Will Trump's tariff affect the trade pattern in U.S. and China?

On the morning of the 26th local time, Donald Trump, the incoming U.S. president in 2025, announced on social media that he would impose a 25% tariff on all products entering the U.S. from Mexico and Canada, stating that he would sign an executive order to this effect on his first day in office. He also criticized Mexico for not taking more measures to prevent the influx of undocumented immigrants across their shared border.

The trade relationship between the U.S., Canada, and Mexico is quite close, ranking first and second in the imports and exports of sovereign nations, surpassing China. In 2023, Canada accounted for 18% of U.S. exports, while Mexico took up 16%; Chinese mainland and Hong Kong together occupied 9%. For imports, Mexico accounted for 15%, Canada for 13%, and Chinese mainland and Hong Kong for 14%. In terms of total import and export trade volume, both Mexico and Canada represented about 15%, while Chinese mainland and Hong Kong possessed 12%. The countries with close trade relations with the U.S. besides Canada and Mexico include EU member states, the UK, Japan and South Korea.

However, when examining the proportion of the U.S. trade deficit, Chinese mainland and Hong Kong together accounted for 22%, ranking first; Mexico accounted for 13%, ranking second; and Canada took up 6%, ranking seventh. The countries ahead of Canada include Vietnam, Germany, Japan and Ireland.

The threat of tariffs against Canada and Mexico may be an effort by the government to balance foreign trade, and amidst political negotiations regarding illegal immigration, there may still be some room for negotiation.

On the same day, Trump also posted on his Truth Social platform about China, stating that an additional 10% tariff would be imposed on products from China.

In terms of China's import and export trade patterns, the U.S. was the largest sovereign country for China's exports, accounting for 15%. ASEAN and the EU also each represented about 15%. For imports, the largest source was again the U.S., occupying 6% while ASEAN and the EU accounted for 15% and 11% respectively. In the aggregate import-export trade volume, ASEAN, the EU and the U.S. took up roughly 15%, 13% and 11% respectively.

Among the sovereign countries impacting China's trade deficit the most were Australia, Brazil and Switzerland, with deficits of $81.57 billion, $63.31 billion and $48.03 billion respectively. Additionally, Taiwan, China had a significant deficit of $130.75 billion.

In recent years, the surplus China has with the U.S. and the EU has gradually decreased. China's trade surplus with the U.S. dropped from 70% in 2019 to 41% in 2023, while the surplus with the EU fell from 36% in 2019 to 27% in 2023. Although the proportion with the U.S. is declining, it still holds the top position, indicating that the tariff war of the Trump 2.0 era is likely to have a significant impact on China's external demand.

In terms of global trade volume, China and the United States ranked first and second in exports and imports, respectively, highlighting the significant impact their trade relationship has on global trade. Moreover, China and the U.S. are the largest sovereign nations with trade surpluses and deficits, respectively. When trade conflicts arise between the two, they affect the largest supply and the largest demand in the global market.

During periods of potential conflict between the two, neighboring sovereign countries can act as a buffer zone. For the U.S., this primarily involves Mexico and Canada, while for China, important neighboring regions include ASEAN, Russia, and Central Asia.