the Financial Times titled, Trade, Tech and Treasuries, China Holds Cards in U.S. Tariff Standoff. I want to go through some of the main points of this report. They noted that, quote, China can replace its imports from the U.S. more easily than the other way around.

U.S. goods exports to China are heavily focused on agriculture, such as soya beans, cotton, beef and poultry, and so are low value added. Many U.S. imports from China, electronics, machinery and some processed minerals, are the opposite, end quote. And the FTE produced this chart that shows that many of China’s exports to the U.S. are high value added goods, technologies like semiconductors and computers and cell phones, whereas the top exports that the U.S. sends to China are things like petroleum, oil, gas, food products.

China can easily replace many of the things that it imports from the U.S. Many countries produce oil and gas. Other countries produce agricultural commodities like soybeans. For instance, China is now importing more and more soybeans from Brazil.

Brazil is, of course, a founding member of BRICS and an ally of China. So Trump administration officials like the billionaire Treasury Secretary Scott Besant have constantly claimed that supposedly China is so dependent on the U.S. But in reality, China can replace its imports from the U.S. for the most part. Now, that said, it is true that there are still a few products that China imports from the U.S. that are hard to replace.

As the Financial Times noted, the pain of a trade war will still be felt in China because it imports some products like U.S. aircraft parts, pharmaceuticals, and semiconductors. However, in all three of these industries, China has been making very rapid progress in developing its own aircrafts, pharmaceuticals, and semiconductors. Let’s start by talking about civilian planes.

Now the global airliner industry is a duopoly. It’s dominated by two Western corporations. The U.S. corporation Boeing and the European corporation Airbus.

However, in 2023, China took on this duopoly by developing its own domestic airliner. It is true that China relies on importing parts for its own domestically produced airliner from other countries. So it’s not a totally indigenous technology.

But China is rapidly making progress to create an entire supply chain locally to create its own airliners. And in fact, in response to Trump’s very aggressive trade war, China ordered its domestic airline companies to suspend deliveries of jets from Boeing. So this is a message from China to the U.S. that we’re no longer going to do business with this, by the way, horrible U.S. company, Boeing, whose planes are constantly failing.

The company has been destroying itself in recent years. Boeing was previously run by engineers, but the company was taken over by a bunch of MBA grads, these financial speculators with little to no experience in manufacturing planes. And instead of investing in security and a high quality product, they made their priority maximizing their stock prices in order to increase the bonuses for their corporate executives.

And they’ve treated the company like a financial firm. And as Boeing has been financialized, they have been laying off skilled unionized workers and hiring contractors who are not unionized and who are not well trained. And they’ve been cutting corners and refusing to invest in good security.

And the result is Boeing around the world is losing more and more market share to its main European competitor, Airbus. And now China is also entering the stage as a serious competitor. And Trump’s tariffs are going to only accelerate China’s process of developing its own domestic civilian jet airliner industry.

This is so similar to what happened with semiconductors. And this is bipartisan. It’s not just Trump.

So in his first administration in 2018, Trump started the U.S. trade war on China. However, when the Democrat Biden came in in 2021, he continued his Republican predecessors trade war. And the Biden administration announced export restrictions on China, trying to block China from getting access to advanced technologies and especially cutting edge chips.

Biden’s Commerce Secretary Gina Raimondo said that the U.S. government would do anything it takes to stop China from getting access to advanced technologies. And she said Washington’s goal was to, quote, slow down China’s rate of innovation, end quote, in order to protect big tech monopolies in Silicon Valley. And now Trump is in his second term as president.

And the U.S. government has ordered NVIDIA to further tighten its restrictions on China. Previously, NVIDIA was allowed to export the H20 chip to China, which could be used for A.I. research. And now the Trump administration has ordered NVIDIA to also halt the exports of that chip to China.

This strategy in which the U.S. government is trying to sabotage China’s chip industry to try to prevent it from developing A.I. has been referred to as a chip war. And yet this chip war, like Trump’s tariffs, has actually been backfiring on the United States and China has been developing its own domestic chip industry. And China has become the world leader in the production of what are known as legacy chips, which are not the most advanced chips, but most electronics products that average people use who aren’t super rich.

Most computers, most cell phones, they don’t have the most advanced chips. You don’t need the most advanced chips. So China has been dominating the global industry for the majority of chips.

Biden’s Commerce Secretary Raimondo, who’s the one who admitted that the U.S. wants to try to prevent China from developing technologically, she warned that in a few years China could produce 60 percent of all new legacy chips coming to the market in the world. That might have been a bit of an exaggeration, but Fortune magazine estimated that by 2027 mainland China will be responsible for creating 33 percent of legacy chips in the entire world, one third. And China has been making enormous progress very quickly.

