Targeted vs. Sweeping Tariffs—Understanding the Impact for China and the U.S.

Following a recent WSJ article by Lingling Wei, arguably one of the most balanced and fair reporters in the U.S. and Chief China Correspondent, she posed the question, “Washington appears to be considering a shift from broad tariffs to more surgical “chokepoints” like software export-controls. Which strategy do you believe is more effective for the U.S., and which poses a greater risk to the global economy?

To address this, it is important to consider U.S. Industries that rely on contract manufacturing from China for key components and finished goods as well as other imports. Often not always written about are jobs created and maintained for these industries that could be affected; even lost by the impact of tariffs as well as annual revenue for these companies and finally U.S. GDP that could be impacted by tariffs

For U.S. national-security objectives, narrowly-targeted export controls (the “chokepoint” approach) are usually more effective and less economically damaging than broad, economy-wide tariffs — provided the controls are carefully calibrated, multilateral where possible, and paired with domestic industrial policy.
But export controls carry a different, serious risk: technology decoupling and long-run loss of U.S. market leadership (and higher costs for U.S. firms). Broad tariffs, by contrast, hit consumers, downstream industries and GDP much faster and more broadly. Below I explain why, give key numbers on industries / jobs / revenues, and end with a short set of policy trade-offs and practical recommendations.

What each tool does (quick comparison)

Tariffs (broad): a blunt tax on trade. They raise import costs, domestic prices, and can shelter some domestic production — but they also reduce consumer welfare, raise input costs for U.S. firms, invite retaliation, and lower real GDP. Many studies and recent analyses find very large aggregate costs from the U.S.-China tariff escalations. Tax Foundation+1
Export controls / chokepoints (targeted): restrict movement of specific goods, software, or know-how (e.g., advanced semiconductors, specialized AI tooling, controlled software). They can directly slow or block certain capabilities from reaching strategic rivals while avoiding a blanket price shock to consumers. But controls also: (a) blunt the innovation ecosystem (if foreign customers are cut off), (b) force companies to reorganize supply chains at high cost, and (c) can accelerate rival ecosystems or circumvention. Just Security+1

Which is more effective for the U.S.?

For immediate national-security objectives (e.g., preventing China from acquiring advanced AI chips or specialized fabrication equipment): export controls are generally more effective. They can specifically restrict sensitive inputs without directly taxing everything consumers buy. Policy papers and expert reviews of the 2020s show controls on semiconductors / AI tooling have real bite if enforced and if export-licensing is strict and coordinated with allies. Texas National Security Review
For reshoring or boosting low-tech domestic manufacturing: tariffs can, in theory, raise prices of imports and make U.S. production comparatively cheaper — but at very high cost (to consumers, to downstream industries). Historical and model-based work suggests tariffs are a very inefficient way to “create” durable employment and tend to shrink real GDP and consumer welfare compared with targeted industrial policy and subsidies. American Enterprise Institute

3) Who actually relies on Chinese contract manufacturing (and how big are those links)?

Below are the major U.S. industry groups that rely heavily on contract manufacturing, plus concise numeric context and sources.

Consumer electronics / smartphones / PCs / wearables
- Many U.S. brands (Apple, numerous peripherals and electronics companies) use Chinese contract manufacturers — Apple’s supply chain is heavily China-centric; Foxconn/Hon Hai is the world’s largest contract electronics manufacturer. Apple’s FY2024 revenue ≈ $~391B; Foxconn’s FY2024 revenue ≈ $~213B (USD) — showing the scale of firms whose supply chains run through China. Disruption or tariffs on those flows transmit quickly to consumers and producers. Visual Capitalist
Semiconductors / chip assembly & testing / mature-node chips
- U.S. firms depend on a global chain: U.S. design, foreign fabs and advanced packaging/testing often done in Asia. Government surveys show many products contain PRC-manufactured chips (visibility is limited, but a large share of firms reported some PRC-made chips). Controls on chip exports are explicitly designed as chokepoints. Bureau of Industry and Security

