104% Tariffs imposed on China! Will protectionism pay off for U.S. industry?

On April 2, President Donald Trump signed an executive order implementing a comprehensive new reciprocal tariff policy. Starting April 5, all goods imported into the U.S. would face a minimum tariff of 10%, with higher rates imposed on countries deemed serious trade violators beginning April 9. Specifically, China, the EU, and Japan were hit with tariffs of 34%, 20%, and 24%, respectively, while Indonesia, Thailand, Vietnam, and Cambodia faced tariffs of 32%, 36%, 46%, and 49%. A 25% tariff on imported vehicles was set to take effect on April 3.

In response, China announced a 34% retaliatory tariff on all U.S.-origin goods. On the eve of the April 9 implementation, the U.S. raised tariffs on Chinese imports to 104%. That same day, China raised its tariffs on U.S. goods to 84%.

Trump described the move as a "reciprocal" tariff policy and emphasised that the executive order was signed on "Liberation Day" in the U.S., claiming these "long-awaited" tariffs would make America "rich again." The policy was viewed as the most significant disruption to the global trade order since World War II, with analysts warning of widespread economic turbulence.

The White House claimed the tariffs would revive domestic manufacturing. But could tariffs alone deliver on that promise?

What are the deeper political and strategic motives behind such aggressive tariff measures?

And ultimately, was Trump truly focused on the tariffs' long-term economic impact, or were other priorities at play?

Manufacturing reshoring: Beyond economics efficiency to national security

Manufacturing reshoring has shifted from an issue of economic efficiency to one of national security. In the wake of COVID-19, the global chip shortage, the war in Ukraine, and disruptions in the Red Sea, the fragility of global supply chains has become increasingly evident. For the U.S., overreliance on imports—especially in critical sectors like healthcare, semiconductors, and energy—has emerged as a strategic liability.

In this context, manufacturing is no longer seen as a "low-value" or "outsourcable" sector, but as a cornerstone of national defense, policy autonomy, and geopolitical leverage. The drive for "reindustrialization" is fundamentally about regaining control over supply chain geography and reducing dependency on strategic rivals, particularly China, to enhance U.S. global influence.

The political logic of reshoring: From tech policy to identity politics

Although Biden and Trump differ significantly in rhetoric and policy tools, they share a common strategic goal: to bring manufacturing back to American soil. Biden has pursued a structured approach through initiatives like the CHIPS and Science Act (to localize semiconductor production), the Inflation Reduction Act (to boost the clean energy supply chain), and massive infrastructure investments. These policies aim to rebuild the industrial base through subsidies and systemic improvements.

Trump, by contrast, has adopted a more aggressive, unilateralist path—using tariffs, putting pressure on trading partners, and withdrawing from multilateral trade agreements like the TPP. Though controversial globally, this approach has bolstered his political standing domestically, particularly among blue-collar white voters in industrial states.

Trump excels at transforming economic nationalism into a form of identity politics. Through emotionally charged messages like "We’re getting ripped off" and "China is stealing our wealth," he recasts reshoring as a symbol of dignity and fairness for working-class Americans. This narrative, while simplistic, carries more political resonance than Biden’s data-driven reforms and reveals a deeper trend in U.S. manufacturing policy: reshoring is increasingly part of a broader national identity project.

The limits and costs of tariffs as an industrial policy tool

While tariffs can raise the cost of imports and offer short-term relief for domestic producers, their overall effectiveness in reshoring manufacturing is limited—and often counterproductive.

First, U.S. manufacturing faces deep structural challenges: high labor costs, stringent regulations, complex project approval processes, and outdated infrastructure. These factors limit the practical ability of firms to relocate. When companies do "return," it is often in a symbolic way—setting up packaging or support centers rather than full-scale production. The core value creation remains overseas, leaving global supply chains largely unchanged.

Second, tariffs raise costs for American consumers. Take aluminium as an example: tariffs have driven up prices for canned drinks, packaging, cars, and home appliances, with costs quickly passed on to end users. Low- and middle-income households bear the brunt of these increases. Meanwhile, manufacturing jobs have not returned at the expected scale, creating a gap between policy intentions and public perception.

At its core, the tariff strategy isn’t aimed at maximizing overall societal welfare but rather stabilizing capital flows and reassuring the middle class. As a result, while tariffs have strong symbolic power, their ability to drive broad economic improvements remains limited.

Beyond narratives: A structural shift in U.S. manufacturing policy

Today, U.S. manufacturing policy serves not just economic goals but a larger strategic narrative. Manufacturing capacity is increasingly tied to national credibility and global influence. In response to China’s industrial rise and the emergence of regional trade blocs and local currency settlements, the U.S. seeks to restore its leadership by promoting a “trusted democratic industrial alliance.”

Manufacturing is evolving from an economic sector into a national security tool and diplomatic symbol. Even if tariffs are economically inefficient, they serve as strong political signals and rally domestic support.

Yet genuine industrial transformation requires more than tariffs. A sustainable reshoring strategy must address multiple dimensions: education and workforce development, infrastructure upgrades, R&D incentives, and international coordination. From training technical workers to improving logistics and safeguarding critical technologies, the U.S. needs a coherent, long-term policy framework.

Relying solely on tariffs could lead to a vicious cycle—rising prices without capacity gains, symbolic protection without meaningful growth.

Striking the right balance: Efficiency, security, and livelihood

Manufacturing reshoring is no longer just an economic issue — it intersects with national strategy, security, and global influence. While tariffs offer political theater, without systemic support and structural investments, they may do more harm than good, fueling inflation and deepening imbalances.

At this pivotal moment of global realignment, U.S. manufacturing policy must be pragmatic, resilient, and coordinated. Avoiding the misuse of tariffs as a blunt instrument is essential to achieving sustainable competitive advantage and protecting the public good.

Author: Xinyi Liu | Aluminium Market Analyst | SMM London Office

Tel: +44 07919949818 | Email: cathyliu@smm.cn