A flood of Chinese investment—totaling a staggering $1.9 trillion—is rapidly transforming global manufacturing, posing a serious threat to industries across the world, especially in the United States, the NY Post reports.
The Chinese government has funneled enormous sums into boosting factory output over the last four years, launching a massive expansion effort aimed at saturating international markets with low-cost products.
In response, former President Donald Trump on Wednesday announced a sweeping 125% tariff on all Chinese goods entering the U.S.—while suspending similar duties on most other nations—marking his latest move to shield American industries from the impact of China’s aggressive export strategy.
Governments around the world are taking similar steps. In recent months, countries like the European Union, Mexico, Brazil, and Thailand have either introduced new trade barriers or are actively considering tariffs to guard against a surge of Chinese goods flooding their markets.
“The tsunami is coming for everyone,” said Katherine Tai, trade representative for former President Joe Biden, told The New York Times.
In a strategic pivot, China has redirected financial resources previously allocated to housing development toward expanding its industrial base. State-run banks have extended nearly $2 trillion in additional loans to manufacturers since 2020, according to new figures obtained by The New York Times from China’s central bank.
Factories are popping up across the country at a breakneck pace, while existing plants are being upgraded with advanced machinery to churn out massive quantities of everything from consumer electronics to automobiles and agricultural chemicals—primed for export.
Among China’s most ambitious projects is the construction of two enormous auto manufacturing plants by carmaker BYD, each of which is on track to surpass the size of the Volkswagen facility in Wolfsburg, Germany—the largest car factory in the world.
China’s exports surged by double digits in the past two years, with a 13% increase in 2023 followed by 17% growth in 2024. Exports now make up about one-fifth of China’s entire economy.
By contrast, the U.S. has seen its export figures shrink. Once at record highs a decade ago, American exports now represent just 11% of the GDP, down from 13.6% in 2012.
Trade with China has been especially hard-hit. U.S. exports to the country dropped nearly 3% last year, falling to $144 billion, according to data from the U.S. Trade Representative’s office. At the same time, the trade deficit with China ballooned to $295 billion.
Despite some previous declines, Chinese imports into the U.S. bounced back last year, climbing almost 3% to reach nearly $440 billion.
Faced with China’s growing dominance in manufacturing, nations are racing to fortify their own markets. Brazil enacted higher tariffs on metal and fiber optic products from China in 2023. The EU slapped Chinese electric vehicles with tariffs exceeding 45% to help safeguard European carmakers.
Mexico has considered aligning its trade policies with U.S. measures by adopting matching tariffs, while Thailand is exploring changes to its free trade agreements that would introduce a 7% tax on inexpensive Chinese imports.
Trump’s dramatic new tariff is aimed at creating a strong protective barrier around U.S. industries in anticipation of the economic pressure heading America’s way.
In some sectors, steep tariffs have already proven effective—particularly on Chinese electric vehicles, which might otherwise have overwhelmed American automakers.
However, for some global competitors, China’s momentum has already had devastating effects. According to ASEAN Briefing, Chinese imports caused manufacturing output in Thailand to plummet by half last year.
{Matzav.com}