How China’s Record Trade Surplus Helped Spark Trump’s Tariff War

Blaming China is part of finding-someone-to-blame tradition. The Muslim, the migrant, the Russian, the unions, the West vs. 'Islam', etc. Years of stagnation, decline in competition with China, rentier economies inabilities to resume capitalist growth after 2008/2009, etc. have created tensions among capitalist states. Forget the cheap goods enjoyed by Westerners for years. Forget the billions made by Western multinationals in China.

US's protectionism and relative decline is just one of the outcomes of 'globalisation'. China is now a demon and the 'the innocent West’ is a victim that must do something to stop its relative economic decline/stagnation. Rearmament is meant for China, not Russia.

“Structurally, this crisis is one of overaccumulation. Chronic stagnation places mounting pressure on the political and military agents of transnational capital to crack open new spaces of accumulation.”

Meanwhile, let's focus on Trump's unpreditable decisions and forget about the tariff-free genocide.

An analysis by the FT – excerpts:

China is comfortably the world’s trading superpower.

Its trade surplus — the difference between imports and exports— rose to almost $1tn last year. Beijing’s exporting machine is one of the main reasons President Donald Trump has launched the opening shots in his new global trade war. But it is not just the US that is alarmed.

Emerging economies and established rivals are also concerned about their industries being crushed by cheaper Chinese goods — a situation that could be exacerbated if products once destined for the US end up in their markets instead. China’s trade surplus affects the whole world.

No country has escaped Trump’s tariffs, but China’s massive trade surplus has seen it hit with the steepest measures. The US and Beijing are locked in an escalatory row that has seen Washington place levies of more than 104 per cent on Chinese goods entering the US.

The US president hopes that his tariff regime will erode China’s surplus and enable American manufacturers to compete again. But Beijing’s trade juggernaut is built on deep competitive advantages built up over decades that will not be easily dislodged.

“The sheer scale of China’s dominance is unprecedented; no other country in recent decades has matched this level across such a broad range of products,” says Vincent Vicard, head of the International Trade Analysis programme at economic think-tank CEPII.

China makes almost a third of all manufactured goods — more than the US, Japan, Germany and South Korea combined.

China produces three in every four lithium-ion batteries sold globally, according to the International Energy Agency (IEA). China has a commanding lead in the global share of patents filed for lithium-ion batteries, in recent years accounting for around 80 per cent of the annual total, according to analysis by Simon Lux, a battery researcher at the University of Münster in Germany.

Other critical sectors include vitamins, pharmaceutical raw ingredients, household appliances and personal items such as wigs, where China accounts for around 75 per cent of the export market.

Overall, the country supplies at least 50 per cent of global exports for 730 of 5,000 classified trading products, three times higher than the EU and almost eight times as many as the US, according to CEPII.

China accounts for only 15 per cent of global consumption — less than its 18 per cent share of world GDP and far below its 30 per cent share of manufacturing. That means it needs demand in other countries to absorb its enormous excess production.

China shipping more goods than it brings in is far from a recent development — Beijing has recorded an overall trade surplus for 30 years. However the gap between its exports and imports has more than doubled since 2019, climbing to almost a trillion dollars last year.

Industrialised nations as well as fast-growing economies have expressed unease at the negative impact this is having on their manufacturing sectors. But Chinese officials have mostly denied the existence of any problem with oversupply.

Mexico’s president, Claudia Sheinbaum, has blamed the decline of the country’s textile and footwear industries on cheap Chinese imports, and said it will review the tariffs it has on China.

In Indonesia, officials worry that hundreds of thousands of jobs could be lost in the critical textile industry because of an influx of cheap Chinese goods. Even China’s close partner Russia has introduced levies on car imports from its neighbour after it took almost two-thirds of the local market.

Some analysts think the measures, which combined take US duties on all Chinese imports to at least 104 per cent, might finally persuade Beijing to restructure its production-orientated economy to allow for more domestic consumption.

Not only will China find it harder to export to the US, other countries may put up their own trade barriers to avoid being swamped by Chinese products no longer heading for America. Chinese companies could be forced to restructure supply chains and invest more in plants overseas.

But some believe China’s export machine can still weather this phase of the trade war. Michael Pettis, a Beijing-based associate of the Carnegie Endowment for International Peace, argues that Trump’s tariffs do not address the root causes of the trade deficit: China’s excess savings and America’s fiscal profligacy.

Source: the Financial Times, 09 April 2025

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