U.S. tariffs a 'half success'…Less reliance on Chinese imports, but trade deficit hits record high

One year into Trump's tariff war

Share of China-made goods at 9%, 'record low'

Deficits widen with Mexico, Vietnam and others

"A chronic trade deficit is a national emergency that threatens our security and our very way of life."

That was what U.S. President Donald Trump said on April 2, 2025, as he raised tariff rates targeting major countries including China. Declaring the day "Liberation Day"—vowing to "break free from unfair trade practices and bring back manufacturing and jobs"—he imposed an additional 34% tariff on China. Nearly a year on, the tariff decision is affecting U.S. and global trade in multiple ways.

According to The Wall Street Journal (WSJ) on the 31st, U.S.-China trade has contracted over the year since Liberation Day. The share of Chinese goods in U.S. imports last year fell to about 9%, the lowest since China joined the World Trade Organization (WTO) in 2001. As recently as the mid-2010s, that share topped 20%.

In 2025, the U.S. goods trade deficit with China also fell 31.6% from the previous year ($295.5 billion) to $202.1 billion (about 310 trillion won), the lowest level since 2005. A U.S. business figure said, "President Trump has repeatedly said the trade imbalance with China is at an 'unacceptable level,'" adding, "From the White House's perspective, it can be seen as having achieved certain goals," the person said.

Not all indicators improved. The overall U.S. goods trade deficit rose 2.1% from a year earlier to $1.24 trillion, a record high. The WSJ explained that "much of the impact reflects U.S. importers shifting sourcing away from China to other countries such as Mexico, Vietnam and Taiwan." In other words, the goal of reducing the goods trade deficit through tariffs failed.

Even regarding China, while U.S. dependence on China for mass-market products such as TVs and home appliances has declined, there is an assessment that many items still lack viable substitutes for China. Rare earths are cited as a prime example. After China began export controls on rare earths, U.S. defense contractors and automakers struggled with production.

Chad Bown, a senior fellow at the Peterson Institute for International Economics, said, "Chinese companies' market share in the U.S. home-appliance market has declined, but China still holds the upper hand when it comes to rare earths," adding, "China's leverage remains strong in supply chains that are hard to replace."

There is also an assessment that the Trump administration's tariff policy has not delivered significant positive effects for the U.S. economy. According to Reuters' analysis of a Brookings Institution report, the Trump administration's tariff policy was estimated to have reduced U.S. gross domestic product (GDP) growth by as much as 0.13%. A major factor was that 80–100% of the tariff increases were passed through into higher consumer prices in the U.S.

Given the U.S. fiscal situation, many expect the high-tariff policy to persist. The Washington Post recently reported that "in fiscal 2026 (October 2025 to September 2026), U.S. importers paid more than $144 billion in tariffs," adding that "there is a high likelihood that the next administration will maintain the Trump administration's tariff policy."

By Hwang Jeong-su hjs@hankyung.com