President-elect Donald Trump’s proposed tariffs will likely blunt U.S. imports, especially from China, but also exports by American manufacturers, a trade analyst predicts.
“The three key words for U.S. trade in 2025 are ‘uncertainty,’ ‘uncertainty’ and ‘uncertainty,’ and add ‘disruption,’” said Mary E. Lovely, Anthony M. Solomon senior fellow at the Peterson Institute for International Economics. “Trump’s trade policy will cause a lot of headaches for shippers and supply chain professionals.”
Lovely commented during a media briefing Wednesday by the Port of Los Angeles.
Trump’s campaign threats to impose massive tariffs and renegotiate trade agreements have caused apprehension among shippers and supply chain professionals.
“There is a lot of support in Washington to reset our trade relationship with China,” Lovely said. “But it doesn’t really matter because we are already differentially taxing China with tariffs and Trump said he will continue that.
“The United States and China are de-coupling. And the rest of the world is seeing the U.S. taking its marbles and going home.”
Potential seismic changes mean trillions of dollars in trade hang in the balance. In 2023 the United States exported more than $2 trillion in goods, according to database platform Statista. But the timeline for change is hard to define.
“As far as the new administration, we’ll encounter some new headwinds our industry will have to navigate,” Lovely said. “Right away, for example, we could see changes on Section 301 (of the Trade Act of 1974) for China tariffs, as President Biden did on China electric vehicles.”
In 2025 Lovely expects U.S. import and export trade flows to decrease despite a robust economy.
“Next year imports will be ‘taxed’ [due to expected tariffs]; as a result consumers will turn to domestic alternative choices,” Lovely said. “There will be higher costs for intermediate inputs by U.S. manufacturing, so manufacturers will be hurt.
“There could be a 1% increase on consumer goods over the inflation rate. Some products will simply disappear from the marketplace.”
The implications have U.S. trade partners wondering how changes are going to impact them.
In 2023 Mexico surpassed China as the top U.S. trade partner with $798 billion in goods and services exchanged. Canada was second at $773 billion and China third at $575 billion, according to the International Trade Administration.
“We could see [changes] right away if Trump follows through on his campaign threats to put 10% to 20% tariffs on everything,” Lovely said. “There will be a review of the USMCA [United States-Mexico-Canada Agreement on trade] and what will be demanded from Mexico. Trump has threatened very high tariffs on Mexico if he doesn’t get agreement on immigration and drug interdiction.
“For Asia, it’s a question of, how much will the new administration tax goods that have Chinese content? The U.S. already went after solar panels under the Biden administration. So third-party countries will have fallout from higher tariffs on China.”
The U.S. in 2024 raised anti-dumping tariffs on Chinese solar panels from 25% to 50%.
Because of Trump’s focus on reshoring activities, Lovely said, “We haven’t heard a lot about exports, which is unfortunate. New trade measures are sure to handicap our exporters. There are implications for jobs across the U.S. in manufacturing, as the U.S. is the second-largest exporter in the world after China. Some jobs will increase but we will also lose jobs in lots of areas.
“The economy will go more slowly and prices will be higher, U.S. manufacturers will be less competitive. Companies will create supply chains to bring goods to America at higher costs, and other countries will create new supply chains.”
A number of other thorny issues arise, Lovely said, as the new administration resets trade.
“We’re not cost competitive on low-value products [such as small appliances]; there is full employment, and deportations. It’s an open question if tariffs are going to create not just jobs but good jobs with good pay and benefits. I am on the side of skepticism.
I think Congress will act on individual districts to protect the effects of across-the-board tariffs. There will be pushback against economic reality when it hits home to Congressional districts.”
Lovely pointed out that uncertainty is hindering reindustrialization and reshoring of manufacturing capacity.
“Supply chain managers at large companies are reluctant to make a $20 million or $50 million bet to build new plants when they don’t know how tariffs will land.”
Gene Seroka, executive director of the Port of Los Angeles, has made frequent visits to China this year. He said he has seen noticeable movement of manufacturing from China to other locations in Asia. On a visit to Detroit, Seroka found automotive industry original equipment manufacturers and tiered suppliers stocking inventory, and other companies were preparing parallel supply chains ahead of the election.
Lovely expects tariffs to land in Q2 or Q3 but can’t say exactly when. Imported electronic products such as phones and laptop computers will be looked at closely. But she foresees a slower approach than what was said on the campaign trail.
“Expect to see tariffs in tranches,” she said.
Find more articles by Stuart Chirls here.
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