Nature, which is the leading scientific journal, published a scientific article in 2025 noting that China’s research on next generation computer chips is double the output of the United States. They wrote that, quote, China is now producing most of the basic research that could underpin future computing hardware, end quote. And Chinese companies are catching up to Nvidia very quickly.

Huawei, which was sanctioned by the U.S. government during Trump’s first trade war. By the way, Huawei is owned by its workers, a fun fact. And also the Chinese semiconductor manufacturing international corporation SMIC, which is partially state owned.

They have been working together to develop new advanced chips for AI research. And despite the U.S. government’s export restrictions and chip war against China, the country has already made enormous progress in artificial intelligence. Of course, the Chinese company DeepSeek surprised the entire world in early 2025 by releasing a new AI model that was open source.

It was just as good as the models developed by the U.S. huge corporation OpenAI, which is 49 percent owned by the monopoly Microsoft. And yet despite the hundreds of billions of dollars being spent by U.S. big tech corporations in Silicon Valley, these small Chinese companies have already caught up in AI models that are just as good, that cost a fraction of the price to use. They use a tiny fraction of the energy and they’ve released their models open source for anyone in the world to use.

So all of this shows how the U.S. has been failing in its trade war against China, its economic war against China and its tech war. And Bloomberg published an important report in 2024 that admits that the U.S. government’s attempt to try to stop China from developing technologically is failing. Bloomberg analyzed the goals that were outlined in Made in China 2025, which was an ambitious government plan announced in China in 2015, because, of course, China has a socialist government that engages in planning of parts of the economy, especially in high tech sectors.

And then the government uses state led policies to drive resources into those sectors in order to advance technological production. And Bloomberg concluded that China met almost all of the goals outlined in the plan that made in 2015 in Made in China 2025. China is now the world’s leader in unmanned aerial vehicles, that’s drones, solar panels, graphene, high speed rail and electric vehicles and lithium batteries.

China is also very competitive internationally in the production of LNG carriers for liquefied natural gas, drugs, that’s pharmaceutical products, large tractors, machine tools, robots, AI and semiconductors. And the only area that China is not yet globally competitive in is commercial aircrafts. And they expect that by 2030, China will also be competitive in the production of commercial aircrafts.

And again, Donald Trump’s trade war against China is only further incentivizing China to develop alternatives to Boeing and Airbus. Just like how the chip war that both Trump and Biden waged against China also incentivized Beijing to develop domestic chip manufacturing. So what all this shows is that the more the U.S. wages economic war against other countries, the more it backfires on the U.S. economy and hurts average working class Americans.

And Bloomberg published another report noting that because of Trump’s threats against countries around the world, not only against China but other countries, tourism in the U.S. is plummeting. And the U.S. economy is going to be losing billions of dollars of revenue that it previously got from tourists from not only China, but from Europe, from Canada, from Mexico, from all of these areas of the world that are being threatened by Trump. And ironically, this could probably worsen the U.S. current account deficit, worsen the U.S. trade deficit with the rest of the world, because when tourists go to the U.S., that’s considered a U.S. export.

It actually helps the U.S. trade balance. And now Trump is making that situation even worse. And Trump expects that Chinese companies are just going to sit on their hands and take the U.S. tariffs and not going to retaliate in any way.

But we’ve seen many creative forms of retaliation, not only by the Chinese government, but by Chinese business people. And one of the most hilarious and incredible examples of these is that on social media, there have been many videos going viral showing Chinese suppliers in the supply chain for Western luxury goods from companies like Louis Vuitton. And what they’ve been showing is that many of these largely European luxury goods actually have significant parts of their supply chains in China, and that Chinese suppliers can produce these luxury goods like these Birkin bags for a tiny fraction of the price that they’re sold at by these European luxury goods companies.

And the quality is the same. The product is basically identical. The only difference is maybe it doesn’t have the tag that says Birkin or Louis Vuitton.

It doesn’t have the logo, but it’s exactly the same. And they’re telling Western consumers, U.S. consumers, they’re saying, buy these products directly from us at a huge discount. So once again, the message is that the more that Trump threatens China, the more it backfires on the U.S. economy and actually ends up strengthening China.

I’ve said this many times in my reports, but I want to repeat it because it’s such an important fact to understand what’s happening here. China’s largest trading partner is no longer the United States. That was true a decade ago.

It’s no longer true today. China’s largest trading partner is Southeast Asia, the ASEAN countries. And in 2018, as recently as then, when Trump initiated his trade war, the United States made up 19.2 percent of China’s exports.

