04/02/2025
The Trump Trade Tariffs & The Future of U.S. Trade Strategy
Our CEO Josh Halpern aka The Vanbassador had the pleasure of speaking with Catalina Villegas from Spectrum News 1 SoCal about the impacts of the Trump trade tariffs. Here are some of the highlights—and some of the things I didn’t get a chance to mention amidst my mumbling...
The Reality of Tariffs: A Tool, Not a Strategy
Tariffs are a blunt instrument. They can help level the playing field, protect domestic industries, and push back against unfair trade practices, but they’re not a substitute for a real, forward-looking economic strategy. If we don’t pair them with supply chain diversification, industrial investment, and coordinated trade policies, they can hurt U.S. businesses as much as they help.
Tariffs without a strategy are just penalties. If we want to win, we need a playbook that strengthens U.S. businesses, protects supply chains, and keeps China from controlling our economy from end to end, which includes control of their trojan horse marketplace, TikTok.
The problem? China isn’t just competing on price—it’s vertically integrated. From manufacturing to logistics, digital marketing to direct consumer platforms like TikTok, Temu, and SHEIN, China’s economic ecosystem allows it to undercut U.S. businesses at every stage from supply chain to consumer thumb click.
We need a full-spectrum strategy that goes beyond tariffs to level the playing field in supply chains, technology, and digital commerce.
Will Prices Go Up? What Tariffs Mean for Consumers
Some price increases are inevitable, but it’s not as simple as seeing a 25% hike on receipts overnight. Many factors influence how much of a tariff gets passed on to consumers:
✔ Company Absorption vs. Consumer Pricing: Large corporations may absorb some of the costs to stay competitive, while smaller businesses will struggle.
✔ Supply Chain Adjustments: Companies may shift sourcing to Vietnam, India, or Latin America, but that takes time—and many of those countries still rely on Chinese components.
✔ Currency Exchange Rates: A stronger U.S. dollar can offset some price hikes, while a weaker dollar makes imports even more expensive (more on this below).
✔ Retailer Behavior: Big-box stores might delay price increases, but small businesses will feel the hit right away.
Example: A Small Business Gets Squeezed
A Pennsylvania-based startup making sleep & exercise headsets assembled its product in the U.S. but relied on a fabric component from China. When tariffs hit, that cost jumped 25% overnight. Consumers wouldn’t pay more, so they turned to a fully Chinese-made alternative on Temu—leaving the U.S. company struggling to survive.
Soundbite: "Tariffs might raise prices, but China has built-in advantages. They don’t just make the products—they control the platforms where we buy them. That’s the real problem."
Are There Alternatives to Chinese Products?
Short answer: Not yet.
✔ Electronics? China controls 90% of rare earth minerals used in semiconductors.
✔ Auto parts? Even Mexico relies on Chinese components for U.S.-bound cars.
✔ Textiles & apparel? Almost all U.S. clothing still uses Chinese-sourced fabric.
Example: A U.S. Bike Company Faces an Unavoidable Tariff
A U.S. bike manufacturer tried to shift production from China to Vietnam, thinking it would avoid tariffs. The problem? Vietnamese factories still sourced key components from China. The price still went up, and consumers opted for fully Chinese-made bikes on Temu instead.
The reality is that we can’t replace China overnight—but we can build better alternatives.
Frontloading: Who Wins, Who Loses?
Frontloading is when companies stockpile inventory before tariffs take effect to avoid future cost increases. It works—temporarily.
✔ Industries That Can Frontload:
Retailers (Walmart, Target) bulk-buy tariffed products.
Auto manufacturers stockpile raw materials.
Tech companies hoard semiconductors ahead of new restrictions.
✔ Industries That Suffer:
Small businesses that lack storage or cash flow to frontload.
Companies relying on ongoing supply chains (e.g., perishables, custom-manufactured goods).
Example: Justice Juice Gets Pushed Out
Justice Juice, a U.S.-made cognitive function and muscle stamina supplement for first responders, prints its packaging in China. Ahead of the tariffs, larger buyers frontloaded their orders, pushing smaller businesses to the back of the line. The result? Delayed shipments, higher costs, and lost revenue.
How Soon Will We See These Changes?
✔ Tariffs take effect immediately, but full impacts take months. ✔ Companies are already shifting supply chains, but finding non-Chinese alternatives takes time. ✔ Retailers may hold prices for now, but smaller businesses will feel the hit first.
Meanwhile, China is adapting too—investing in Mexico, Vietnam, and even Europe to find new ways into the U.S. market.
How Currency Strength Affects Tariffs & Prices
The strength of the U.S. dollar plays a massive role in whether tariffs make imports more expensive.
✔ A Strong Dollar = Tariffs Hurt Less.
A strong dollar makes foreign goods cheaper, softening the impact of tariffs.
U.S. consumers pay less for imports, even with a 25% tariff.
✔ A Weak Dollar = Tariffs Hit Hard.
A weak dollar means imports cost more, making tariffs feel even harsher.
U.S. inflation rises, and small businesses suffer the most.
✔ Current Outlook:
The U.S. dollar remains relatively strong, which has helped offset some price hikes from previous tariffs.
However, if inflation rises and interest rates drop, the dollar could weaken, making imports even more expensive.
A Smarter Trade Strategy: Working With Canada, Mexico & Beyond
We’re not the only country dealing with China’s low-cost, highly-competitive products. Canada, Mexico, and Europe are also facing an influx of Chinese goods. Instead of fighting solo, we need a unified trade strategy.
✔ Three Things We Can Do Together:
1️⃣ Align Tariff Rules & Trade Barriers: If we harmonize tariffs with Canada and Mexico, Chinese companies won’t be able to route goods through one country to avoid tariffs in another.
2️⃣ Joint Supply Chain Development:
Invest in regional supply chains for semiconductors, auto parts, and textiles.
Support Latin American manufacturing so we’re not just shifting dependency from China to another country.
3️⃣ Regulate Digital Marketplaces Together:
Crack down on Temu, SHEIN, and TikTok Shop’s predatory pricing.
Set joint digital trade policies to protect U.S., Canadian, and Mexican businesses.
Final Thought: A Smarter, Coordinated Strategy
Tariffs aren’t the solution—they’re just a tool. If we really want to protect U.S. businesses and workers, we need:
✔ Strategic nearshoring that limits Chinese content in Mexico & Latin America. ✔ Stronger enforcement of de minimis loopholes so Temu and SHEIN can’t keep undercutting us. ✔ Investment in U.S. industrial and digital commerce so we can actually compete.
Grow Big
Vanbassador
U.S. Commercial Service - ASEAN
Spectrum News 1 SoCal
