Trade Policies Can Make or Break Businesses: How to Prepare 

With Trump’s second term reigniting the potential for a trade war with China, businesses relying on global trade need to prepare for new challenges. From increased tariffs to supply chain disruptions, the stakes continue to rise.  

As someone who has worked in import/export compliance for years, I’ve seen firsthand how trade policies can make or break businesses. I believe these are the top actions we can expect from China-US tensions: 

• Increase tariffs on Chinese imports 
• Stricter technology restrictions 
• Chinese limits on critical minerals

Below, I break down these predictions for U.S.-China trade relations during this administration and how businesses can stay ahead of the curve. 

What to Expect from U.S.-China Trade Tensions 

The first question on most business leaders’ minds is: what’s next? Based on current trends and historical patterns, here’s how businesses may be impacted. 

1. Increased Tariffs on Chinese Imports

Trump’s trade policies have consistently leaned toward heavy tariffs on Chinese goods. In his second term, tariffs could spike to 60% or higher, making it even more expensive to import products from China. Businesses must anticipate and factor these costs into their supply chain strategies. 

2. Stricter Technology Trade Restrictions

Semiconductors, AI, and software with potential military applications will likely face intensified scrutiny. Export controls on high-tech products could limit U.S. companies' ability to sell to China, and in turn, China may accelerate efforts to develop its own alternatives. 

3. China Limiting U.S. Access to Critical Minerals

China dominates the global supply of rare earth elements like neodymium, praseodymium, dysprosium, and terbium—essential for EVs, wind turbines, and electronics. If China restricts exports in retaliation to tariffs, it could disrupt entire industries, forcing businesses to seek alternative sources. 

The State of US-China Trade Relations 

With tariffs and trade barriers already in place, businesses must stay informed about potential escalations. I anticipate these shifts to go into effect soon: 

• Higher reciprocal tariffs across multiple sectors. 
• A review of the 2020 trade agreement with China, potentially reinstating aggressive trade measures.

How Past Tariffs Have Impacted U.S. Businesses 

I’ve recently reflected on past trade wars to understand the impact of this new wave. Previous tariffs have raised consumer prices and disrupted supply chains. For example, the previous 25% tariff on steel imports led to a 16% increase in domestic steel prices, impacting the construction and automotive industries. Similar effects could be seen across industries if tariffs increase again. 

Common Misconceptions About U.S.-China Trade 

• Myth: Tariffs mainly hurt China.
  Reality: U.S. businesses and consumers often bear the brunt of cost increases. 
• Myth: It's easy to shift supply chains away from China.
  Reality: China’s manufacturing ecosystem is nearly impossible to replicate overnight. 
• Myth: Only large corporations are affected.
  Reality: Small and medium-sized enterprises often face bigger challenges due to limited resources and flexibility. 

Tariffs, Sanctions & Export Controls: What’s Next? 

Trade tensions will not be limited to tariffs—sanctions and export controls will also play a critical role. From my experience working with businesses across many industries at Star USA, I believe these industries are most at risk:  

• High-tech Manufacturing: Semiconductors & AI (tightened export controls). 
• Electronics & Automotive (supply chain disruptions). 
• Businesses reliant on Chinese rare earth minerals (potential shortages). 

To offset tariff costs, businesses should: 

• Diversify suppliers (look beyond China). 
• Improve supply chain efficiency (reduce costs elsewhere). 
• Explore product redesigns (use alternative components). 

Stricter Export Controls & Their Implications 

Tighter export rules will make it harder for U.S. tech companies to sell products to China, pushing China to develop self-sufficient alternatives. This could lead to long-term market shifts that permanently alter the competitive landscape. 

Supply Chain Risks & Considerations for Resilience 

Supply chain resilience should be a top priority as businesses navigate trade uncertainties. At Star USA, we’ve recommended these practical steps to our clients to reduce their reliance on China: 

• Map your supply chain to identify risks. 
• Develop supplier relationships in alternative markets (Mexico, India, Southeast Asia). 
• Invest in automation and reshoring where feasible. 
• Enhance inventory management to cushion against supply shocks.