OPINION
From China with Tariffs
As President-elect Donald Trump begins his second term on Jan. 20, the new administration is sharpening focus on fair and balanced trade.
The renewed agenda includes expanding tariffs, reinforcing ties with key economic partners, and prioritizing U.S. industries.
Central to this effort is addressing historic trade distortions, compelling corporations to align with new rules to stay competitive.
The high stakes threat of tariffs may turn soybeans, semiconductors and whiskey — to name but a few — into global political chess pieces.
American Tech Companies See Opportunity as Tariffs Reshape Market
China remains a central priority in Trump’s trade policies.
Despite earlier efforts to resolve disputes, Beijing continues to impose tariffs as high as 25% on American agricultural products like soybeans and pork.
Technology exports face tariffs of up to 30%, while key sectors like machinery and aerospace contend with barriers averaging 20%, squeezing U.S. companies trying to compete in Chinese markets.
This is before even addressing the systematic abuse of commercial intellectual property by the Chinese.
In response, Trump’s administration is imposing new tariffs on Chinese consumer electronics, including smartphones and laptops, ranging from 10% to 20%.
Building on first-term strategies, these tariffs are accompanied by stricter controls on Chinese investments in semiconductors and biotechnology, citing national security.
China Faces Limited Options to Counter U.S. Tariffs. China's ability to retaliate against U.S. tariffs is constrained by potential negative consequences that could worsen its economic position.
Measures such as restricting exports or penalizing American firms might provoke stronger countermeasures from the U.S., leading to further efforts to reduce reliance on Chinese imports.
The continued shift in U.S. supply chains and the challenges within China’s own economy suggest that retaliatory actions could be more damaging to China than to the U.S.
Consequently, China is more likely to adopt a cautious approach, focusing on negotiation rather than escalating tensions.
Luxury Goods and Tough Love. Trump’s Europe Tariff Takedown Begins
The European Union (EU) poses its own set of hurdles for the administration’s trade agenda.
U.S. automakers face a 10% tariff on vehicles exported to the EU — starkly higher than the 2.5% tariff applied to European cars entering the U.S. Iconic U.S. exports like whiskey still carry a 25% tariff, while textiles and apparel are taxed at over 12%.
This disparity has prompted Trump to take bold action. New tariffs, exceeding 25%, on European luxury goods, wine, and auto parts are designed to level the playing field and incentivize manufacturers to relocate to the U.S.
Trump's observation that BMWs and Mercedes are commonly seen on U.S. streets, while Chevys are rarely found in cities like Paris or Berlin, is stark and insightful.
Navigating these disparities effectively requires not only clear policy actions but also strategic communication efforts to galvanize support and mitigate resistance.
"And as ye would that men should do to you, do ye also to them likewise." - The Golden Rule (Luke 6:31)
The imbalance is undeniable.
For years, China and Europe have imposed steep tariffs on American exports while benefiting from lower barriers to U.S. markets. Trump’s stance signals a breaking point —no more free access for America’s trading partners.
From Cabernet to Circuit Boards . . . Tariffs Hit Where It Hurts
The U.S. has reinforced restrictions on investments in China’s critical technology sectors, including semiconductors and biotechnology, citing national security concerns.
These measures aim to prevent American capital and expertise from bolstering China’s technological and military capabilities, with new regulations set to take effect in early 2025.
President-elect Donald Trump’s proposed tariffs on European Union (EU) imports, including luxury goods, wine and automotive parts, aim to address trade imbalances and encourage global companies to relocate production to the United States.
The luxury sector, reliant on U.S. consumers, faces potential strain from increased costs, as seen with the 2019 25% tariff on European wines.
Automotive tariffs could disrupt supply chains and cut profits for U.S. and European carmakers by up to 17%.
While these measures seek to boost American manufacturing, relocation challenges include significant logistical and financial hurdles. The broader economic impact will depend on global responses and the adaptability of affected industries.
China Looks Inward; Southeast Asia Throws the Party of the Decade
In anticipation of heightened tariffs, China is focusing domestic markets and investing heavily in high-tech industries to reduce export dependency.
Southeast Asia, meanwhile, is benefiting from this shift. Vietnam, especially, is drawing manufacturers seeking to leverage its favorable trade agreements and growing infrastructure.
For global businesses, diversification across Asia has shifted into an operational necessity.
