Among even proponents of generally free trade, a consensus has emerged that targeted U.S. tariffs on Chinese goods — initiated by the first Trump administration and expanded by President Biden — have successfully reduced our economic dependence on Beijing. By raising tariffs on China well above those on other manufacturing-heavy countries, the story goes, America slashed its share of imports from the PRC in half. We filled the gap with goods from friendly or neutral countries — Taiwan, Vietnam, Mexico, Thailand, and India — thereby rebalancing global trade in our favor.
Looking purely at bilateral trade data, that story appears true. In 2023, however, The Economist warned that more — or less, rather — was happening than met the eye:
Instead of being slashed, trade links between America and China are enduring — just in more tangled forms. The American government’s preferred trading partners include countries such as India, Mexico, Taiwan and Vietnam, in which it hopes to spur the “friendshoring” of production to replace imports that would have come from China. And trade with these allies is rising fast: just 51 percent of American imports from “low-cost” Asian countries came from China last year, down from 66 percent when the Trump administration’s first tariffs were introduced five years ago, according to Kearney, a consultancy. The problem is that trade between America’s allies and China is also rising, suggesting that they are often acting as packaging hubs for what, in effect, remain Chinese goods. This flow of products means that, although America may not be buying as much directly from China as before, the two countries’ economies still rely on each other.
Paradoxically, by incentivizing Chinese manufacturers to reroute shipments through third-party nations, the United States was helping to amplify Beijing’s economic influence around the globe. All for little to no reduced dependence on our end.
Still, there was not much hard evidence to back up these allegations. Until now.
Two researchers at the Peterson Institute for International Economics have published new research tracking Chinese-produced content in U.S. imports regardless of their immediate origins. They find that while the share of imports from China has plummeted over the past eight years, China’s share of total value added has remained steady at around 15 percent. The latter began to exceed China’s percentage of direct imports in 2019, the first full year of targeted tariffs, and the gap has persisted ever since:
In which @melovely_max confirms with hard data what I've been saying since 2019:
"Years of US tariffs on China have largely failed to reduce dependence on Chinese suppliers" https://t.co/ehrUsEtblL pic.twitter.com/Zas0Wt08Gq
— Scott Lincicome (@scottlincicome) August 6, 2026
Previously, China exported a lot of goods with components produced in other countries. Now, the authors conclude, suppliers “reroute supply chains through third countries to avoid shipping directly from China” to the United States. As a result, tariffs have “failed to achieve significant US decoupling from China during this period, leaving America vulnerable to interruptions of key supplies originating in China.”
Reducing our reliance on China through strategic tariffs and friendshoring may be a noble aim, but good intentions are not the measure of sound public policy. We must ask at a certain point, “Does this actually work?” Unfortunately for the confident planners atop U.S. trade policy, it is very hard to disentangle a globalized economy bound together by price signals, and nearly impossible to cut the world’s premier industrial power out of complex supply chains.