By Joshua Vickers
Donald Trump’s tariffs are here. Bigger and brasher than expected. An attempt to restore American greatness by battering China into submission. The end product, however, may not be an American resurgence but a global reordering. As Washington reaches for blunt instruments, Beijing builds leverage elsewhere.
Some of the tariffs now top 140%. Chinese export volumes in tariff-sensitive sectors such as electronics, textiles and furniture have plunged—up to 80% in some cases. According to Goldman Sachs, full implementation of the proposed levies could knock 2.4 percentage points off China’s GDP growth. Yet this is only part of the story.
Far from panicked, China is adapting. The shift from an export-led model to a consumption-driven one has accelerated. Trade with ASEAN reached $911.7 billion in 2023, surpassing China’s trade with America. Commerce with Latin America hit a record $489 billion, and trade with Russia totalled 1.74 trillion yuan ($237 billion) in 2024. Within BRICS, intra-bloc trade remains under $1 trillion but is climbing.
Far from panicked, China is adapting
Global supply chains have not decoupled so much as rethreaded. Vietnam, Mexico and Malaysia now perform much of the final assembly once done in China. However, they rely heavily on Chinese inputs: more than 60% of Vietnam’s electronics exports in 2024 used Chinese components. The web remains Beijing-centric.
Washington’s export controls on advanced technologies were intended to stall China’s rise. Instead, they have invigorated it. Despite American pressure, Semiconductor Manufacturing International Corporation (SMIC) has achieved 7-nanometre chip production. Huawei and BYD are expanding into AI hardware and EV batteries with state support.
Western capital has grown skittish. American and European firms are pulling back. But Gulf sovereign funds, Russian ventures and Southeast Asian investors are moving in. IPOs once bound for New York are now listed in Shanghai and Shenzhen.
China’s currency, the yuan, is slowly gaining foreign traction. In December 2024, it surpassed the yen to become the fourth most-used global payment currency, with a 3.75% share. Petro-yuan deals with Saudi Arabia and Iran are now routine.
Whilst it is true, the dollar remains dominant—accounting for nearly 84% of global trade invoicing. China’s ability to offer credible alternatives is geopolitically meaningful. So long as the United States wields the dollar as a strategic weapon, the appeal of neutrality will grow.
Mr Trump’s tariffs have alienated not just adversaries but allies. Duties on Canadian, Japanese and European imports have eroded decades of trust. Into this void steps China—with charm, infrastructure and investment.
The Regional Comprehensive Economic Partnership (RCEP), which includes China but not America, is now the world’s largest trade pact. Chinese investment in Belt and Road Initiative (BRI) infrastructure rose 14% in 2024, reversing two years of decline. Ports, railways and digital corridors bind Asia, Africa and Latin America ever tighter to Beijing.
Sanctions on Russia and Iran have further driven a shift to China’s economic embrace. Oil-for-goods exchanges, settled in yuan, are increasingly common. Every attempt to weaponise the dollar nudges the system towards alternatives—and China is ready.
Mr Trump sought to cripple China’s rise. Instead, he may have accelerated its transformation. Beijing has been nudged into strategic diversification, forced to nurture domestic innovation and emboldened to build new alliances.
However, the country is not without challenges. Domestically, youth unemployment is stubbornly high, the property sector is fragile, and local government debt is swelling. Yet the overall system is growing more shock-proof. The MSCI China index rose 15% in early 2025, and consumer spending in Tier-1 cities has returned to pre-pandemic levels.
For all the talk of decoupling, America’s strategy may be doing more to globalise China’s ambitions than anything Xi Jinping might have scripted.
The irony will not be lost on those watching from Zhongnanhai.
Image credit: Joshua Vickers