Pharmaceuticals (APIs and generic active ingredients)
- A very large share of APIs and generic drug intermediates are produced in China and India. U.S. government analyses flag that over 80% of the world’s API supply (in some categories) is produced in China/India and that a significant share of U.S. drug input imports come from China (~23.6% of some categories referenced). That makes the sector vulnerable to tariffs or export-control-style decoupling of key inputs. U.S. Economic Development Administration
Biotech / CDMOs (contract R&D & manufacturing)
- Surveys show ~79% of U.S. biotech firms contract with Chinese partners for elements of R&D/production. That’s a large footprint — especially for clinical trial support, reagent manufacture, and CDMO work. Reuters
Apparel, toys, furniture, low-end appliances and many durable goods
- These have long relied on Chinese contract manufacturing. Apparel and toys are particularly sensitive to import tariffs — tariff increases translate into higher retail prices or lower margins for U.S. brands, and often no domestic alternative exists at the same price/scale. (Breakdown of U.S. imports by product shows electronics, machinery, toys, sports equipment, furniture are large categories from China.) Supply Chain Dive
Contract manufacturing overall (all industries): Global contract manufacturing market ~ $700–760B range in mid-2020s (multiple market reports), indicating the scale of outsourced production. Mordor Intelligence

4) Jobs: created/maintained and at-risk

Jobs supported by U.S. trade with China: U.S. exports to China supported roughly ~0.9–1.0 million U.S. jobs in recent years (US-China Business Council / related compilations show ~931,000 jobs supported by exports in earlier reports). Tariff escalation puts hundreds of thousands of export-related jobs at risk; one industry estimate put ~862,000 U.S. jobs at risk under a large tariff/retaliation scenario. The US-China Business Council
Manufacturing employment baseline: about 12.7 million Americans employed in manufacturing (data through 2024/2025 discussions). That’s the pool that tariffs hope to help, but historical evidence shows tariffs rarely restore employment to previous highs and often raise downstream job losses. CBS News
Industry-specific job risks: tariffs on Chinese imports rapidly translate into higher input costs for U.S. downstream firms (retail, electronics assemblers, PC makers, etc.). If inputs become more expensive or unavailable, U.S. firms either pass costs to consumers (reducing demand) or cut staff. By contrast, export controls are less directly labour-disruptive for mass consumer sectors but could displace high-skilled jobs in R&D/manufacturing reorganizations over time. (See examples above: biotech contracting, pharma APIs, electronics assembly.) Reuters

5) Company revenue / scale examples (to illustrate exposure)

Apple (FY2024 revenue): roughly $~391 billion — large parts of device assembly and component sourcing are tied to China/Asia manufacturing networks. Visual Capitalist
Foxconn / Hon Hai (FY2024 revenue): reported revenue in NT$6.86 trillion for 2024 (~$200+ billion USD) — Foxconn is the largest contract manufacturer and a central node of electronics manufacturing. Disruption here ripples across many U.S. tech firms. Foxconn
Pharma CDMO/API sector: global CDMO market and API markets are big (APIs represent a multibillion category; the EDA/other US documents flag that China/India produce a very large share of global API volumes). Precise revenue for “the industry” varies by subsector but it is a tens to hundreds of billions market globally. U.S. Economic Development Administration

6) Aggregate economic exposure (imports / GDP context / tariffs cost)

U.S. goods & services trade with China (2024): ≈ $659 billion. That’s a non-trivial share of the U.S. economy and trade flows. Tariffs and retaliatory tariffs on those flows directly affect GDP components (exports, imports, consumption). United States Trade Representative
Estimated corporate/consumer cost of tariffs (recent analyses): one S&P Global–based press summary estimated tariffs and related policy moves could cost companies ~$1.2 trillion in 2025 (costs that mostly get passed to consumers), and other independent studies put per-household cost increases in the low-thousands of dollars annually depending on the tariff slate. Those are large macroeconomic hits. Axios
GDP scale: U.S. nominal GDP in 2024 ≈ $29.1 trillion (national output). A shock that raises costs by a trillion dollars or reduces exports materially therefore can shave meaningful tenths of a percent off GDP; model literature finds tariffs reduce GDP and consumer welfare by non-trivial amounts depending on the tariff base and elasticities. (For open-economy models and empirical estimates see Kreuter and others.) Wikipedia

