The tariff war, which many fear might severely impact the U.S. economy, might not be as detrimental as expected. In 2022, a significant portion of U.S. trade involved multinational corporations (MNCs) engaging in intra-firm trade. Specifically, 33.7% of U.S. exports and 46.6% of U.S. imports were transactions between parent companies and their foreign affiliates or related parties. This means that a large share of trade is essentially domestic in nature, even though it crosses borders. For instance, when the U.S. imports smartphones from China, these devices are often produced by American companies like Apple or incorporate substantial components from American firms. Thus, the impact of tariffs may be less severe, as much of the trade is still within the ecosystem of U.S. companies.
Data Source: https://www.cato.org/blog/some-welcome-trade-facts-white-house-economists