[Text by Guancha Observer Network, Zhang Jingjuan] US President Donald Trump, who views tariffs as a powerful tool to restrict foreign goods, attempted to strengthen the protection of domestic industries and promote the revival of American manufacturing through "tariff walls," but this effort seems to have little effect on China.

The Washington Post reported on the 27th that American factories rely heavily on Chinese machinery and components. Although Trump claims that his trade policy is sowing seeds for an "age of gold" in American manufacturing, trade experts and businesses point out that widespread tariffs will make the recovery of some industries even more complicated.

The report stated that not only does the U.S. economy depend on finished products like toys and laptops from China, but also the tools required by local factories to produce everything from cars to electronics are dependent on China.

"The overall situation in the U.S. machinery industry is not optimistic. China accounts for a significant share of the capacity needed across various industries," said Susan Helper, an economist at Case Western Reserve University in Ohio and former senior advisor on industrial strategy for the Biden administration.

The report argues that the skyrocketing prices of industrial machinery due to tariffs are just the tip of the iceberg of economic chaos and uncertainty caused by the trade war, highlighting the mutual interdependence between the two economies and revealing the difficulty of repatriating supply chains through decades of globalization.

Helper added, "The ability to produce manufacturing tools is crucial, but it cannot be achieved overnight; tariffs alone cannot accomplish this."

The report noted that over the past decade, China's machinery industry has risen to become a dominant global force. Since 2015, China's machinery exports have more than doubled, reaching $869 billion in 2024. Although Germany has long been the leader in advanced machinery industries, experts say that China has rapidly narrowed the gap with its European rivals.

Data from the U.S. International Trade Commission shows that China is the largest exporter of machinery globally, while the U.S. is the largest importer. In 2023, China accounted for 17% of U.S. mechanical imports.

The Washington Post pointed out that this data may underestimate America's reliance on Chinese machinery. For many products, including machinery, direct import figures from China do not fully reflect the reality because even machines imported from other countries may contain Chinese components.

Richard Baldwin, a professor at the International Institute for Management Development (IMD) in Lausanne, Switzerland, studied this phenomenon and called it "hidden dependence." His research shows that every manufacturing hub in the world relies heavily on China's industrial intermediates. Approximately 40% of China's exports to the U.S. are intermediates rather than final products. You really can't avoid this.

On September 3, 2024, staff members of a parts processing enterprise in Qinhuangdao City, Hebei Province, were polishing parts for export overseas. IC Photo

The American Equipment Manufacturers Association said that bearings, gears, and other mechanical components, as well as hydraulic systems containing pumps and valves, can currently only be purchased in large quantities from China.

Although Trump hoped for more Chinese enterprises to invest in the U.S., tariffs have prompted some Chinese manufacturers planning to expand operations in the U.S. to reassess their plans.

John Ling, an advisor helping Chinese enterprises set up factories in the U.S., said that many Chinese enterprises confided to him that under the new tariffs, they were extremely concerned about whether they could procure necessary raw materials and machinery at reasonable prices.

He stated that in some cases, the investment required to build a factory in the U.S. would double, which might deter Chinese enterprises from establishing factories in the U.S.

"Costs are indeed increasing, leading to the cancellation or postponement of some projects," Ling said.

A material manufacturer described the difficulties of setting up a factory in the U.S. without Chinese machinery. The mechanical equipment required by the company's U.S. factory is almost entirely sourced from China or Germany.

"These machines simply cannot be purchased in the U.S.," a representative of the company said, adding that they had made early preparations last year by importing a large amount of machinery from China to expand production in the U.S.

The report noted that the uncertainty of tariffs has made manufacturers' business decisions difficult.

The Trump administration sent mixed signals regarding whether to maintain tariffs on China, while delaying tariff increases for other countries.

Han Wen, founder of electric truck company Waymo Technology, said he had suspended all procurement decisions for weeks to "wait for the tariff storm to subside."

Although the company has production plants in China, assembly plants in the U.S. and Europe, and its U.S. factory mainly focuses on assembly and does not rely on Chinese mechanical equipment, it depends on certain components from China.

Baldwin emphasized that the contradictory signals from Washington hindered the goal of promoting the development of American manufacturing.

He stressed that promoting the return of manufacturing to the homeland is a very difficult task. The U.S. should strategically consider which industries need to be repatriated and recognize that this is a ten-year plan, not a ten-month one.

In recent days, the U.S. government has arbitrarily abused tariff measures, raising tariffs on Chinese goods from an initial 20%, to 54%, then to 104%, 125%, and most recently to 145%.

Chen Bin, deputy director of the Expert Committee of the China Machinery Industry Federation, said that Sino-U.S. trade occupies a relatively large proportion in the current foreign trade of the machinery industry, but the industry as a whole is actively expanding overseas markets. In 2024, the export volume of the machinery industry to countries participating in the Belt and Road Initiative increased by 14% year-on-year, accounting for 51.5% of the total exports of the machinery industry, an increase of 1.3 percentage points over the previous year. Export volumes to ASEAN, Africa, and Latin America grew by 17.7%, 12.9%, and 27.1%, respectively, all significantly faster than the overall level of the machinery industry.

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Original source: https://www.toutiao.com/article/7498198955747934720/

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