Released March 14, 2025 | SUGAR LAND
en
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Widely publicized tariffs on China, Mexico and Canada, while the exact percentages have been in flux, threaten to raise raw materials costs for industry and for consumers. But for China, things will be different this time than they were in 2018, in the first round of U.S. tariff wars.
China has spent the years since then disconnecting somewhat from the U.S. as a trading partner, with the goal of lessening those tariffs' economic impact. And they're striking back with tariffs of their own against imports from the U.S. Beijing has announced tariffs of 10-15% on U.. corn, beef, pork, dairy and soybeans, on the agriculture side, and added to 10% tariffs on crude oil, farm machinery, along with a 15% tariff on coal and liquefied natural gas (LNG), among others.
Chinese economic growth slowed to 5.0% in 2024 compared to a rate of 5.2% the previous year, according to the World Bank. And Fortune magazine noted that, in spite of that growth, China suffered from deflation during that time due to monetary policies. A significant trade war with the U.S. could further damage China's economy.
And although China is the world's largest crude oil importer, Reuter's reports that the nation gets only about 2% of its crude and 5% of its LNG from the U.S. China's top crude suppliers in 2023 were, in order, Russia, Saudi Arabia and Iraq, according to figures from the U.S. Energy Information Administration (EIA).
As for total trade percentages, Bloomberg reported that, measuring the sum of exports and imports, China's portion of total U.S. trade in 2024 was 10.9%, down about one-third from 2018's 15.7%. Conversely, the U.S. portion of China's trade dropped about two and a half percentage points, from 13.7% in 2018 to 11.2% last year.
Beijing has targeted U.S. farmers in its retaliatory tariffs, set at 15% on chicken, wheat and corn, and 10% on soybeans, pork, beef and fruit. Being the largest market for these U.S. farm products, this could be painful in the farm belt should the tariff war continue. China appears to be ready for a long battle, with an official recently declaring, "If the U.S. insists on waging a tariff war, trade war, or any other kind of war, China will fight to the end."
There may some hope for some kind of reprieve, as a "tariffs and trade" meeting between Trump and Chinese President Xi Jinping is being discussed for April or June.
On March 12, new tariffs also took effect against neighbors Canada and Mexico, who depend much more on the U.S. as trading partners. Mexico sends more than 80% of its exports to the U.S., and Canada's percentage is 75%. Oil and gas, along with auto parts, are significant trade segments for both.
In response, Canada has put an estimated $21 billion in tariffs on U.S. goods.
Mexico President Claudia Scheinbaum has reacted differently. She is leaning in to the announced purpose of the tariffs being less about economics and more about limiting illegal immigration and fentanyl across borders. Scheinbaum has promised to dispatch 10,000 troops to her nation's shared border with the U.S. to tackle smuggling. That would then eliminate the stated motivation for tariffs.
Former Canadian Prime Minister Justin Trudeau declared that less than 1% of fentanyl smuggled into the U.S. comes from Canada, which likely was a significant motivator for him to react with tariffs instead of troops.
The economic effect on the U.S. of just its own tariffs will be significant. For example, levies of 25% on Canadian steel and aluminum took effect March 12, and because Canada is the leading exporter of both metals to the U.S., that would send massive price hikes across any industry that depends on those supplies.
Many forecasters predict the U.S. tariffs alone will adversely affect the U.S. economy. For example, Taxfoundation.org estimated that the total tariffs against China, Canada and Mexico will boost federal tax revenue by $142 billion this year, amounting to an average tax increase of $1,072 per US household.
On the gross domestic product (GDP) front, Taxfoundation.org sees China tariffs dropping the U.S. GDP by 0.1% and the neighbor (Canada and Mexico) tariffs costing the U.S. GDP 0.3% on an annualized basis. But that's not the whole story, because it is "before accounting for foreign retaliation."
