Trump Has Limited Leverage to Pressure Chinese Exports; Tariffs Unlikely to Resolve Structural Imbalances
nashnova research
As Trump and Xi hold a state summit, China's trade surplus is on track to exceed last year's record $1.19 trillion — but economists warn that tariffs only treat the symptom, not the cause, and Washington's negotiating leverage remains thin.
Tariffs have been in place for over a year — what have they achieved?
Bilateral US-China trade in goods and services fell 25% year on year — a sharp headline number.
Yet China's exports to the rest of the world kept growing; its global trade surplus may set a new record this year.
This means → tariffs squeezed the direct US-China channel, but China's total export volume barely dipped. The goods simply found another route.
How are Chinese goods getting around the tariffs?
White House trade adviser Peter Navarro published a report in August alleging that Chinese exporters reroute goods through more than 40 countries to reach the US.
Several economists agree: Chinese products still enter America after transiting through third countries.
In plain terms = the tariff is a lock on the front door, but dozens of side doors remain open — goods ship first to Vietnam, Mexico, or elsewhere, then arrive in the US labelled as locally made.
What is Washington's next move?
The Trump administration has threatened blanket "overcapacity tariffs" on China, the EU, India, and other countries running trade surpluses with the US.
Rates already in effect sit at 10% to 12.5%; the new round would stack on top.
This means → the strategy is shifting from "block the front door" to "seal the side doors too" — targeting not just China but any country that might serve as a pass-through.
Why is this called a "structural" problem?
China's capacity in autos, solar panels, batteries, steel, and minerals far exceeds domestic demand; the surplus has long been absorbed by exports.
Jonas Nahm, a Johns Hopkins SAIS professor and former industrial-strategy economist in the Biden administration, says: "The imbalance is deeply embedded in China's economic structure."
In plain terms = Chinese factories produce more than China's own market can consume, so the excess must go abroad — that is a production model no round of tariffs can rewire.
What can this summit actually deliver?
In his first term, Trump pushed hard for China to restructure its economy but ended up with a narrow deal covering agricultural purchases and market access.
Treasury Secretary Scott Bessent, who leads the current talks, has declared that "access to cheap goods is not the essence of the American Dream."
This reflects a tougher rhetorical stance than the first term — but history suggests that getting China to fundamentally pivot away from an export-driven model is far beyond what a single summit can accomplish.
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