Analysis: Who Will Bear the Brunt of Trump’s Tariffs?

[para. 1] Since taking office in January, U.S. President Donald Trump has implemented higher tariffs on Chinese imports, which has provoked debates on the ultimate impact of these trade policies. [para. 2] Specifically, in late February, Trump announced an additional 10% tariff on goods from China starting March 4, adding to a previous 10% tariff enforced on February 4.

[para. 3][para. 4] The distribution of these tariffs' costs remains uncertain, as it depends on negotiations among consumers, U.S. importers, and Chinese suppliers. Hu Jie from Shanghai Jiao Tong University highlights that weaker negotiating parties are more likely to bear the costs. The complexity of retail negotiations further complicates the exact distribution of these costs.

[para. 5][para. 6] Analysts contend that costs might be equally divided between Chinese exporters and U.S. importers. However, some U.S. clients, like those of Yang Wei, a curtain manufacturer in China, plan to increase retail prices by up to 10%. Smaller suppliers are disadvantaged in negotiations with large U.S. importers like Walmart, which has been negotiating price cuts amid tariff hikes.

[para. 7] According to industry expert Hu, small and midsize Chinese suppliers generally operate with low-profit margins of around 2% to 3%, making it challenging for them to absorb the tariff costs. Larger suppliers, like those servicing Walmart, also experience average profit margins of only around 5%.

[para. 8][para. 9] On March 12, Trump reinstated a 25% tariff on steel and aluminum imports, which significantly affects China due to its large aluminum export market to the U.S., accounting for 16.3% of total Chinese aluminum exports in 2024.

[para. 10][para. 11][para. 12] The report by Beijing Antaike Information Co. Ltd suggested that aluminum exporters in China are particularly targeted due to the metal's importance in sectors like electric vehicles and solar cells. A projected 12% decrease in aluminum exports from China has been predicted due to increased scrutiny from Western governments.

[para. 13][para. 14][para. 15] Amidst these challenges, U.S. importers are seeking alternative suppliers as seen with Walmart. The retailer has diversified its supply chain, reducing reliance on Chinese goods from 80% in 2018 to 60% by August 2023, while increasing imports from India.

[para. 16][para. 17] Andrea Albright from Walmart emphasized the need for resilience, explaining the importance of not relying solely on one supplier or geography. Despite this shift, some Chinese products with technological advantages remain resilient.

[para. 18][para. 19] Lawyer Chen Hui explains that higher U.S. tariffs aim to revive American manufacturing, even if it results in higher product prices. U.S. pharmaceutical companies will face increased production costs due to reliance on Chinese and Indian imports.

[para. 20][para. 21] To counteract these tariffs, Chinese manufacturers can relocate supply chains, improve efficiency, or explore other markets. However, Han Lijie cautioned against the potential for tighter U.S. origin rules, which could complicate efforts to circumvent tariffs by relocating manufacturing to other countries.

[para. 22][para. 23] Sun Yanran contributed additional insights, while reporter Ding Yi and editor Joshua Dummer were involved in compiling and finalizing the report.