The Alternative Theory on Tariffs That's All About Boxing Out China

President Donald Trump’s so-called “Liberation Day” tariffs, which imposed levies even on obscure and remote territories like the Heard and McDonald Islands and its population of penguins — were not designed for economic precision.

Instead, some experts argue, they are meant to block every conceivable route for Chinese goods to reach the United States—boxing China out of the global supply chain and reordering the world’s trading system.

“The formula has been widely mocked, but that misses the point,” trade expert Henry Gao, professor at Singapore Management University, wrote on X, formerly Twitter. “The numbers aren’t meant to hold up in a PhD defense—they’re meant to shock, to create leverage. The more extreme the figure, the stronger the incentive for other countries to come to the negotiating table with the U.S.”

In a series of posts, Gao described the strategy as “intentionally chaotic,” but with a focused aim: isolating China by any means necessary, even if it causes friction with long-standing U.S. trade partners. “All countries have become collateral damage in the U.S.-China economic standoff,” he said.

That theory, while not explicitly backed by the White House, was eluded by U.S. Secretary of Commerce Howard Lutnick during a bombastic appearance on CBS’s “Face the Nation” on Sunday, where he defended the tariffs that have dragged U.S. stocks lower, marking one of the most volatile weeks for Wall Street in recent memory.

“What China started doing was they started going through other countries to America,” Lutnick told CBS’s Margaret Brennan. “So basically he [Trump] said, look, I can’t let any part of the world be a place where China or other countries can ship through them… He’s going to fix that.”

A Global Tariff Net Aimed at One Target?

While the list of “reciprocal” tariffs may seem scattershot—targeting American allies and critical trading partners in Europe and Asia—some analysts have warmed to the theory that the president’s underlying goal is to close every possible backdoor China could use to preserve its export dominance.

That logic helps explain why the administration included countries like Cambodia and Vietnam in its latest round of tariffs—nations often viewed as extensions of China’s supply chain. For its part, Vietnam was among the first nations to respond to the tariffs by dropping its export duties for the U.S. to zero. It’s not yet clear if that is enough to placate the White House.

Todd Belt, director of the Graduate School of Political Management at George Washington University, said the goal of isolating China may not have been fully intentional at first, but it has become central to the story.

“Trump’s tariffs weren’t originally designed with this complexity in mind,” Belt told Newsweek. “But the Chinese government understands the dynamic well. We can already see them responding by trying to build new markets for component parts.”

This aligns with Beijing’s escalating posture in the face of a cascade of new tariffs, the latest of which the White House said would go into effect as scheduled at midnight Wednesday.

“[Chinese President] Xi has built up an image of himself as a defiant strongman helming a powerful country,” Julian Gewirtz, a former White House China adviser, told The New York Times. “China’s official messaging is conveying that they are determined to stand up to U.S. pressure even at high costs.”

The Chinese foreign ministry has called the tariffs “economic bullying” and vowed to “fight to the end,” and Beijing responded to last week’s round of “reciprocal” tariffs with its own 34 hike in tariffs on U.S. goods.

US Companies Already Making Moves

As the tariffs took effect, tech giant Apple was said to be ramping up its production in India, shifting supply lines that once ran directly through China, in a bid to escape the harsh Chinese tariffs. The same day it was reported Apple flew planes full of iPhones from New Delhi, the Wall Street Journal reported that the company is planning to produce up to 25 million iPhones in India this year, potentially covering half of its U.S. market demand.

The move may be as much about evading Chinese tariffs as it is about strategic realignment. Apple faced a 54 percent levy on Chinese-manufactured goods under the new policy, compared to a more manageable 26 percent on Indian exports. The shift from Apple had a secondary, perhaps psychological, effect: denting China’s ability to produce the most popular consumer product in the world, and shifting that production to its biggest rival in the East.

Bloomberg reported Monday that Apple stocked up on inventory ahead of the tariffs as part of its efforts to prepare for their arrival, which should delay the impact of the tariffs on Apple’s bottom line at least into the next quarter. In the meantime, the company has also sought exemptions from the new tariffs, repeating a strategy that worked during Trump’s first term.

If the “isolate China at all costs” theory is correct, it would amount to one of the riskier bets Trump has ever taken, with profound opportunities for collateral damage to U.S. relationships as well as the domestic economy, which was the beneficiary of $440 billion in Chinese imports last year.

Joseph Foudy, professor at NYU’s Stern School of Business, questioned the coherence of the strategy. “We’re essentially picking fights with every major country in the world,” Foudy said. “Even if we end up cutting deals, the level of acrimony and the signal that the U.S. is no longer a reliable long-term partner weakens our position.”

Foudy argued the administration could have crafted a more targeted approach if its goal was to target Beijing—starting with tariffs solely on China, then expanding only if it was detected that China was flouting the tariffs by rerouting exports through non-tariffed countries or territories.

“But instead, we’re imposing tariffs on countries like Australia, which actually has a trade surplus with the U.S. That raises doubts about whether this is really a focused strategy—or just a repackaging of a broader tariff policy after the fact.”

Gordon G. Chang, an American lawyer known for his influential writings on China, wrote in a Newsweek opinion piece this week that China’s economy is more precarious than advertised, and that Beijing enters into this trade war in a weakened position.

“Trump holds all the high cards,” Chang wrote. “Xi, in short, has placed the fate of the Chinese economy in the hands of the leader of that irreplaceable export market, the American one.” He added that “there are winners in trade wars. In this particular trade war, the winner will not be China.”

Trump, who famously sees himself as a dealmaker above all else, may be expecting China to come to the table in the end. “I don’t think he’s bluffing either,” said Belt. “He’s willing to put the U.S. through some short-term pain to get what he sees as a deal that benefits the country and reflects well on him.”