In 2017, approximately 21.6% of U.S. imports came from China. As of 2024, that number has dropped to 13.3%. That’s an average annual decrease of 1.19% in reliance on China. At that rate—in theory—we could be fully divested from Chinese imports by 2035. That’s just ten years from now. At that point, China trade tariffs wouldn’t really matter all that much. The recent trade war is accelerating that shift.
Now, whether we’ll ever be completely diversified away from China is a different story. But what is clear is that we’re becoming less and less dependent on them. China isn’t even our number one trade partner anymore—they’re number three, behind Mexico and Canada.
What Net Effect Does the 145% China Tariff Have on the U.S. Consumer?
We’ve established that only 13.3% of our imports come from China. But that’s not the same as 13.3% of the goods we use. That figure doesn’t account for domestic production, which means the actual share of Chinese goods in the U.S. market is much smaller. The exact number is debatable.
Also, a large portion of what we import from China consists of components, not finished goods. These components are often used by U.S. manufacturers to produce American-made products.
But for the sake of argument, let’s assume Chinese goods make up 13.3% of the products we buy.
If we apply a 145% tariff to that 13.3%, and assume all other countries either have zero or much lower tariffs, the blended tariff rate across all goods ends up being around 19.29%.
However, it’s important to note: Tariffs are applied to the importer’s cost, not the retail price. This distinction dramatically reduces the real-world impact—possibly even cutting the cost increase in half. Let’s conservatively estimate an 8% effective cost increase to the consumer. (Likely much less.)
That’s not nothing, but it’s also far from catastrophic. The actual burden on U.S. consumers is far less than the 145% headline rate suggests.
In the end, yes—some products will see a noticeable price increase. But not as many as people think. The overall, temporary inflation resulting from this could end up being less than 8%, assuming no other changes.
How Consumers Will Pay Less and Less in Tariffs
As mentioned earlier, fewer and fewer goods are coming from China—and this trend is accelerating due to the trade war. The inflation spike may be so temporary that most consumers won’t even feel it in a broad sense. Some items will go up in price, absolutely—but not as many as you’d expect.
Here’s how that happens:
1. Alternative Low-Labor Countries
For products where low labor cost is essential, we’re already shifting sourcing to countries like Mexico, Vietnam, Taiwan, and India. These are top 10 trading partners with the U.S. and offer competitive manufacturing rates. This transition has been ongoing since 2017 and will continue, reducing reliance on China and spreading the tariff exposure across more countries.
2. Domestic Manufacturing Growth
For goods where low labor cost isn’t critical, U.S. manufacturing is ramping up. It’s not just about cost—lead time, flexibility, and geographic proximity often matter more. Certain goods are increasingly worth producing domestically, which not only reduces imported goods but also boosts U.S. jobs.
3. Tariffs on China May Decrease
Even if tariffs drop just back to pre-trade war levels, we will still likely continue diversifying away from Chinese manufacturing. In that case, we’ll still have access to cheap Chinese goods, but with less reliance, and lower tariffs.
4. Reduced Distribution Tiers
Many of the goods you buy took a longer path to get to you than necessary. Many importers sell to distributors, who sell to retailers, who sell to you. There is of course value in distribution, but in todays global world, it’s far easier to get distribution without a third party distributor. Cutting out a distributor allows them to absorb cost increases without having to past them on to the consumer.
Conclusion
Critics are right: Tariffs on Chinese imports are paid by U.S. consumers. But it’s not nearly as extreme as it sounds.
The actual economic impact is far more nuanced, and over time, the burden on consumers will shrink as we continue to diversify trade partners and increase domestic production.
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