Washington, Jan 16 (Reuters) - Eight years ago, Trump arrived in Washington with promises to overhaul U.S. trade relations, reduce a significant trade deficit, and revive the country's industrial sector through the introduction of new tariffs.
As he prepares for his second term, the incoming president plans to implement a more assertive strategy, aiming to levy 10% tariffs on all imports into the U.S. and 60% on goods originating from China. The outcome of these measures remains uncertain; however, early data from the initial trade reforms indicate a diversion of U.S. imports from China to alternative markets like Mexico and Vietnam. Despite these efforts, the U.S. trade deficit has continued to swell, surpassing $1 trillion over the past four years, while factory employment stagnated amid a broader job market surge following the COVID-19 crisis.
During Trump's tenure, American steel producers notably benefited from the tariffs, securing a 25% global tariff, with aluminum producers subject to a 10% duty. These figures were somewhat moderated after quota agreements were reached with Mexico, Canada, the European Union, Britain, and Japan.
Despite the initial revival of some facilities due to these tariffs, certain plants, including a U.S. Steel mill visited by Trump in 2018 to celebrate the industry's revival, have shut down operations. Similarly, a Missouri aluminum smelter revived by the tariffs was eventually closed by Magnitude 7 Metals.
A significant legacy of Trump's first term was his disruption of longstanding policies that favored lowering trade barriers, enabling China to become the world's leading goods producer. In 2021, President Joe Biden revisited these themes upon assuming office.
Kelly Ann Shaw, a trade adviser during Trump's first term, highlighted the significance of Trump's efforts in raising awareness about the economic challenges posed by China. She noted the renegotiation of major trade agreements and ongoing discussions in the U.S. about prioritizing industries, assessing critical supply chains, and determining strategic trade relationships.
By imposing tariffs of 25% on $370 billion worth of Chinese imports, Trump managed to reduce the U.S. trade deficit with China from $418 billion in 2018 to $279 billion in 2023. However, as production shifted to other countries, Mexico and Vietnam emerged as major beneficiaries, significantly increasing their trade surpluses with the U.S. at China's expense.
Despite the positive outcomes in certain sectors, such as the steel industry, retaliatory measures enacted by China, like imposing tariffs on U.S. soybean exports, resulted in economic realignments and shifts in market dynamics, impacting various industries.
As the global trade landscape continues to evolve, analysts anticipate complex challenges for firms navigating higher tariffs, especially in sectors where China maintains a competitive advantage due to its scale and efficiency. These uncertainties underscore the complexities and far-reaching implications of trade policies on the broader economy.