By Zhong Sheng, People’s Daily
“How much more will we pay when tariffs hit?”
This is the question ricocheting across U.S.newsrooms and households alike, as American consumers brace for price hikes and product shortages. With inflation fears mounting, somehave even begun stockpiling daily essentials. These concerns come from America’s growing appetite for economic extremism.
The U.S. side’s reliance on punitive tariffs and economic coercion not only runs counter to economic laws, but also threatens to dismantle the intricate global industrial and supply chains painstakingly built over decades. Such moves hamper economic development worldwide and, more importantly, jeopardize the wellbeing of people in all countries, including those in the U.S.
The modern global industrial and supply chains were not imposed by fiat. It evolved organically, shaped by comparative advantages of different nations and the natural flow of capital, labor, and innovation across global markets. China and the U.S., with different development stages, distinct industrial structures and complementary strengths, have grown increasingly intertwined. This economic relationship is forged over decades of market competition, proving to be the most efficient system in the global economy.
China’s recently released white paper, “China’s Position on Some Issues Concerning China-U.S. Economic and Trade Relations,”presents a compelling case for the positive impact of this cooperation. It demonstrates how this partnership has facilitated the upgrading of American industries and brought tangible benefits to American consumers.
The U.S. has imported from China a large quantity of consumer goods, intermediate goods, and capital goods, which has supported the development of the supply and industrial chains of the U.S. manufacturing industry, provided U.S. consumers with more choices, lowered their cost of living, and increased the real purchasing power of the American people – especially the low and middle-income groups.
Through cooperation with China, U.S. multinational corporations have boosted their international competitiveness by integrating the strengths of resources from both countries. China has taken on certain production processes for American enterprises, which enabled the U.S. to allocate resources such as capital to innovation and management, and focus on the development of high-end manufacturing and modern services. It has driven U.S. industry towards higher value-added and more technologically advanced sectors, reducing U.S. domestic pressure for energy consumption and environmental protection.
China-U.S. cooperation on industrial and supply chains is far from a zero-sum game, but rather a mutually beneficial and reciprocal arrangement. In 2024, the total trade volume between China and the U.S. reached $688.28 billion, a year-on-year increase of 3.7 percent. According tothe American Chamber of Commerce in China, 53 percent of U.S.companies are expected to invest more in the country through 2025.
At the 2024 China International Import Expo, U.S. companies claimed the largest exhibition area, and at the China International Supply Chain Expo, the U.S.firms were at the forefront of foreign participants in terms of exhibitor numbers. Out of Apple’s 200 major suppliers worldwide, over 80 percent have set up factories in China. Amazon’s third-party sellers count on Chinese supply chains to remain price-competitive.
These examples reflect the underlying logic of efficiency driving China-U.S.industrial and supply chain cooperation – creating broad opportunities for stakeholders across the globe. This collaboration facilitates raw material exports, intermediate goods production, and service sector growth in other countries, enhancing the efficiency and effectiveness of the global value chain.
However, the U.S.”tariff blackmail”is wreaking havoc on global industrial and supply chains, distortingthe allocation of resources in the global market, which hurts others as well as itself. While the goal behind these tariffs is to reshore manufacturing, the reality is far from simple. Tariffs cascadethrough industrial and supply chains, heightening the risk of fragmentation andacceleratingthe hollowing-out of the U.S. industry. Rather than revitalizing American manufacturing, this approach undermines its very foundation.
The Mechanical Engineering Industry Association based in Germany has warned that sweeping U.S. tariffs will cause serious damage on both sides of the Atlantic. These measures will never resolve bilateral trade issues but are more likely to escalate into a damaging tit-for-tat standoff that harms European exports and impedes U.S. industrial transformation.
Martin Wolf, chief economics commentator at the Financial Times, has pointed out that America is trying to undo the very system of open trade that it created. The resulting collapse in trust of the countries that used to share its values will end up very costly for the U.S., too.
Both history and reality have shown that the rules-based multilateral trading system meets the common interests of all countries, while unilateralism and protectionism undermine global industrial, supply, and value chains, and threaten the stability and development of the global economy.
In the face of shared global challenges such as sluggish global economic growth, China and the U.S., as the world’s two largest economies, must see each other’s development as opportunities rather than threats, and engage as partners, not rivals.
Both countries bear responsibility for stabilizing global industrial and supply chains. They must work together to make these systems more resilient, efficient and dynamic, so as to provide certainty and momentum to global economic development.
(Zhong Sheng is a pen name often used by People’s Daily to express its views on foreign policy and international affairs.)
