Introduction
In a significant shift from historical trade patterns, President Trump’s recent imposition of sweeping tariffs on global imports has set the stage for what analysts are calling a “US Plus One” world. This emerging paradigm represents a fundamental reconfiguration of global supply chains that could have profound implications for American exporters. While these policies aim to rebuild domestic manufacturing and reduce trade deficits, they may inadvertently isolate US suppliers from global markets and diminish the competitiveness of American exports.
Understanding the “US Plus One” Concept
From “China Plus One” to “US Plus One”
The term “US Plus One” represents an adaptation of the established “China Plus One” strategy that has been prominent in global business since around 2013. To understand the implications, we must first examine the original concept:
The “China Plus One” strategy emerged as companies sought to diversify their manufacturing operations beyond China due to rising labor costs, geopolitical tensions, and supply chain vulnerabilities. This approach allowed businesses to maintain production in China while establishing additional facilities in other countries (the “plus one”), providing resilience through geographic diversification Z2Data.
In contrast, the “US Plus One” concept represents a different dynamic, driven not by voluntary diversification but by tariff-induced restructuring. Under Trump’s tariff regime, companies are incentivized to relocate production to the United States for domestic consumption while maintaining just one additional international base for parts or production. This represents a sharp departure from the globally integrated supply chains that have defined international trade in recent decades Economic Times.
Key Elements of Trump’s Tariff Policy
President Trump’s trade policy, formally announced in April 2025, includes several key measures:
- A baseline 10% tariff applied to all imports from every country, effective April 5, 2025
- Individualized higher “reciprocal” tariffs on countries with which the US has the largest trade deficits, effective April 9, 2025
- Particularly steep tariffs on Chinese goods, which were increased to 104% after initial retaliation
- Exemptions for certain strategic goods like pharmaceuticals, semiconductors, and certain energy products WhiteHouse.gov
These measures are justified as necessary responses to unfair trade practices that have contributed to persistent US trade deficits. According to the administration, they aim to “increase our competitive edge, protect our sovereignty, and strengthen our national and economic security” WhiteHouse.gov.
Impact on US Exporters
Higher Production Costs
One of the most immediate consequences for US exporters is the increase in production costs. Import tariffs raise the prices of components and inputs used in manufacturing export goods:
“As tariffs raise import costs… they also raise the price of exports through higher production costs and tariffed components from abroad. Foreign-made inputs into exports average some 12% of US exports.” Bloomberg
The Tax Foundation notes that during previous tariff periods (2018-2019), companies more exposed to import tariffs experienced lower export growth, amounting to an effective export tax of nearly 1.5% at average exposure levels, and up to 4% for the most exposed firms Tax Foundation.
Currency Effects
Tariffs can lead to currency appreciation, further hampering export competitiveness:
“A stronger US dollar may partly counteract the tariffs by making imported products relatively more affordable pre-tax, but it also makes US exports relatively more expensive in international markets, lowering demand for US goods abroad.” Tax Foundation
Retaliatory Measures
Perhaps the most significant impact on US exporters comes from retaliatory tariffs imposed by trading partners. China has announced an 84% tariff on US goods, up from an initial 34%, in direct response to Trump’s 104% tariff on Chinese imports The Guardian.
Beyond tariffs, China has indicated it may pursue additional countermeasures, including:
- Suspending cooperation on issues like fentanyl control
- Investigating US companies’ intellectual property gains in China
- Potentially banning Hollywood films
- Encouraging grassroots boycott campaigns against US products The Guardian
The European Union has also announced retaliatory measures, with tariffs on €22 billion worth of US exports EURACTIV.
Historical Evidence: Agriculture Sector Case Study
The agricultural sector provides a clear example of how tariffs can impact US exports. During the 2018-2020 trade tensions:
- US agricultural exports to China fell from $42.8 billion in 2022 to $29.25 billion in 2024
- US soybean exports to China declined by 38% compared to pre-trade war levels
- Meanwhile, Brazil’s soybean exports to China increased by more than 45% The Guardian
This indicates that tariffs can lead to permanent market share losses as trading partners diversify their own supply chains away from the US.
