United States Reliance on Trade with China

Blue Collar Dollar Institute
September 6, 2022

The world economy is currently experiencing drastic power shifts as long-standing trade relationships are being tested by rising political tensions. China recently enforced trade restrictions with Taiwan amidst regional disputes regarding Taiwan’s independence from the Eastern superpower. Previously, China and Taiwan were close trade partners with the former accounting for over 40% of Taiwan’s exports.  

With current trade restrictions, over two thousand products are no longer traded between the two nations, harming Taiwan’s economy and leaving many to wonder what would happen if China were to similarly cut trade with the US.  

US Reliance On China  

In 2021, the U.S. goods trade deficit reached $1 trillion, highlighting our severe reliance on imports. The U.S. Census Bureau reports that of this trade deficit, $353.5 billion came from China, or roughly 33%. And these goods aren’t your parent’s “crystal” dining set, but goods we rely on daily to fuel modern society.  

Critical Goods  

Medicinal/Pharma Products  

In 2021, the US imported $5.16B of both medicinal and pharmaceutical products from China. Studies state nearly 80% of all APIs, or Active Pharmaceutical Drugs, in the US come from China and India (CFR). Estimates also claim that Chinese firms supply over 90% of US antibiotics, over 70% of acetaminophen (Tylenol), and almost half of anti-coagulant heparin (blood thinners).  

Semiconductor Components and Devices 

As of 2021, China is the largest exporter of electronic semiconductor components, such as diodes and transistors ($48.7B), with the US importing $809 million of such components from China in 2021 (WITS). China is also a critical producer of larger electronic devices requiring semiconductors like cellphones, making up 72% of available consumer devices on the global market (AEI).  


The United States Geographical Survey (USGS) reports that roughly 75% of the world’s lithium imports are used for battery creation. With only one domestic lithium producer, the United States lacks the production capabilities to produce the good for domestic consumption, with the USGS estimating that over 50% of US lithium consumption in 2020 was supplied by imports. On a dollar trade value, China supplied $61 million worth of lithium imports in 2021, making up roughly 13% of our total imports of the good. China is additionally responsible for nearly 60% of lithium processing and over 60% of cobalt processing within the electric vehicle supply chain. It should also be noted that China refines 68% of the world’s nickel, 73% of cobalt, 93% of manganese, and 100% of the graphite in lithium-ion batteries (The Times).  

Steel & Iron  

USGS reports that for 2021, 10% of our consumption of steel and iron came from imports. China produces more steel than every other country combined, and in 2021 produced 1.04B tons of raw steel; more than 12 times that of the US. China could restrict trade with the world and still have enough steel for a lifetime (World Steel). USGS reported that 47% of US iron/steel is used for construction, with another 25% for automobile production.  


China is the largest automobile manufacturer in the world. Given they also produce the most steel, they have the manufacturing capacity to cripple any country. China alone produced roughly 26.1M vehicles in 2021; this is nearly 3 times what the US produced in the same year (9.2M) (OICA).  


Aluminum is critical for the production of airplane parts with USGS reporting that 35% of the end-product usage of aluminum imports was for transportation. The US net import reliance on aluminum was estimated to be 44% of our total consumption (USGS). US imports of aluminum from China were valued at $934M in 2021, only 4.6% of our total imports. However, China produces more aluminum than any country on Earth with 38.8M tons of aluminum produced in 2021. The United States only produced 0.8M tons, nearly 50 times less than China.  


       For every country with which the US shares an unbalanced trade relationship in the global economy, that respective country should be contractually obligated through negotiations to purchase an amount of US exports equal to that which was imported from the trading country (i.e. agricultural, natural gas, oil, coal). This restores balanced trade relationships and remedies existing trade surpluses.  

      If negotiations are not effective, the US could impose a 40% tariff on all imports of products used for our national defense. This deters outsourcing and forces US businesses to invest in American manufacturing, additionally reducing unemployment and giving US manufacturing a competitive chance. The Coalition for a Prosperous America estimates that certain tariff levels could bring back 10 million jobs and boost GDP by over 7%. Additional revenues raised by this policy could be used by the federal government to offer depreciation credits to US businesses as well as credits for labor training expenses to incentivize keeping jobs stateside.  

Thirdly, stricter regulations regarding import licenses for all US businesses, meaning businesses would have a capped limit on how much they could import, reinforcing domestic production.  To balance trade, such import licenses could be capped at the level of US exports.  This helps protect from foreign competition, allowing American manufacturing to proliferate towards an equal status on the international stage of commerce.