TARIFFSApril 2, 2025: A Day of Economic Lunacy, Not Liberation
A year ago this week, President Trump walked into the White House Rose Garden, held up a poster board with nonsensical tariff rates on imports from virtually every country in the world, and declared April 2, 2025, “Liberation Day.” History will likely view April 2, 2025, as a day of economic infamy, not liberation. After a year, the tariffs are failing their stated objectives, including their central premise: to reshore domestic manufacturing.
A year ago this week, President Trump walked into the White House Rose Garden, held up a poster board with nonsensical tariff rates on imports from virtually every country in the world, and declared April 2, 2025, “Liberation Day.” He told the audience that it would be “remembered as the day American industry was reborn” and that it was “one of the most important days … in American history.” The president declared, “We import virtually all of our computers, phones, televisions and electronics.” He promised that jobs and factories would “come roaring back” and that the US would reduce its reliance on China.
It does appear that a manufacturing boom is happening—just not in the United States.
Earlier this week, Bloomberg published a story about what “Liberation Day” wrought on global supply chains, using China and Vietnam as case studies. Last year, Vietnam surpassed China as the leading supplier to the United States of laptops and other electronics. On paper, this should be a partial victory for the Trump administration—while not reshoring production in America, at least the US is lessening its dependence on Chinese electronics. Scratch beneath the surface, and a different story emerges.
Bloomberg’s analysis found that the core production of those electronics is still happening in China. Faced with unpredictable tariffs, Chinese manufacturers found a cost-effective workaround: moving low-skilled, finishing assembly lines across the border to Vietnam where they face lower levies. It is worth noting the particular irony here: Consumer electronics produced across Asia were exempted from the so-called “reciprocal tariffs,” but goods made in China were still subject to separate fentanyl-related levies of up to 20 percent.
Bloomberg found that Foxconn’s Vietnamese subsidiary “exported $8.6 billion worth of MacBooks, iPads and motherboards for both products and servers, while importing $7.9 billion of various components from China, South Korea and Taiwan. That means at most 7.8% of the export value was created in Vietnam, if all final products at Fukang were exported.” A similar story is occurring with BYD (best known for its electric cars), which also makes iPads for Apple. The net effect on Chinese export exposure to the US was minimal. The roughly $51 billion drop in direct Chinese shipments to America was nearly wiped out by equivalent growth in imports from Vietnam, India, and Mexico. The supply chain didn’t reshore.
