Washington's relations with partners could be affected by duties: Panelists

Participants in a discussion on the effect of US tariffs on China and other countries said it could have a lasting impact on the US economy, trade with key partners, including Canada, Mexico and Europe, and international relations.

The discussion on Tuesday was held at the China Institute in America, a 100-year-old organization based in New York City that strives for better relations between China and the United States.

Panelists included Craig Allen, former president of the US-China Business Council; Brad W. Setser, a senior fellow at the Council on Foreign Relations and former senior adviser to the US Trade Representative; and Susan Yuqing Feng, a journalist and director of programs at the China Institute in America, who moderated the discussion.

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Feng said the US government has placed tariffs on more than $440 billion of Chinese imports, and the current tariffs on Chinese goods are around 39 percent. She asked what effect that would have on global trade relations.

"If you put 25 percent tariffs on the entire world or 20 percent tariffs on the entire world, the US will import less. We'll also export less," Setser said.

Since the beginning of his second term, President Donald Trump has placed 20 percent additional tariffs on Chinese imports to the US. He has also enacted a broad 25 percent tariff on Canada and Mexico. He enacted tariffs of 25 percent on all steel and aluminum imports, and plans reciprocal tariffs for most trading partners on April 2.

Allen said it was important to understand what the Trump administration is trying to achieve by using tariffs, that it is mainly to bring back manufacturing and jobs to the US. But he said the levies have several other purposes.

"They're to raise revenue, tariffs can also be used for retribution. …Tariffs can be used for reciprocity to encourage other countries to lower their tariffs for perceived harms, and that's a useful framework to look at the president's policies," Allen said.

Mexico, Canada and China are the US' top three trading partners.

However, the president's reason for increasing tariffs on China seems unclear.

No clear goals

"I don't think the goals that this administration has set out are clear yet," Setser said. "There's obviously contradictions. If you follow their own rhetoric, we are just actually getting started.

"These are the appetizers, … The main course perhaps comes on April 2 with the reciprocal tariffs, so perhaps it gets delayed and pushed beyond."

Allen noted that the trade landscape between the US and China has changed over the past decade.

"In 2017, Chinese imports into the US as a percentage of our total imports peaked at a little bit above 21 percent," he said. "In 2024, they were about 13 percent, and so while our total trade deficit has gone up enormously, the share from China has gone down, and I suspect that both parties approve of that."

He said China's exports are growing rapidly and will go from 33 percent of global manufacturing to 42 percent by 2030.

US and Chinese companies are now diversifying which countries they work with, which could mean that goods shipped to the US will avoid tariffs.

Economists are closely watching how the pending reciprocal tariffs will work out.

Setser said if reciprocal tariffs are imposed on countries worldwide, then the levies on China will seem less significant.

Allen added that reciprocal tariffs could flout the World Trade Organization rules.

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In 2018, during his first term in office, Trump placed tariffs on $300 billion of Chinese-made goods, sparking a trade war. Former president Joe Biden maintained those original tariffs and increased levies on $18 billion of Chinese imports.

Setser explained that at the offset, Trump's goal was to get China to buy more goods from the US. But he said that at present, Trump is more focused on a trade war with Canada, Mexico and the European Union.

Overall, Allen believes that tariffs are not an effective measure to increase employment across the economy. He said the US had experimented with it, and it did not work out well and contributed to inflation in 2023, which he said "Americans were very resentful about".

Setser added that "we could certainly throw the US and the global economy into a downturn with this level of tariffs introduced this quickly. … We are at least taking policy decisions that put us at risk of a self-inflicted recession".

belindarobinson@chinadailyusa.com