American industries most affected by Chinese tariffs

Tariffs can have significant and far-reaching economic impacts, not only to the countries being charged tariffs but to the country implementing the tariffs. One of the first reactions to the new 2025 tariffs on goods from Mexico, Canada, and China is reflected in the US stock market, which famously fluctuates based on traders’ feelings, fears, or confidence. In early March 2025 large-cap stocks experienced their their worst weekly close since September, as reported by JP Morgan, with the the S&P 500 (-3.6%), NASDAQ 100 (-4.0%) and small caps (Solactive 2000 -4.2%) all trading down amid tariff-related volatility.

But why should these “big three” tariffs incite fears and volatility on the American markets? Just how big are the numbers we’re talking about for imported goods from these countries? Well, JP Morgan further reports that the US imported approximately $3.25 trillion worth of goods in 2024. Of that total, over a third—$1.3 trillion of those imports—were from the three countries targeted by the new 2025 tariffs: Mexico, Canada, and China. China—the second largest source of total imports to the US after Mexico—accounted for $439 billion worth of goods in 2024.

In this article, we’ll look more closely at China and see if we can shed some light on what American industries and markets might be most impacted by these higher new tariffs on Chinese goods.

How can tariffs on foreign goods potentially cause economic harm to American industries?

There are several ways a tariff can impact a particular sector. Naturally if an American industry has transitioned over the past decades to depend heavily on Chinese-sourced raw materials, goods, or components, then as import taxes are levied the prices for the related products sold by American firms must either be increased to help defray the cost, or the American company must absorb the increase and rely on reserves or other means of cash flow. When stiff new Chinese-aimed tariffs go into effect, an American business that relies exclusively on Chinese-made resources, and/or one that utilizes Chinese goods to a lesser extent but operates on very slim profit margins, might find itself instantly struggling or even insolvent, unless alternative revenue sources and/or domestic (or non-tariffed import) sources of materials and components can be acquired quickly.

In the most optimistic sense, the intent of increased tariffs against foreign goods is to encourage domestic companies to innovate, fill in the gaps, and hopefully flourish in a market that’s under less pressure from a flood of cheap foreign products. If American companies can acquire goods and components from American sources rather than foreign ones, at a price either competitive with or (ideally) lower than the tariff-influenced prices of foreign goods, it’s a win-win for American businesses, American interests, and the American economy. However, history shows, especially in cases where the two countries are deeply intertwined economically, that raising tariffs often results in lasting harm to American businesses, particularly smaller ones without an abundance of emergency resources or lucrative connections. When businesses are forced to raise prices, consumers are squeezed financially, and this can backfire when they slow or stop their purchases of the more expensive goods.

Additionally, high tariffs often have the reciprocal effect of the other country enacting its own concomitant tariffs on American exports to that country. This is commonly termed a Trade War. Since America and China have grown over the past decades to be heavily dependent upon one another, the economic effectiveness of a trade war between the two is highly debatable, and US businesses and consumers will likely be the first ones crying for relief.

This is further complicated by the fact that the US imports a great deal more from China than China imports from the US. Business Standard reports that American imports from China through November 2024 reached $401 billion, while Chinese imports from America totaled $131 billion during the same period. So it could be argued that the US tariffs will probably hurt American consumers and businesses disproportionately as the supply of those goods is impacted. Best-case scenario? American innovators and businesses will step up, fill in the gaps in components, goods, and materials, and reduce America’s interdependence on foreign sources. However, at least in the short term, the American industries below will likely find themselves moderately or even heavily impacted by the new Chinese tariffs.

What US industries are most impacted by Chinese tariffs?

The American industries most affected by Chinese tariffs include manufacturing (especially automotive, electronics, and industrial machinery sectors), agriculture (particularly soybeans, cotton, and pork), energy, and obviously any other sectors that are heavily dependent upon imported Chinese goods or components (or that heavily export to China).

Manufacturing sectors, particularly automotive, electronics, and industrial machinery

Agriculture and farming, especially soybeans, cotton, and pork

Other industries: Aerospace, energy, retail

So, will the US’s new 2025 tariffs have the desired effect? No one can say for sure. However, to get a somewhat better idea, we can examine the impact of the tariffs enacted during President Trump’s first term in office. Kellog/Northwestern says, “During the first US-China trade war, most of the burden of China’s retaliatory tariffs was borne by American exporters rather than Chinese importers. This was because China quickly found alternative suppliers for the goods it had previously sourced from the US. Oil and food—two of the top US exports to China—were readily supplied by Russia and other countries. Meanwhile, the US struggled to replace Chinese imports, forcing American businesses and consumers to bear the brunt of Trump’s tariffs. These consequences have not gone unnoticed. Under both Trump and former President Joe Biden, the US has taken steps to incentivize domestic production and encourage firms to reduce their dependence on Chinese supply chains. But the extent to which such efforts will enable the US to shift more of the tariff burden onto China remains unclear.”

So, we wait and see.

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