Before the trade war began, American companies sending goods to China paid nothing in tariffs. That was the status quo. Zero tax. A smooth transaction from the U.S. to China. But that clean slate is long gone.
Now, any American product sent to China carries a ten percent tax. That includes not just finished goods but also raw materials. That means if you ship cotton, soybeans, oil, or copper, China hits it with ten percent the moment it crosses their border.
Then it gets worse. China takes that raw material, processes it, adds labor, manufactures the finished product, and ships it back to the U.S. Once it lands on American soil, it gets taxed again. This time it is not ten percent. It is thirty.
So now you have a forty percent penalty, baked in over two continents and two political systems. That is a massive and mostly invisible drag on trade. Forty percent on goods that used to flow without friction.
Here is where most analysts miss the plot. They only look at one direction. They ask, what is the tariff from China to the U.S.? Or what is the tax from the U.S. to China? That is outdated thinking. We are in a loop now. Goods circle the globe. They move through multiple countries. So the only way to understand the true burden is to calculate the round trip. What does it cost to ship a product to China, have it processed or assembled, and bring it back?
But the math is not clean. Tariffs change all the time. Products move between hands. Supply chains do not sit still. They reconfigure constantly based on who is offering better terms or fewer headaches.
You cannot just look at China either. Vietnam, India, Japan, South Korea. Every one of them is in the loop. A component might pass through four different nations before it reaches the end customer. That means the tariff math must be repeated four times, and every time the rate may be different. If you do not calculate both the outbound and return cost for every leg of the journey, your spreadsheet is wrong.
There is also the wildcard of substitutions. If the tariff on rubber spikes in China, a company may switch to buying it from Thailand or Brazil. That reroutes the entire production chain and rewrites the tariff math again. This happens at a staggering scale. Hundreds of thousands of components, parts, and raw materials are impacted. Even the ink in your printer or the resin in a child’s toy gets touched by this.
Here is what matters. If you do not understand round trip tariffs, you do not understand trade in this environment. It is no longer about who makes the product. It is about how many times it moves, where it moves, and how many hands it passes through. Each stop adds another layer of cost. Each leg creates friction. And most of that is invisible to consumers.
But companies feel it. And prices reflect it.