President Donald Trump’s strategy for addressing US-China trade issues has involved imposing significantly high tariffs. Recently, Trump temporarily exempted some key tech imports from these tariffs, but the rest of Chinese products continue to face a 145% tariff rate. An economist argues that if Trump aims to hinder China’s technological advancement, this strategy might be counterproductive.
Trump’s fluctuating tariff policies have had a considerable impact on the global economy, with a particular focus on China, which has been subject to these elevated duties. Although certain tech imports have been temporarily spared, China’s manufacturers of products such as toys, apparel, and furniture must seek alternative markets due to ongoing tariffs.
A primary objective for the Trump administration has been to reduce the US-China trade deficit and encourage domestic manufacturing. However, Keyu Jin, an associate professor of economics at the London School of Economics and author of “The New China Playbook,” suggests a different approach is necessary to slow China’s technological progress. Jin notes in an op-ed for the Financial Times that technological advancements often occur during conflicts, and the ongoing trade war might trigger a surge in Chinese innovation.
Jin argues that Trump’s intended goal to forestall China’s technological development could be better achieved by keeping tariffs low on the majority of Chinese exports to the US, thus maintaining China’s focus on low-margin manufacturing. Encouraging high-tech US exports to China could potentially stall advancements in their sophisticated components. Nonetheless, US exports now face obstacles due in part to retaliatory measures, with China imposing a 125% tariff on American goods.
This tariff escalation could potentially bring trade activities between the US and China to a near standstill. Jin forecasts that the effects of Trump’s trade war will drive China to invest more heavily in advanced technologies that rival US products. She highlights that China views innovation and proprietary technology as vital defenses against tariffs, as evidenced by companies like Huawei and BYD, which are less affected by tariffs due to their control over core technologies.
Despite the trade war’s disruptions, the continuation of Trump-era tariffs by the Biden administration—along with new restrictions aimed at hindering China’s advances in areas such as artificial intelligence—has rerouted demand away from US suppliers. Instead, Chinese chipmakers are seeing record profits and reinvesting in research and development.
Jin also points out the emergence of companies like China’s DeepSeek, which developed a cost-effective AI model comparable to US versions under these constraints. Meanwhile, China is advancing in fields like photonic quantum computing, low-orbit satellites, and chipmaking equipment, maintaining its lead in factory robotics.
Since the imposition of Trump’s first-term tariffs, Chinese firms have been exploring new markets worldwide, particularly in Africa, thereby extending beyond manufacturing to include services and digital infrastructure. Jin draws a historical parallel with Napoleon’s early 19th-century trade embargo on Britain, which inadvertently prompted British industrial expansion and exploration of new markets across Asia, Africa, and the Americas.
Jin concludes that the US could be mirroring this historical misstep. She suggests that if Trump’s aim is to “make America great again,” he should not fear a thriving China, but rather a constrained one.
This summary is based on an article originally featured on Fortune.com.
