How China could strike back at Trump’s tariffs

America’s industries, including defense, outsourced tens of thousands of key parts to China during the past 20 years. US manufacturers don’t produce capacitors, accumulators, pumps, compressors, switching equipment and other essential equipment for US electrical utilities.

None of these are hard to manufacture or expensive when manufactured in volume. But rebuilding industrial capacity for a wide range of critical inputs would be extremely expensive. Key dependencies on Chinese imports make America vulnerable to Chinese retaliation in the event of a trade war.

President-elect Donald Trump has proposed 60% tariffs on Chinese imports, while the US Congress Select Committee on China wants to strip China of its Most Favored Nation trading status, which could lead to tariffs of 100%.

China’s exports to the US peaked at over 10% of its GDP (in US dollars) in 2005, but have fallen to just over 2% of GDP today. If trade relations with the US rupture, which side would suffer more? It’s hard to reckon with all the variables, but the United States well might well come out worse.

Asia Times published the first study showing that China had re-routed a large portion of its exports to the US via third countries (“The Great re-shoring charade,” April 6, 2023).

Since then, the International Monetary Fund, World Bank, Bank for International Settlements and the office of Senator Marco Rubio have published supporting evidence. Vietnam and Mexico now export 25% of their GDP to the United States. As noted, China exports barely over 2%.

America’s failure to scale up production of ammunition for Ukraine should be a warning to policymakers. In February 2024, the US produced just 30,000 155mm shells a month, or three days of Ukrainian