By Dusty Miriam Gutierrez

April 22, 2025

President Trump’s plan during his second administration is to eliminate global trade irregularities and unfair trade practices, particularly from China. The President plans to convene over 70 U.S. allies to discuss solutions to trade irregularities, such as non-tariff trade barriers, currency manipulation, and other unfair trade practices. He aims to prepare the U.S. and its allies to address China’s unacceptable trade practices. President Trump, with support from strong allies, such as Canada, the U.K., Japan, parts of Europe, Mexico, and South Korea, seeks to decouple from unfair Chinese trade policies. (Jan Jekielek Senior Editor of the Epoch Times)

Effective April 9, 2025, the president has increased tariffs on goods imported from the People’s Republic of China, from 20% to 145%. He has also authorized a 90-day tariff pause on reciprocal tariffs with all other trading countries except China. During this pause, the U.S. will open negotiations with foreign trading countries regarding tariffs.

Non-Tariff Trade Barriers

Global trade has evolved significantly since the establishment of the World Trade Organization (WTO) in the year 2000. Countries often implement currency-related non-tariff trade barriers (called “loopholes”) to gain economic advantages. China has imposed unfair irregularities, called “non-tariff measures,” on most U.S.-China trade.

Transshipment

China has demonstrated unfair trade policies all along. As a reprisal, since 2000, the U.S. has imposed larger tariffs on Chinese imports than it has on imports from other countries. Exports from Mexico and Vietnam to the U.S. include genuinely produced goods by firms in those countries. However, there has been a marked increase in transshipment: Chinese-originated products are sent to Mexico or Vietnam, minimally processed, relabeled as “Made in Mexico” or “Made in Vietnam,” and then shipped to the US, seeking the economic advantage of lower tariffs.

Mercantilist Trade Policies

Mercantilism is an economic practice where governments seek to regulate their economy and trade in order to promote domestic industry, often at the expense of other countries. Mercantilist trade policies are prevalent worldwide. Nations are running trade surpluses (where exports are larger than imports) and rely on the U.S. to run deficits (where exports are smaller than imports). When every country except the U.S. adopts this approach, the global trade system begins to break down.

The Chinese economy accounts for roughly 15% of the global economy, yet its manufacturing sector represents about 30% of global production. In certain industries, Chinese firms supply a large percentage of global demand due to massive Chinese state subsidies, yet China fails to adhere to international rules. China’s trade surplus is one-sided.

Currency Manipulation

Some countries give their exports an artificial price advantage, such as devaluing their currency. This constitutes currency manipulation, boosting export competitiveness. Japan, Vietnam, Malaysia, and China often devalue their currencies to sustain unfair mercantilist trade policies.

Bilateral Relationships

The Trump administration advocates building bilateral win-win trade relationships, arguing that multilateral institutions like the WTO, United Nations (UN), and World Health Organization (WHO) are often inefficient and lack enforceable penalties.

U.S. Tariff Negotiations Leverage

Although the U.S. runs a substantial trade deficit with China, importing $400 billion and exporting $150 billion annually, this imbalance grants the U.S. significant leverage in negotiations. China does not want to lose $400 billion in its economy.

Essential Minerals and Pharmaceutical Products

China holds leverage in the trade of essential minerals and pharmaceuticals. However, alternative suppliers, such as India for pharmaceuticals, can diversify supply chains. The Trump administration has identified potential partner countries to shift critical industries away from China.

Predictions

The International Monetary Fund (IMF) is a major financial agency of the United Nations and an international financial institution. Its mission, among other things, is to facilitate trade and global financial stability. The IMF predicts that the global economy will slow sharply in 2025. This prediction is due to general market uncertainties and to President Trump’s high import tariffs. The slowdown will be particularly sharp in the US economy. However, the U.S. economy is expected to grow at an annual rate of 1.8 percent in 2025. (David J Lynch, Washington Post writer)

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Dusty Miriam Gutierrez has earned degrees in economics, IT, and legal technology, and has published an economic article in the Townhall magazine.