So perhaps the biggest question revolves around which nations will respond by clamping down on drugs and illegal immigration, and which ones will push back economically. It may also involve the strength of President Donald Trump's resolve in a climate that has already seen him change tariff rates multiple times.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
China has spent the years since then disconnecting somewhat from the U.S. as a trading partner, with the goal of lessening those tariffs' economic impact. And they're striking back with tariffs of their own against imports from the U.S. Beijing has announced tariffs of 10-15% on U.. corn, beef, pork, dairy and soybeans, on the agriculture side, and added to 10% tariffs on crude oil, farm machinery, along with a 15% tariff on coal and liquefied natural gas (LNG), among others.
Chinese economic growth slowed to 5.0% in 2024 compared to a rate of 5.2% the previous year, according to the World Bank. And Fortune magazine noted that, in spite of that growth, China suffered from deflation during that time due to monetary policies. A significant trade war with the U.S. could further damage China's economy.
And although China is the world's largest crude oil importer, Reuter's reports that the nation gets only about 2% of its crude and 5% of its LNG from the U.S. China's top crude suppliers in 2023 were, in order, Russia, Saudi Arabia and Iraq, according to figures from the U.S. Energy Information Administration (EIA).
As for total trade percentages, Bloomberg reported that, measuring the sum of exports and imports, China's portion of total U.S. trade in 2024 was 10.9%, down about one-third from 2018's 15.7%. Conversely, the U.S. portion of China's trade dropped about two and a half percentage points, from 13.7% in 2018 to 11.2% last year.
Beijing has targeted U.S. farmers in its retaliatory tariffs, set at 15% on chicken, wheat and corn, and 10% on soybeans, pork, beef and fruit. Being the largest market for these U.S. farm products, this could be painful in the farm belt should the tariff war continue. China appears to be ready for a long battle, with an official recently declaring, "If the U.S. insists on waging a tariff war, trade war, or any other kind of war, China will fight to the end."
There may some hope for some kind of reprieve, as a "tariffs and trade" meeting between Trump and Chinese President Xi Jinping is being discussed for April or June.
On March 12, new tariffs also took effect against neighbors Canada and Mexico, who depend much more on the U.S. as trading partners. Mexico sends more than 80% of its exports to the U.S., and Canada's percentage is 75%. Oil and gas, along with auto parts, are significant trade segments for both.
In response, Canada has put an estimated $21 billion in tariffs on U.S. goods.
Mexico President Claudia Scheinbaum has reacted differently. She is leaning in to the announced purpose of the tariffs being less about economics and more about limiting illegal immigration and fentanyl across borders. Scheinbaum has promised to dispatch 10,000 troops to her nation's shared border with the U.S. to tackle smuggling. That would then eliminate the stated motivation for tariffs.
Former Canadian Prime Minister Justin Trudeau declared that less than 1% of fentanyl smuggled into the U.S. comes from Canada, which likely was a significant motivator for him to react with tariffs instead of troops.
The economic effect on the U.S. of just its own tariffs will be significant. For example, levies of 25% on Canadian steel and aluminum took effect March 12, and because Canada is the leading exporter of both metals to the U.S., that would send massive price hikes across any industry that depends on those supplies.
Many forecasters predict the U.S. tariffs alone will adversely affect the U.S. economy. For example, Taxfoundation.org estimated that the total tariffs against China, Canada and Mexico will boost federal tax revenue by $142 billion this year, amounting to an average tax increase of $1,072 per US household.
On the gross domestic product (GDP) front, Taxfoundation.org sees China tariffs dropping the U.S. GDP by 0.1% and the neighbor (Canada and Mexico) tariffs costing the U.S. GDP 0.3% on an annualized basis. But that's not the whole story, because it is "before accounting for foreign retaliation."
So perhaps the biggest question revolves around which nations will respond by clamping down on drugs and illegal immigration, and which ones will push back economically. It may also involve the strength of President Donald Trump's resolve in a climate that has already seen him change tariff rates multiple times.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
