US President Donald Trump claimed that his tariffs were already bringing in almost US$2 billion a day.PHOTO: REUTERS
WASHINGTON: The era of cheap Chinese goods in America is over.
Steep tariffs kicked in at midnight in Washington here on imports from Asia’s largest economy amid an outcry from some corporate chieftains, recession warnings from economists and pushback from Congress.
Tariffs of up to 104 per cent on China-made goods took effect at 12.01am Eastern Time on April 9 (12.01pm April 9 Singapore time) although President Donald Trump predicted that China would come to the table to whittle them down.
Reciprocal tariffs – ranging from 11 per cent for Cameroon to 50 per cent for Lesotho – also kicked in on over 50 other nations at the same hour.
The 10 per cent “baseline” that applies to most nations, including Singapore, came into effect on April 5.
A number of senior White House officials said the administration was besieged with phone calls from countries wanting to make a deal, and priority would be accorded to countries that have not retaliated with counter tariffs against the US.
Trump said he had a “great call” with South Korea’s acting president Han Duck-soo, who was presumably trying to negotiate a lower rate than the 25 per cent imposed on the country. Trump also said he was waiting to hear from Chinese President Xi Jinping.
“China also wants to make a deal, badly, but they don’t know how to get it started. We are waiting for their call. It will happen!” he said in a Truth Social post on April 8.
China, which has shown no indications of mellowing, has said that it will hit back with a tariff of 34 per cent on US imports from April 10. The move prompted Trump to heap an extra 50 per cent duty on Chinese goods, adding up to tariffs of a whopping 104 per cent.
The White House struck a note of triumphalism, with Trump claiming that his tariffs were already bringing in almost US$2 billion (S$2.7 billion) a day.
“America is going to be very rich again,” the President declared.
The “era of American economic surrender is over”, Trump’s Press Secretary Karoline Leavitt said in a media briefing hours before the reciprocal tariffs were set to kick in.
“America does not need other countries as much as other countries need us,” she said.
Treasury Secretary Scott Bessent described the Chinese escalation as a “big mistake”.
“What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them,” he said.
In 2024, the US imported US$462.5 billion in goods and services from China and exported US$199.2 billion, resulting in a US$263.3 billion trade deficit.
Once each other’s largest trading partners, they are now firing the opening salvos of a flaring trade war.
Speaking to The Straits Times, Dr Alicia Garcia Herrero, the Hong Kong-based Chief Economist for Asia Pacific at French investment bank Natixis, observed that the additional 50 per cent tariffs on China do not really matter any more.
“The tariffs are already too high, and China will not be able to export to the US,” she said, noting that the extra tariffs “show Trump’s resolve”. They reflect that the Trump administration “wants to decouple from China at any cost”, she added.
As the Trump team proceeds to reorder world trade at breakneck speed, it is speaking in marginally different voices about the end game and whether the tariffs were set in stone.
Trump’s trade and manufacturing senior counsellor Peter Navarro said the tariffs were non-negotiable because the US was coping with a “national emergency” caused by enormous trade deficits.
But Bessent suggested otherwise, saying that talks were just getting started after Trump gave himself “maximum” negotiating leverage with his April 2 tariff announcement.
“It’s going to be a busy April, May, maybe into June,” he said.
The President had the final word on the subject. “They can both be true,” Trump said. “There can be permanent tariffs, and there can also be negotiations.”
The public face of the administration, Leavitt, said Trump had asked for “tailored” deals.
“He met with his trade team this morning and directed them to have tailor-made trade deals with each and every country that calls up this administration to strike a deal,” she said.
Asked if Trump had set a deadline for the trade deals, she demurred from naming a date.
Economists not linked to the administration have largely faulted the theory behind tariffs.
“The tariffs seek to balance trade with every partner, which can’t or won’t happen for macroeconomics reasons,” said Dr Marcus Noland, a senior fellow and executive vice-president at the Peterson Institute for International Economics in Washington.
“The tariffs would be laughably misguided if not so destructive,” he said.
“But not only are they regressive internationally, they are regressive internally. They will drive up the prices for clothing and footwear hitting low-income families with children the hardest.”
“Overall, a lower stock market, lower growth, higher prices, and more unemployment. All of this is done without any reference to WTO or FTA obligations,” he said.
“The US has gone rogue,” he added.
Corporate America, which has so far played along with Trump, is starting to voice its discomfort.
Ken Griffin, a billionaire and top Republican donor who runs hedge-fund firm Citadel, called the tariffs a “huge policy mistake”.
“I may agree with your diagnosis on what the problem is, but don’t kill the patient in the pursuit of treating the disease,” he said at the University of Miami’s Centennial Celebration on April 7.
“It is wrong to tell a middle-class or economically challenged family that “it’s going to cost you 20 per cent, 30 per cent, 40 per cent more for your groceries, for your toaster, for a new vacuum cleaner, for a new car,” Griffin said.
Bill Ackman, another billionaire who is the CEO of the Pershing Square hedge fund, has called for a 90-day pause in the tariffs to give Trump the time to “carefully and strategically resolve our historically unfair global trading position”.
Or, he said on X on April 7, the US could face “a self-induced, economic nuclear winter”.
The Consumer Technology Association has calculated that a 60 per cent to 100 per cent tariff on all imports from China could increase the cost of laptops and tablets for consumers by 46 per cent to 68 per cent.
Videogame-console prices could increase by 40 per cent to 58 per cent and smartphone prices could increase by 26 per cent to 37 per cent, it said.
Smartphones are the largest import from China, with laptops coming in second.
If the phones were to be made in the US, they could cost more than thrice as much.
“iPhones made in the US would cost US$3,500 (vs US$1,000), and the AI Revolution trade would be significantly slowed down by these head-scratching tariffs that need to be negotiated to realistic levels,” said Daniel Ives, a tech analyst.
“If not, it’s darker days ahead for the tech world and US consumers will be paying the price for it,” he said in a note.
GameStop Corp Chief Executive Ryan Cohen, a well known Trump supporter, also weighed in. “I can’t wait for my US$10,000 made in the USA iPhone,” he wrote in a sarcastic post on X on April 4.
Video game company Nintendo said the preorders for its hotly anticipated Switch 2 console would be delayed due to the tariffs.
Some resistance is also building up in Congress, where Trump’s party has a majority in both Houses.
The Democrats, and a vocal minority of Republicans, are asserting that the President has usurped a Congressional function by imposing tariffs. The Constitution mandates that the Congress, and not the executive, controls the purse strings of government.
Seven Republican senators are sponsoring a bipartisan Bill that would place a check on Trump’s authority to impose tariffs.
“No president should have the power to tax everything Americans buy without being accountable to Congress,” said Senator Bill Wyden, a Democrat and ranking member of the Senate Finance Committee.
A similar Bill will be introduced in the House of Representatives by Nebraska Republican Don Bacon.
But there is also some public support for pushback against China. A large majority of Americans are skeptical about trading with China, according to a new report from the Pew Research Centre.
Only 10 per cent say trade benefits the US more than China, while 46 per cent take the opposite view in the survey of 3,605 US adults conducted between March 24-30. A quarter say the US and China benefit equally from their trade relationship.
But perhaps Bessent had the most incisive quip as he laid the ground for tariffs in March.
“Access to cheap goods,” Bessent told members of the Economic Club of New York, “is not the essence of the American Dream”. - The Straits Times/ANN