7) Risk profiles to the global economy

Broad tariffs = immediate global downside:
- Raise consumer prices globally, reduce trade volumes, disrupt global supply chains, and invite widespread retaliation — that combination quickly reduces global GDP and raises inflation. Models and recent experience show tariffs have big short-run output and welfare costs. The S&P/market estimates of corporate cost and media analyses from 2025 document strong real effects. Axios
Chokepoints/export controls = slower, structural risk:
- They may avoid immediate consumer-price shocks, but they push firm strategies to decouple: dual supply chains, relocation to other jurisdictions, and — crucially — incentivize the target to build domestic alternatives. Over time this can fragment R&D ecosystems and slow the global diffusion of technology (which hurts global productivity growth). If many advanced economies move from open markets to techno-bloc competition, global growth and innovation could be meaningfully lower in the long run. Just Security

8) Bottom line recommendation (policy trade-offs)

Use export controls for genuine national-security threats (advanced node semiconductors, specialized lithography or AI model export elements, military-sensitive dual-use tech). Controls should be narrow, transparent about thresholds, and coordinated with allies (multilateral controls have much greater bite and less collateral damage). Texas National Security Review
Avoid broad, economy-wide tariffs as a primary tool. If tariffs are used, they should be limited, temporary, and paired with: (a) targeted domestic industrial investment (subsidies, tax credits, workforce training), (b) explicit programs to secure critical supply chains (APIs, rare earths processing, advanced packaging), and (c) compensation/transition assistance for hurt workers and communities. Studies show that pure tariffs are costly and inefficient at reviving durable manufacturing employment. Tax Foundation
Invest in resilience and alternatives: fund domestic API capacity, onshore/nearshore contract manufacturing for strategic sectors, accelerate ally coordination on export controls, and create rapid licensing pathways for non-sensitive commerce to minimize unintended damage. The U.S. Tech Hubs / APM initiatives are examples of this approach. U.S. Economic Development Administration

9) Quick summary of the five most important facts (with sources)

U.S.–China trade (goods + services) ≈ $659B in 2024. United States Trade Representative
U.S. exports to China support roughly 0.9–1.0 million U.S. jobs; tariffs and retaliation put on the order of ~862k jobs at risk in large-escalation scenarios cited by business groups. The US-China Business Council
Pharma API dependence is large: government analyses flag that a major share of APIs and some drug intermediates come from China/India (over 80% of certain API capacities cited). That makes some medical supply chains acutely vulnerable. U.S. Economic Development Administration
Tariffs are very costly: recent market/analyst work estimated tariffs would impose roughly $1.2 trillion of costs (2025 estimate) on companies/consumers in a recent escalation—showing the scale of the macroeconomic hit. Axios
Most effective path for security + least global GDP damage: targeted export controls (multilateral where possible) combined with domestic investment and ally coordination — rather than broad tariffs — is the preferred mix if the goal is to constrain strategic capabilities while limiting collateral economic damage. (But beware long-run risks of decoupling.) Texas National Security Review

Both the United States and China would be wise to recognize that excessive economic confrontation—whether through sweeping tariffs or escalating technology controls—ultimately weakens global growth, supply chain resilience, and innovation on both sides. Strategic competition is inevitable, but sustainable prosperity depends on preserving selective cooperation in areas like health, climate, and stable trade frameworks. A balanced approach that safeguards national security while maintaining channels for commerce and joint innovation will serve both nations—and the global economy—far better than a zero-sum decoupling.