The escalating trade tensions between the United States and China continue to send ripples through global markets, with American consumers increasingly bearing the brunt of policy decisions made in Washington. As I’ve tracked this economic conflict from my desk in D.C. over the past several years, one thing has become abundantly clear: the gap between political rhetoric and economic reality grows wider by the day.
Last week, President Trump announced his administration would impose an additional 25% tariff on $300 billion worth of Chinese imports, expanding the trade war that has already impacted everything from soybeans to smartphones. During a rally in Pennsylvania, Trump declared, “China is paying these tariffs, not us,” a claim that has been repeatedly challenged by economists across the political spectrum.
My conversation with Daniel Mitchell, senior fellow at the Cato Institute, highlighted the fundamental misconception driving current policy. “Tariffs are essentially taxes paid by American importers, who typically pass those costs to American consumers,” Mitchell explained during our interview at his office overlooking Massachusetts Avenue. “The data simply doesn’t support the narrative that China bears the cost.”
Indeed, a recent study from the Federal Reserve Bank of New York estimates that the tariffs implemented so far cost the average American household $831 annually. When I visited Portsmouth, New Hampshire last month, small business owner Sarah Delaney showed me how tariffs had increased her costs for imported furniture components by nearly 20%. “I either absorb the cost and reduce my profits or pass it to customers and risk losing sales,” she told me, pointing to spreadsheets tracking her narrowing margins.
The impact extends beyond retail prices. According to data from the Bureau of Labor Statistics, manufacturing employment growth has stalled in states heavily dependent on industries affected by retaliatory Chinese tariffs. Pennsylvania, Michigan, and Wisconsin – states crucial to Trump’s electoral strategy – have seen manufacturing job growth slow to just 0.5% in the past year, compared to 2.3% nationwide.
Agricultural communities have been hit particularly hard. During my drive through Iowa’s corn belt in February, I stopped at a diner in Cedar Rapids where local farmers gathered for morning coffee. Third-generation soybean farmer James Wilson didn’t mince words: “We’re being used as pawns in a game we never asked to play.” U.S. Department of Agriculture figures show soybean exports to China dropped by 74% in 2018, forcing the administration to provide $28 billion in farm subsidies – more than twice the auto-industry bailout of 2009.
The broader economic consequences continue to mount. The International Monetary Fund recently lowered global growth projections, citing trade tensions as a primary factor. Meanwhile, stock markets have responded with volatility to each new development in the trade saga, with the Dow Jones Industrial Average swinging more than 300 points following Trump’s latest tariff announcement.
For all the economic pain, the stated policy goals remain elusive. “If the objective was reducing the trade deficit with China, we’ve failed,” noted Jennifer Harris, senior fellow at the Council on Foreign Relations, during our panel discussion at Georgetown University last week. “The U.S-China trade deficit actually grew by 10.9% since the tariffs began, according to Commerce Department data.”
Some manufacturing has indeed begun shifting away from China – but rarely to American shores. Vietnam, Mexico, and Thailand have emerged as the primary beneficiaries as companies restructure their supply chains to avoid tariffs. Taiwan-based electronics manufacturer Foxconn, despite promises of major U.S. investment, has scaled back planned operations in Wisconsin while expanding in Vietnam.
When I pressed White House economic advisor Larry Kudlow about these trends during last month’s press briefing, his response revealed the administration’s
