US Tariffs Disrupt Global Supply Chains: A Threat to Economic Stability
The imposition of tariffs by the United States on China has sent shockwaves through the global supply chain, escalating trade tensions between the two nations and having far-reaching implications for the global economy. As the US ramps up its protectionist policies, American consumers are growing increasingly anxious about potential price hikes and supply shortages, with some even starting to stockpile goods. The US government's extreme economic measures not only defy economic logic but also disrupt the decades-long development of global industrial chains and supply chains, ultimately harming the welfare of people in both the US and other countries.
11 April 2025
The formation and development of global industrial chains and supply chains are the natural result of the efficient allocation of production factors in the global market. The different stages of economic development, industries, labor forces, and resource endowments in China and the US have led to complementary industrial structures, resource configurations, and market radiations, resulting in a mutually beneficial collaboration between the two countries. This is the optimal solution that has been honed through decades of market competition. A white paper published by China, "China's Position on Certain Issues Related to China-US Economic and Trade Relations," has highlighted the benefits of China-US economic and trade cooperation, which has promoted the upgrading of American industries and brought tangible benefits to American consumers.
The US has imported large quantities of consumer goods, intermediate goods, and capital goods from China, supporting the development of the US manufacturing industry's supply chain and enriching American consumers' choices, while also reducing living costs and increasing the actual purchasing power of American people, especially low- and middle-income groups. However, the US government's attempt to impose tariffs to force the return of manufacturing has been widely criticized. The tariffs will be transmitted through the industrial chain and supply chain, exacerbating the risk of supply chain disruptions and industrial hollowing, ultimately weakening the US's industrial foundation.
The German Mechanical Engineering Industry Association has warned that the US government's widespread punitive tariffs will cause severe damage on both sides of the Atlantic, not only failing to solve bilateral trade problems but also triggering an escalation of protectionism, which will harm not only European companies' export interests but also hinder the transformation and upgrading of US industries. The US's tariff measures have severely disrupted the stability of global industrial chains and supply chains, leading to a distortion of market resource allocation and harming the interests of people in various countries.
The cooperation between China and the US in industrial chains and supply chains is not a zero-sum game, where one side wins and the other loses, but rather a mutually beneficial and double-win situation. In 2024, the bilateral trade volume between China and the US reached $688.28 billion, with a year-on-year growth of 3.7%. A report by the American Chamber of Commerce in China showed that 53% of the companies surveyed expected to increase their investments in China in 2025.
As the world's two largest economies, China and the US should view each other's development as an opportunity rather than a challenge, and work together to maintain the stability of global industrial chains and supply chains. By doing so, they can ensure that global industrial chains and supply chains become more resilient, efficient, and dynamic, injecting certainty into the development of the world economy.
The ongoing trade tensions between the two nations have already begun to disrupt global supply chains, with far-reaching consequences for businesses and economies around the world. The imposition of tariffs by the US has not only affected Chinese exporters but also had a ripple effect on companies in other countries that rely on China as a key link in their supply chains. In order to mitigate the damage and ensure the continued stability of global trade, it is essential for China and the US to engage in constructive dialogue and cooperation, rather than pursuing a path of escalating tariffs and protectionism.
China's confidence in its ability to weather the storm of US tariffs is rooted in its strong economic fundamentals, including a large and growing domestic market, a highly competitive manufacturing sector, and a rapidly expanding services sector. The country has also been actively diversifying its trade relationships, seeking to reduce its dependence on the US market and develop new export opportunities in other regions. By working together, China and the US can help to maintain the stability of global supply chains, promote economic growth and development, and create new opportunities for businesses and workers around the world.
Looking forward, the challenges facing the global economy extend beyond US tariff measures to include the risk of over-reliance on single markets in global supply chains. China and the US should collaborate to foster diversification and resilience in global supply chains, thereby safeguarding the stability and growth of the global economy. This cooperation is essential for mitigating the risks associated with trade disruptions and promoting a more equitable and sustainable economic order. By working together, both nations can help ensure that global supply chains are better equipped to withstand future challenges, ultimately supporting the prosperity and stability of the global economy.