China’s pivot from trade partner to competitor represents a critical miscalculation that leaves it vulnerable to growing automation threats, according to a former Trump trade advisor, as the president-elect signals plans for aggressive tariffs on major trading partners.
“China was a close trade partner to the US but unfortunately they decided to become a competitor, which I believe is a massive miscalculation on their part,” said Barry Bennett, former Trump trade advisor and founder of consultancy firm Tactic, in an interview with Arabian Business.
The comments come a week after Trump announced plans to impose a 10 percent tariff on Chinese imports upon taking office on January 20. He has separately threatened duties up to 60 percent if China loses its most-favoured-nation trading status.
Bennett suggests the challenge extends beyond tariffs, pointing to fundamental shifts in manufacturing economics.
“The rules of global trade, at least on our part, were designed to give us access to cheap labour. As innovation and automation have dominated manufacturing this last decade, this cost of labour is no longer the driving force that it once was. In fact, it’s becoming marginal,” he said.
This assessment comes amid China’s struggles with property sector challenges, debt concerns, and weakened domestic demand. During Trump’s first term, his trade war with China saw tariffs imposed on over $550 billion of Chinese imports, with China retaliating with duties on $185 billion of U.S. goods.
“This automation is actually China’s enemy, not the United States,” Bennett said, highlighting that modern factories require fewer but more skilled workers.
“The labour it takes to run these automated factories is pretty high skilled labour.”
The shifting dynamics could further complicate China’s response to Trump’s latest trade threats, which include potential 100 percent tariffs on BRICS nations if they move away from the U.S. dollar for international trade.
“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump said in a social media post on Saturday.
Automation over emerging markets
Bennett argues that artificial intelligence and automation, rather than developing economies like India, will become the next manufacturing powerhouse.
“We were thinking that someday India might be the next China but I just think the computer is the next China, AI is the next China, and factories with lower and lower number of man hours per product produced just no longer requires cheap labour,” he said.
The transformation is already evident in the automotive sector, according to Bennett.
“Look at the Koreans, they make all their cars here, even Honda, everyone who used to make their cars in Asia and ship them to the United States now makes cars in the United States because the cost of shipping is far higher than any advantage the cost of labour might provide.”
He pointed to emerging U.S. manufacturing capabilities as evidence of this shift: “If we can make cellphones in Austin, Texas at the same cost as we can in China and not have to ship them across the ocean, that’s a huge competitive advantage.”
This trend could particularly impact Asian manufacturers using Mexico as a production base for the U.S. market, especially as Trump has suggested implementing tariffs as high as 200 percent on vehicles crossing the U.S.-Mexico border.
Automation’s impact fundamentally changes traditional assumptions about global trade, Bennett added.
“Gone are the days of mining in Africa then shipping to China for processing and selling to us out of the Chinese market whenever they feel like selling and at whatever price they feel like selling… that’s not sustainable for us and that can’t and won’t go on.”
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