They went to the U.S. That figure has fallen to 14.7 percent as of 2024. And that figure will likely continue to fall. But China is not going to be the one that suffers most of the economic consequences.

It will feel a little pain, but it’s actually the United States that will feel much more pain. Because if China does not redirect those exports to other countries, it can boost internal consumption. The Chinese government can announce a stimulus or carry out other policies that increase the domestic demand in China to purchase these goods.

And we’ve seen this happen over the past two decades. China in fact relies less on exports as a share of its overall economy, as a share of GDP, than the world average. And yes, it’s true that in the early 2000s, China was above average.

It was very dependent on exports. But today, exports make up around 20 percent of China’s GDP, whereas the world average is around 30 percent. And over time, China’s dependence on exports has been falling as there’s been much more domestic consumption, as living standards have risen, wages in China have risen by many times, by over 10 times in the past few decades.

And as Chinese people have more disposable income, they’re buying more and more of these local goods produced by Chinese companies. And it’s not just me saying this. It’s now even the mainstream financial press that is warning exactly the same.

The Financial Times columnist Gideon Rachman, who’s very anti-China. You cannot accuse this guy of being pro-China. He’s a very centrist British journalist who his views represent the kind of elite neoliberal establishment in Europe.

And even he admitted in an op-ed in the Financial Times that China holds a stronger hand than the United States. As he wrote, quote, it looks like Trump has a much weaker hand than he thought in the game of tariff poker that he is playing with China. The longer it takes for Trump to accept this definitively, the more he and the U.S. stand to lose, end quote.

He continued, quote, the fact that China exports far more to the U.S. than the other way around is actually a source of leverage for them, for China, not a weakness. The U.S. is not buying products from China out of charity. Americans want what China makes.

So if those products become much more expensive or disappear from the shelves altogether, Americans will suffer, end quote. And then he goes through some of these shocking statistics that show just how dependent the U.S. is on China. More than half of the smartphones sold in the U.S. are iPhones, and 80 percent of those iPhones are made in China.

80 percent of the world’s air conditioners are made in China. Three quarters of the electric fans of the U.S. imports are made in China. 75 percent of the dolls and bicycles of the U.S. imports are made in China.

He went on noting that China makes almost 50 percent of the ingredients that go into the antibiotics that Americans depend on. So the U.S. pharmaceutical industry, maybe they make their drugs, but they rely on inputs from China. The U.S. military’s F-35, the backbone of the U.S. Air Force, requires rare earth components sourced from China.

China dominates the global supply chain for rare earths. And also, by the way, China is still the second largest foreign holder of U.S. Treasury securities. And although China has been de-dollarizing in the past decade and reducing its holdings of U.S. Treasury securities as an overall percentage of its foreign exchange reserves, China still has the nuclear option that it could fall back on if Trump really tries to escalate things further.

And China could simply dump the Treasury securities that it holds. This is U.S. government debt, which would cause a crisis in the U.S. bond market. And it was a mini-crisis in the U.S. bond market that forced Trump to pause his tariffs for 90 days in the first place.

So China has so many cards up its sleeve that it can still play, whereas Trump already used most of the cards that the U.S. had against China. And just a few days after launching this nuclear trade war against China, he immediately backtracked and essentially admitted defeat by issuing exceptions for the most important electronics goods that China exports to the U.S. So again, I want to conclude on this point, which is that the United States is actually weaker economically than many people think, than it wants the world to think. The Trump administration and many Democrats as well, they overstate the power of the U.S. economy.

And essentially, they’re still living in the 1990s and the early 2000s, when the U.S. was the unipolar imperial power in the world. It was the only great power. It had a global empire, and the United States could bully other countries and force them to do whatever it wanted through military interventions and sanctions and other threats.

But we are in a multipolar world today. The situation has changed drastically. China is in fact now the world’s largest economy when you measure its GDP at purchasing power parity.

It has been since 2016. China continues to grow at a very fast pace. China is the world’s manufacturing superpower, and it’s the United States that is in relative decline.

Of course, the U.S. empire is still strong. It can still do a lot of harm to other countries, especially small and medium-sized countries like Venezuela, Iran, Cuba. The U.S. empire loves to bully around smaller, weaker countries.

But when it comes to large powers like Russia, the United States and NATO lost the proxy war in Ukraine. And now with China, the United States has already lost this trade war that Trump massively accelerated, and Trump is begging China’s President Xi to return his calls. So this shows how we are most definitely in a multipolar world, and there are so many changes happening so fast.

But here at Geopolitical Economy Report, we’re trying to help people understand what’s going on. I’m Ben Norton. I’m the Editor-in-Chief.

I want to thank everyone for joining me today. Please like and subscribe. Please share this.

I will see you all next time.