The Trump administration appears to have thought China would simply roll over like a good dog and grovel for an end to tariffs. But, unsurprisingly to pretty much everyone, they’ve instead vowed to “fight to the end” rather than bend to US coercion.
As a result, Trump has slapped them with a 104% punishment tariff and China has responded with an 84% tariff on the United States. But it’s easy to see these stories in the press and wonder what, if anything, these numbers will mean for you. Well, in summary, nothing good! Let’s get into it.
Overview of US-China trade
US-China trade added up to roughly $558 billion in 2024. Of that, $440bn were Chinese imports to the US, with $145 billion the other way. It’s worth remembering that there were already tariffs on China from Trump’s first term that Joe Biden maintained, which have gradually decreased America’s reliance on the country over the 2020s. For example, in 2016, China represented 21% of American imports, but as of 202,4 it was down to 13%.
What’s going to get more expensive?
A huge swathe of consumer goods comes into the United States from China. One of the biggest imports is smartphones, with Apple assembling them in Chinese factories and importing them. As such, we suspect Tim Cook of Apple is sorely regretting his million dollar donation to Trump’s inauguration, because as things stand, the iPhone is suddenly massively more expensive to sell domestically. It remains to be seen how much prices will rise, but it’s very possible that they could double if the tariffs aren’t lifted.
That’s just one example, so here’s a brief list of items that are likely to see their prices skyrocket in coming days: laptops, smartwatches, headphones, TVs, solar panels, batteries, mattresses, sneakers, cosmetics, handbags, general clothing, game consoles, kid’s toys, sports equipment, bicycles, cookware, stationary, and EV parts (you might distantly hear Elon Musk weeping). This is by no means a full list, as China’s factories have ensured a flood of a huge variety of affordable items into the United States. For the last few decades, prices have been kept low by sensible trade rules, but now this is all out the window.
Less disposable income
Beyond consumer products, it appears China is already responding with direct economic action. As per Brian Krassenstein, China’s Central Bank is asking its banks to reduce US dollar purchases, which will raise US interest rates:
BREAKING: China, moments ago has just launched the first weapons to fight back against Trump’s tariffs.
— Brian Krassenstein (@krassenstein) April 9, 2025
China’s Central Bank has just asked state-owned banks to reduce their US Dollar purchases.
This will do what Trump hates most… raise US interest rates.
Everyone loses…
That means increased costs of borrowing money, less disposable income and, as a result, stunted economic growth. Make no mistake, Chinese consumers will also be hit by these tariffs, though given the trade imbalance it’ll be you and your family that come off worse.
If you have any big electronics purchases planned make them immediately, as once the stock already imported is sold there’ll be a colossal mark-up. Otherwise it’s time to start budgeting very carefully, as what was affordable this week may be out of your reach very soon. Either way it’s going to be grim.
Published: Apr 9, 2025 07:52 am