The Economics of “US Plus One”
Misallocation of Resources
The “US Plus One” model can lead to a misallocation of economic resources:
“Tariffs make domestic products more attractive by raising the prices of foreign products. However, this protectionist measure leads to misallocation of resources away from sectors that might otherwise be competitive in foreign markets.” Tax Foundation
This runs counter to the economic principle of comparative advantage, where countries benefit from specializing in areas where they have relative efficiency and trading for other goods.
Delinking from Global Supply Chains
A core feature of the “US Plus One” world is the potential delinking of US suppliers from global markets:
“High tariff walls will delink US suppliers from the rest of the world, incentivizing companies to move from a ‘China plus one’ manufacturing model to a ‘US plus one’. The end result will be the marginalizing of US exports in the global economy.” Bloomberg
This delinking creates a situation where US-made goods become increasingly uncompetitive in international markets, even as they may gain dominance domestically.
Consumer Costs and Downstream Effects
While the direct impact on exporters is substantial, there are also downstream effects that ripple through the economy. For example, analysts at Rosenblatt Securities predicted that the price of the cheapest iPhone available in the US could rise from $799 to $1,142 due to tariffs The Guardian.
Such price increases would affect domestic consumers but also impact the competitiveness of businesses that rely on these goods as inputs for their own products, including potential exports.
Global Supply Chain Reconfiguration
Shifting Trade Patterns
The US Plus One approach is driving a significant reconfiguration of global supply chains:
“By 2025, many supply chains may shift from global flows of goods and services to national, regional, and local networks of buyers and suppliers.” BSR
This represents a reversal of decades-long trends toward globalization and could fundamentally reshape the international trading system.
Industry-Specific Impacts
Different industries will experience varying impacts from this shift. Industries with complex global supply chains, such as automotive, electronics, and consumer goods, may face the most significant challenges in adapting to a “US Plus One” world.
For example, with higher tariffs worldwide, US-made automobiles are likely to become “less affordable and desired” in international markets Economic Times.
Contrasting “China Plus One” and “US Plus One”
The fundamental differences between these two strategies highlight why “US Plus One” may be problematic for exporters:
| Aspect | China Plus One | US Plus One |
|---|---|---|
| Driver | Voluntary risk diversification | Policy-driven restructuring through tariffs |
| Primary goal | Reduce risks while maintaining cost efficiency | Protect domestic market and reduce trade deficit |
| Effect on costs | Often lowers or maintains production costs | Typically increases production costs |
| Global integration | Maintains global supply chain integration | Reduces global integration |
| Export competitiveness | Generally maintains or improves export potential | May reduce export competitiveness |
Expert Assessment and Future Outlook
Economic experts are generally pessimistic about the long-term consequences of the “US Plus One” approach for US exporters:
“I do not remember ever being this pessimistic about the trajectory of US-China relations,” wrote China analyst Bill Bishop. “The trade relationship is the linchpin between the two countries, and as it breaks, we should probably expect other areas to see more stress.” The Guardian
Diana Choyleva, founder and chief economist at Enodo Economics, notes that political considerations on both sides make de-escalation difficult: “For President Xi, there is only one politically viable response to Trump’s latest threat: Bring it on!” The Guardian
Conclusion
The “US Plus One” world that is emerging from Trump’s tariff policies represents a significant departure from decades of increasingly globalized trade. While the stated goals of these policies include protecting American workers and reducing trade deficits, the evidence suggests they may inadvertently harm US exporters through multiple mechanisms: higher production costs, retaliatory tariffs, currency effects, and delinking from global supply chains.
Unlike the “China Plus One” strategy, which emerged organically as companies sought to diversify risk while maintaining global integration, the “US Plus One” approach is driven by policy interventions that may ultimately reduce the global competitiveness of American exports. As this new trade paradigm unfolds, US exporters will face significant challenges in maintaining their position in international markets, potentially undermining the very economic strength the policies aim to bolster.
