China'S Counteraction: Trump'S Government Threatens To Levy 50% More Tariff, Harming Others, Not Self Serving

This year, China was imposed 54% tariff by the Trump government, which was countered by China. The Trump government threatened to impose another 50% tariff, which is tantamount to de hooking.

In addition, the White House announced on Wednesday that the duty-free treatment of small parcels imported from the mainland of China and Hong Kong to the United States will be terminated from May 2, EST, and 30% tariff or $25 tariff will be levied on each parcel (it will rise to $50 after June 1).

The United States imports most of its textiles and clothing, while the source countries of imports are mainly China, South Asia and Southeast Asia. Among them, 33% of textiles and clothing are imported from China, 13% from India, 6% from Malaysia, 6% from Vietnam, 3% from Pakistan, and 2% from Bangladesh, The proportion of imports from Cambodia is 2%, and the textile and clothing imports from these countries account for 65% of the total textile and clothing imports of the United States.

This time, the United States has relatively high equivalent tariffs on these countries, with the lowest being 24% and 26% in Malaysia and India, and the highest being 49% and 46% in Cambodia and Vietnam. Calculated at 30% of the mid value, since 65% of the clothing in the United States will be subject to 30% tariffs, the future price rate of textile and clothing in the United States will rise with the increase of tariffs, thus exacerbating the inflation in the United States.

Although the US government hopes to support its domestic manufacturing industry in this way, the textile and clothing industry chain is very long and cannot be established in a short time. Therefore, the US textile and clothing prices are expected to rise along with the rise of tariffs. Of course, under the condition that the United States imposes high tariffs on most of the South and Southeast Asian markets, the comparative advantage of other textile and clothing exporting countries over China's tariffs has also weakened, especially in Vietnam, Cambodia and other markets.

Previously, when the United States only imposed tariffs on China's textiles and clothing, China's orders were transferred to other countries in large numbers. Of course, many of China's textiles and clothing were exported from other countries to the European and American markets through entrepot trade or export grey cloth reprocessing.

We can see that in 2024, in addition to the major consumer markets of the United States, the European Union, Japan and South Korea, most of our textile and garment export markets will be exported to Vietnam, Malaysia, Thailand, Indonesia, Myanmar and other major garment exporting countries in Southeast Asia. Some of these will be re exported to European and American markets through third countries.

In addition, we can also see that the export of grey cloth market is mainly from South Asia, Southeast Asia and other countries, which import Chinese cotton grey cloth to make clothes and then export them to European and American markets. In 2024, China will export 16% of its cotton greige to Vietnam, 9% to Thailand, 8% to the Philippines, and 3% to Bangladesh. This time, the United States imposed high tariffs on South and Southeast Asian countries, which can be said to have a greater impact on China and its surrounding associated markets. On the one hand, the tariff policy of the United States has increased tariffs on all channels (entrepot or reprocessing) that China can export to the United States market.