Tariffs Will Turn America Into a Global Factory Floor and U.S. CEOs Into New Landlords
Trump’s trade policies are redefining global manufacturing, pushing companies to localize production in the U.S.
Tariffs favoring domestic goods have driven foreign and U.S.-based firms to set up operations in states like Texas, Ohio, and Tennessee . . . with additional incentives such as tax breaks and grants further encouraging investment.
Amid these transformative shifts, seasoned advisers play an indispensable role in bridging policy changes to actionable strategies, ensuring businesses adapt and thrive.
In Texas, Tesla’s Gigafactory in Austin, a multi-billion-dollar investment, produces Model Y and battery components, creating thousands of jobs and strengthening Texas as a manufacturing hub. The state’s business-friendly climate and renewable energy incentives continue to attract global companies.
Intel’s $20 billion semiconductor facilities near Columbus, Ohio are designed to reduce reliance on foreign chip supplies.
This investment is expected to create thousands of jobs and establish Ohio as a key player in the high-tech ecosystem.
LG Chem's $3.2 billion battery manufacturing plant solidifies Tennessee’s role in the EV supply chain. With robust incentives for green energy, Tennessee is emerging as a leader in electrification.
Tariffs are Making Supply Chains Great Again . . . One CEO at a Time
Global tariffs pose a dual reality: a challenge for political leaders to address through balanced trade and equitable market access and an opportunity for those poised to leverage the shifting landscape.
The response to these policies will determine who seizes the moment.
One certainty remains: CEOs must act swiftly.
Trump's policies serve as a wake-up call, urging leaders to tackle challenges head-on while exploring new avenues for growth.
Supply chain diversification is the cornerstone of survival.
Relocating operations closer to key markets and integrating flexibility into supply chains reduces geopolitical risks and ensures operational stability.
This strategic move aligns directly with the administration’s push for self-reliance and fair trade, reinforcing a more secure and balanced global economy.
Harnessing predictive analytics powered by advanced artificial intelligence (AI) technologies provides foreseeable disruptions, optimize costs, and adapt to market changes with speed and precision.
In a world of rapid shifts, staying ahead of the curve is not a luxury — it’s a necessity.
Active policy engagement is no longer optional. CEOs must lead efforts to shape trade policy agreements and regulatory frameworks, ensuring they support industry growth. Advocacy has evolved into a critical function of leadership, where proactive participation defines competitiveness in a volatile trade arena.
Investing in workforce development ensures companies remain agile in the face of technological change. By prioritizing training and upskilling in advanced manufacturing, renewable energy and emerging technologies, businesses empower their employees to meet the demands of a localized and innovation-driven production model.
Strengthening regional partnerships is the final piece of the puzzle.
Deepening ties with suppliers, manufacturers and distributors within key regions creates more resilient and innovative supply chains.
These partnerships reduce dependency on distant markets and unlock new opportunities for growth in dynamic, emerging economies.
"In the business world, the rearview mirror is always clearer than the windshield."
— Warren Buffett
As nations prioritize regional partnerships and reliable supply chains, the U.S. will solidify its position as a manufacturing leader and key global innovator.
By investing locally, embracing advanced technologies, and shaping trade policy, businesses ensure their relevance in a competitive global economy.
This emerging trade landscape balances resilience, innovation, and sustainability, ensuring prosperity for businesses and nations alike.
Richard Torrenzano is chief executive of The Torrenzano Group. For nearly a decade, he was a member of the New York Stock Exchange management (policy) and executive (operations) committees. He organized and managed several economic summits with top Wall Street leaders in Beijing and Moscow. His new book, "Command the Conversation: Next Level Communications Techniques," launches in January.
The Right Honorable Sir Conor Burns was elected Member of Parliament in 2010 and a is key figure in UK politics. Twice serving as Minister of State for Trade Policy he advanced UK’s post-Brexit trade agenda. As Minister of State for Northern Ireland, he tackled economic stability and cross-border trade. He also served as UK envoy for U.S. Trade and Investment.
Travis Lucas has more than 30 years’ experience in Washington, D.C. as a seasoned expert in national politics and governance. He has served as a congressional chief of staff, political strategist, judge, and corporate attorney. He serves as a trusted adviser to members of Congress, cabinet officials, White House staff, and business executives.
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