Which US products will suffer most in trade war with China?

The National

18-04-2025

Trade tensions are rising between the US and China, with the effects set to ripple through prices of everyday products. Washington and Beijing have stepped up their trade war in recent weeks. President Donald Trump has imposed tariffs of 145 per cent on all Chinese goods, while Beijing has countered with a levy of 125 per cent. Mr Trump has also flip-flopped on exemptions from tariffs on electronics such as smartphones, contributing to the volatility. The back-and-forth represents a new phase in the commercial war between the countries, which remain one of each other's largest trading partners. Last year, the US imported $438.9 billion worth of goods from China, according to Office of the US Trade Representative data. While Mr Trump has employed a whipsaw approach towards imposing tariffs, economists argue it will be inflationary with the costs trickling down to everyday consumers. Jay Zagorsky, a professor at the Questrom School of Business at Boston University, believes consumers are now stocking up on goods before inflation bites. "It reminds me of Covid days," he said. The World Trade Organisation said this week that merchandise trade is likely to contract by 0.2 per cent this year, down from a growth of 2.9 per cent in 2024, because of the tariff uncertainty. It also lowered its world economic growth projection for this year to 2.2 per cent from 2.8 per cent. Analysts in the private sector are forecasting a year of tepid US growth, with researchers at Goldman Sachs pencilling in a 45 per cent chance of a recession. Few sectors have been affected as badly by Mr Trump's tariff flip-flopping as technology. Last week Mr Trump announced a 90-day pause on so-called reciprocal tariffs that would affect Apple's production supply chain in India and Vietnam, then announced an exemption on electronic products, only to then say no such exemption was made. "The self-inflicted uncertainty by these actions have unleashed an Armageddon scenario for the US sector in particular, as the heart and lungs of the supply chain are cemented in Asia," Wedbush Securities tech analyst Dan Ives wrote in a note before the exemption was announced. Other electronic items making up a sizeable portion of Chinese imports into the US are broadcasting equipment ($54.5 billion), computers ($37.9 billion), office machine parts ($14.3 billion), electric batteries ($13.8 billion) and electric heaters ($6.32 billion), according to the Observatory of Economic Complexity, a trade data platform. Unlike during Mr Trump's first term, toys are not exempt from the latest round of tariffs, which could mean parents will have to spend more on inexpensive toys shipped from China. About 80 per cent of all toys in the US are made in China, industry group the Toy Association says. Jay Foreman, chief executive of Care Bear and Tonka Trucks parent company Basic Fun!, told NBC's Today show he expects 80 per cent of toys to cost twice as much as usual during this year's holiday season. From Nike trainers to the White House press secretary's attire, Americans wear a significant amount of Chinese-imported clothing and footwear. Textiles and fashion are likely to be the most affected, according to The Budget Lab at Yale. It estimates consumers will face 65 per cent higher prices on apparel in the short term and 27 per cent higher in the long term. E-commerce fast fashion companies Shein and Temu could also be forced to raise their prices when the "de minimis exception" – which allows for packages valued under $800 to enter the US duty-free – expires. Mr Trump briefly closed the loophole in February and is expected to do so again in May, Reuters reported. Shein and Temu account for 17 per cent of the US discount market. The two companies said they plan to raise prices for US consumers next week. Meanwhile, China was the largest supplier of textiles to the US last year, according to USImportData. Walmart, Target, Amazon and Costco – all major retailers selling budget-friendly goods – used China as a primary source for textiles.