Decoupling From China Speeds Up Under Trump Administration

Shipping containers from China and other Asian countries are unloaded at the Port of Los Angeles in Long Beach, Calif., on Sept. 14, 2019. Mark Ralston/AFP via Getty Images

Commentary

President Donald Trump’s return to office is accelerating U.S. decoupling from China, threatening Beijing’s fragile economy with tariffs and legislative crackdowns.

With his return to the White House, Trump is ramping up his tough-on-China trade policies, vowing to impose higher tariffs and stricter restrictions. Emboldened by his leadership, U.S. lawmakers are pushing legislation to economically cripple the Chinese Communist Party (CCP), including a bill introduced on Jan. 23 to revoke China’s Most Favored Nation trading status.

The Restoring Trade Fairness Act, introduced by House Select Committee on the Chinese Communist Party Chairman John Moolenaar (R-Mich.) and Rep. Tom Suozzi (D-N.Y.) on Jan. 23, aims to revoke China’s Permanent Normal Trade Relations (PNTR) status.

The bipartisan bill follows Trump’s executive order directing officials to review legislative proposals on PNTR. Initially granted in 2000 under the expectation that China would adopt fair trading practices, PNTR status has instead facilitated the depletion of U.S. manufacturing, intellectual property theft, and economic coercion by the CCP.

The bill introduces a new tariff structure, including a minimum 35 percent tariff on non-strategic goods and a 100 percent tariff on strategic goods, phased in over five years. It also ends China’s de minimis treatment, limiting its ability to ship low-value goods tariff-free into the United States. Additionally, tariff revenue would support American farmers, manufacturers, and military preparedness in the Pacific.

With bipartisan support and parallel legislation introduced in the Senate by Sen. Tom Cotton (R-Ark.) and Jim Banks (R-Ind.), the bill underscores the growing consensus that the Chinese regime’s economic aggression requires decisive action. The U.S. International Trade Commission found that tariffs have successfully reduced reliance on Chinese imports without significantly impacting inflation, further justifying the move. Supporters argue that revoking China’s PNTR status is critical to restoring American industrial capacity, safeguarding national security, and countering CCP economic coercion.

The Trump effect is already rippling through China, with a record 30 percent of U.S. companies in China considering or beginning to relocate manufacturing or sourcing in 2024, surpassing the previous high of 24 percent in 2022, according to the American Chamber of Commerce in China (AmCham China).

The latest survey, completed in November, found that more than 60 percent of respondents cited U.S.–China tensions as their biggest challenge. This shift will benefit U.S. allies like India and Southeast Asia, the primary relocation destinations; however, 18 percent of companies are considering moving operations back to the United States, up from 16 percent the previous year.

China’s economy is already struggling, making it poorly positioned to withstand further stress from Trump’s new tariffs on $500 billion worth of Chinese goods. Although Beijing reported that China met its 5 percent growth target for 2024, this marks one of the slowest growth rates in decades, weighed down by a prolonged property crisis, high local government debt, and rising youth unemployment.

Muted consumer spending and intensified competition from local Chinese firms have further eroded profitability, with over half of AmCham China respondents reporting losses for the third consecutive year. As confidence wanes, the share of companies no longer viewing China as a preferred investment destination has surged to 21 percent—double the pre-COVID-19 pandemic level.

China’s recent growth has relied heavily on manufacturing-led exports, particularly electric vehicles and industrial goods. Still, rising tariffs from the United States, Canada, and the European Union now threaten this momentum. At the same time, weak domestic spending remains a major issue, with household consumption contributing just 29 percent to economic activity in late 2024—down from 59 percent pre-pandemic. This decline is further exacerbated by falling property values and stagnant wages, making China increasingly dependent on exports to sustain growth.

China’s population is feeling the economic decline, with more than 900 protests related to economic grievances recorded between June and September 2024—a 27 percent increase from the previous year, according to China Dissent Monitor. The country’s 5 percent GDP growth rate in 2024 is a sharp drop from the 6.7 percent logged in 2016, before Trump’s first presidency. China is even more vulnerable to U.S. trade restrictions this time, as its economy is far more reliant on exports than during Trump’s first term.

A record $1 trillion trade surplus in 2024 was driven by an export surge, including a last-minute push before Trump’s inauguration. However, this surge was temporary. Beijing has since been forced to shift trade away from the United States and EU, relying more on smaller economies like Russia, where bilateral trade hit $237 billion in 2024. Yet this won’t fully offset declining demand from Western markets. China’s ability to sustain trade with Russia depends heavily on Trump’s Russia policy—particularly whether he imposes strict secondary sanctions on Beijing for supporting Moscow’s war in Ukraine.

Internally, China’s real estate crisis continues to weigh on growth, with investment down by 25 percent from its 2021 peak, following Beijing’s “Three Red Lines” policy, which restricted developer financing. The sector, once accounting for one-third of GDP, remains in turmoil, with millions of stalled pre-sold apartments and mortgage boycotts straining consumer confidence.

Household spending remains weak, accounting for less than 40 percent of GDP, well below global averages. A 2024 survey by China’s central bank found that 62 percent of people preferred to save rather than spend or invest, up from 44 percent in 2018, while only 10 percent of respondents viewed China’s job market positively, down from 16 percent in 2018.

As Beijing struggles to stabilize real estate, boost domestic demand, and navigate global trade shifts, Trump’s tariffs will add another layer of uncertainty to an already fragile economy. In response, the CCP has suppressed negative economic commentary, pressuring analysts and influencers to avoid criticism.

Meanwhile, decoupling from China will strengthen U.S. national security and help rebuild America’s manufacturing base. It will also drive investment, job creation, and economic growth in U.S. allies across Asia, as not only American but also European and other foreign companies relocate away from China to avoid U.S. tariffs.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.