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Free Trade

Tariffs Are Changing the Game

Plus: Guardian Angels corruption, an insane free-range kids story, and more...

Liz Wolfe | 8.7.2025 9:30 AM

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President Donald Trump holds up the chart of "reciprocal" tariffs he pledged to impose on other nations, during an event in the Rose Garden. | CNP/AdMedia/Newscom
(CNP/AdMedia/Newscom)

Total Chinese exports surged in July…but not to us. Compared to July 2024, Chinese exports were up 7.2 percent last month. "Its exports to Southeast Asia and Africa, key regions for reshipment to the United States, rose more than twice as fast as its overall exports," per The New York Times' reading of the data. "China's exports to the European Union, its main alternative to the American market, were also up very strongly."

Specifically, "data released Thursday by the customs authorities showed the pickup was driven by strong growth in shipments to the European Union, Southeast Asia, Australia, Hong Kong and other markets, which more than made up for the fourth month of double-digit declines in US purchases," reports Bloomberg. 

Predictably, even the threat of tariffs has been enough to dampen trade. Remember, Washington and Beijing are still operating under a 90-day truce—set to expire on August 12, though it could be extended if a new agreement is reached—that holds off the imposition of higher tariff levels, namely, the tit-for-tat tariff increases that both countries had threatened. The truce also staves off export controls on certain critical rare-earth minerals and items that fall into the technology category. But still, current tariff levels mean a baseline 30 percent tariff on Chinese imports, which has been enough to depress trade.

The Reason Roundup Newsletter by Liz Wolfe Liz and Reason help you make sense of the day's news every morning.

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For those in the Trump administration who are worried about trade deficits in particular, I suppose the good news is that we've made progress there: "For the last several decades, China has been selling as much as $4 worth of goods to the United States for each $1 of American goods that it buys," reports The New York Times. Following China's admission into the World Trade Organization, the trade deficit rose. Now, "tariffs have begun to reduce the imbalance. The United States announced on Tuesday that its overall trade deficit had narrowed in June to $60.2 billion, the smallest in nearly two years."

It's not clear why Trump administration officials, and the president himself, are so worried about trade deficits as something to eliminate for their own sake. We are dependent on Chinese goods to a rather substantial degree, which would pose a problem in the event of war with China (which is why the previous administration focused on improving our semiconductor manufacturing capabilities back in 2022). But you can just as easily make the case that it's the vast volume of trade between the two countries—the deeply intertwined economies so reliant on each other (despite China's claims of autarky and, more amusingly, communism)—that are incentivizing continued decent relations.

A few factors are at play that might help to explain why you likely haven't felt a drastic increase in prices just yet. First, since there's been a long lead-up to this trade war, many larger importers have stockpiled product over the last few months, so shortages haven't been felt yet—they've just been selling off product they've been storing. Second, China has already managed to divert some stages of manufacturing to other countries—namely Vietnam—and some larger companies already have factories up and running in other Southeast Asian countries to avoid the "made in China" or "shipped from China" labeling. Expect more transshipping and manufacturing-locale creativity as a means of throwing customs officials off the scent.


Scenes from New York: This is disappointing news for Guardian Angels appreciators like myself.

ICYMI yesterday: Republican mayoral hopeful Curtis Sliwa's crime-fighting group is soliciting charity donations — even though it lost IRS status to do so in 2022 as its longtime treasurer got ensnared in a massive tax fraud scandal. https://t.co/sYOpPZHIpD

— Chris Sommerfeldt (@C_Sommerfeldt) August 7, 2025


QUICK HITS

  • A North Carolina couple, Jessica Ivey Jenkins and Sameule Jenkins, let their 7- and 10-year-old sons walk 10 minutes to the store by themselves, with Sameule staying on the phone with them as they completed their journey. They made it to the store safely, but on the way back, the 7-year-old was hit and killed by an SUV driver while crossing the street. The county district attorney charged the parents with involuntary manslaughter, and their remaining children were taken away from them. The parents have struggled to afford bail, and pleaded guilty to felony child abuse (with suspended prison sentences). Those felony convictions will jeopardize their employment, and likely mean they'll be evicted from their home. (Also, wasn't the pain of losing their child enough? It's not like the conviction helps them understand that, in this case, they made a decision that resulted in something tragic; they already know that.) It's a terribly sad story and yet another example of how parenting decisions that used to be commonplace have become increasingly criminalized, with awful accidents used as fodder for more fearmongering.
  • Possible developments forthcoming between Ukraine and Russia?

NEWS: Trump tells European leaders earlier today that he intends to hold a bilat with Putin and then shortly after a trilat with Zelensky, following Witkoff meeting in Russia. @StevenErlanger me https://t.co/7iIQC4Y1X4

— Maggie Haberman (@maggieNYT) August 6, 2025

  • This makes no sense:

The latest ….

DCPS said the kids who turned 5 before the Sept 30 cut off & did an extra year of pre K should be tested to see if they should be forced to skip kindergarten

The kids failed the test

DC is sending them to first grade anyway https://t.co/bn715lgN9F pic.twitter.com/K6eZmsJjFX

— Kasie Hunt (@kasie) August 6, 2025

  • A sane and sober analysis of how to think about tech and kids:

Recently I was asked how I deal with screen time and technology usage as a mother of young children. I'm definitely not anti screen, though our kids are too young for the question of "Would you give them a phone?"

But my rule for tech is simple, one I call The Production…

— Katherine Boyle (@KTmBoyle) August 6, 2025

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NEXT: Does Donald Trump Know What a Dictator Looks Like?

Liz Wolfe is an associate editor at Reason.

Free TradeTariffsTrump AdministrationChinaEconomicsPoliticsReason Roundup
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