With New 40% Tariff, Trump Takes Aim at U.S. Dependence on China’s Factories

The New York Times ^ | Aug. 1, 2025, 5:53 a.m. ET | Alexandra Stevenson and Keith Bradsher

[E. Pluribus Unum]

President Trump’s executive order carved out a special tariff on goods shipped indirectly to the United States by way of other countries.

Ever since President Trump began raising tariffs on goods from China during his first term, Chinese companies have raced to set up warehouses and factories in Southeast Asia, Mexico and elsewhere to bypass U.S. tariffs with indirect shipments to the American market via other countries.

But on Thursday, Mr. Trump took aim at all indirect American imports, which he blames for part of the $1.2 trillion U.S. trade deficit. The president imposed 40 percent tariffs on so-called transshipments, which will take effect in a week. And a senior administration official who briefed reporters said work was underway that could broaden considerably the definition of indirect shipments.

The new rules cover indirect shipments from anywhere, not just China. But China, with its massive factory infrastructure and expansive manufacturing ambition, has been the main country to develop a global network for such shipments. Trade experts were quick to predict that China would be the most affected — and the most annoyed.

“The trade provisions are a thinly veiled attempt to box in China — China will view them as such, and this will inevitably spill over into trade discussions with the United States,” said Stephen Olson, a former American trade negotiator who is now a senior fellow at the ISEAS-Yusof Ishak Institute, a research group in Singapore.

Mr. Trump’s executive order Thursday created a new category of imports: goods that are transshipped through other countries instead of coming straight from the country of origin. The 40 percent tariffs on these goods will be on top of whatever tariffs would have applied if the goods had come directly from the country where they were originally made.

The legal definition of transshipment is quite narrow: a...

[escapefromboston]

Need to ban Chinese student visas too (spies)

[HYPOCRACY]

Correct. Has the double whammy of getting the spies out and hurts the universities’ wallets.

I think the tariffs are 80% about crushing the chicoms.

[kaktuskid]

Like we need the latest Chinese-made crap sold on late night TV?

[Carriage Hill]

Is China still making 80-85% of our Pharmaceuticals?

[bigbob]

This and the elimination of de minimis, affects people like me who have built products and businesses around low-cost printed circuit boards and assembly services from China. Credit to them for inventing a business model based on combining multiple small orders to be able to extend the economy of scale to entrepreneurs and developers all over the world.

But I realize the solution is not to try to go back to how things were, but rather to take the model Chinese companies have created and replicate it elsewhere. It’s a very capital-intense business but the direct labor content is very minimal due to automation. The very same business model and factories could be established in other low-cost countries (Vietnam, Thailand, and Taiwan will be the first) which have negotiated more favorable trade deals with the US. Maybe even Mexico, or even in the US. It’s called “blowing up the myth of offshoring” as in many cases that I have personal knowledge of, there was a very minimal cost advantage, the reason offshoring was done had a lot more to do with public companies trying to show compliance with “megatrends” that the investment community was being told by the smart people from Harvard Business School and McKinsey they ought to be doing.

Interesting times ahead and great opportunities for those countries who really want to do business with US consumers and have the agility to beat China at it’s own game.

[Vigilanteman]

China is mainly responsible for hollowing out factory production not only in the United States, but also in the EU, Japan and other countries.

This was based on the Bush-Clinton-Bush-Obama Administration theories that if we granted China most favored nation trade status, they would enjoy the fruits of capitalism and become less authoritarian.

It was clear how that was working out 25 years ago and has become clearer since. In addition to building China into an economic and military superpower, it has harmed our traditional allies and retarded the economic development of countries like Bangladesh, India and the Philippines. Trump is the first president to actually recognize this and do something about it.