Unexpected Results of the US-China Trade Conflict
By
March 18, 2024
Four years ago, the US-China trade war started, with both countries putting tariffs on about $450 billion worth of goods. People thought this would change how trade and politics worked around the world.
After this, trade between the US and China decreased. But during Covid-19, there was a lack of computer chips, which made the US realize it needed to make more of these chips itself.
China also began controlling the amount of rare-earth metals it sold globally. These metals are important for things like making F-35 jets.
All this led to more manufacturing and mining in the US, to try to balance the trade deficit with China. But did it work? Did manufacturing come back to the US? And did the trade deficit get smaller?
It seems like manufacturing is growing in the US. The Chips and Science Act of 2022 is putting a lot of money into making more computer chips in the US. Big companies like Intel and Micron are building new factories, and foreign companies are investing in US factories too.
But some companies are struggling because they made too many chips when there was a shortage, and now they can’t sell them all.
The trade deficit with China didn’t get bigger after the tariffs were put in place, but it didn’t get much smaller either. Instead, the US started buying more from other countries like Mexico, Taiwan, and Vietnam.
China found ways to still sell a lot to the US, even with the tariffs. They send goods to other countries like Mexico, and then those countries send the goods to the US without paying tariffs. This helps China keep selling a lot to the US, but through other countries.
So, while the trade war with China didn’t make things better, it did change who the US buys things from.
