Commentary
For the Chinese Communist Party (CCP) and Xi Jinping, U.S. President Donald Trump’s second term of tariff mania is “déjà vu all over again”—only much worse.
A brief look back puts today’s situation in context.
Trump Tariffs in 2018
You may recall that in 2018, the first Trump administration deployed $250 billion worth of tariffs against China, and the impact was felt almost immediately. In the ensuing months, the level of U.S. imports from China declined sharply.Predictably, the U.S. decline in imports from China was largely balanced by a rise in imports from other countries with low manufacturing costs. However, even throughout the Biden administration, the outflow of manufacturers from China continued. It’s also important to note that the Biden administration largely left Trump’s tariffs against China in place.
Trump 2.0 Tariffs in 2025 Are Even Harder on China
Fast forward to today, and we’re seeing a massively expanded tariff policy from the Trump administration that’s altering entire global trading relationships.We’re also seeing tremendous pushback from Beijing.
Where will this latest round of reciprocal tariff escalation lead?
A variety of adversarial and trading scenarios could unfold, but one thing is certain: China’s golden days of being the world’s factory are fading fast.
As discussed above, manufacturing has been shifting out of China for years. It’s not a short-term phenomenon but rather a long-term trend.
Furthermore, the manufacturing shift away from China is not all a consequence of the Trump administration’s tariff policies.
US Firms Leading Stampede Out of China
For example, in a survey by the American Chamber of Commerce in China, up to 30 percent of American companies are either moving their supply chains out of China or thinking about it. That’s more than twice the number that did so in 2020 in response to Beijing’s overreactive COVID-19 lockdowns there.With its comprehensive and extended lockdown period, thousands, if not millions, of China’s manufacturing customers saw extended disruptions in their businesses and suffered significant losses. The pandemic revealed to countries worldwide the folly of relying solely on China for all their manufacturing needs. As a result, supply chain diversification suddenly became a very important business consideration.
Another factor is the rising cost of doing business in China. Its labor force is not nearly as economically desirable as it once was. With its growing middle class and aging population, the pricing and reliability advantages China once enjoyed are much less than they used to be. That fact isn’t likely to change, as long as the CCP is in power.
Beijing’s Behavior on World Stage Is Problematic
Another compelling reason is the rising geopolitical tensions in that part of the world that go well beyond Beijing–Washington competition. Many of China’s customers’ concerns are driven largely by CCP aggression against neighboring countries, the Asia-Pacific region as a whole, and its global ambitions.War games by Chinese military forces near Taiwan and other aggressive moves against the Philippines, Vietnam, and Japan have soured customers on doing business with China.
European companies are at least as pessimistic as American ones, if not more so. In a 2024 survey, nearly half (44 percent) of European Union Chamber of Commerce members see the future of business in China as bleak in terms of profitability going forward. They raised concerns similar to those of their American counterparts and noted that Beijing restricted access to China’s market. This was before the Trump administration took off in 2025 and the latest round of tariffs.
Other Countries Attracting Manufacturers
Companies that once had all their factories in China have now opened plants in Vietnam, India, Turkey, Mexico, and other locations that are closer to the markets where the products are sold and offer other competitive advantages, including lower labor costs, market access, and infrastructure.This trend is unlikely to revert to China’s favor in the near future.
In fact, the United States may see a reshoring trend as the business conditions and regulatory environment continue to improve. Indeed, a significant number of foreign companies have announced plans to relocate their manufacturing to the United States to avoid tariffs. Recent overtures include international firms such as Japan’s SoftBank, Taiwan’s TSMC chip manufacturing company, South Korea’s Hyundai, which has pledged a $21 billion investment in steel and automotive plants, and some wealthy Gulf states, among others.
Welcome to the China Hustle
Today, China finds itself in hustle mode, as it faces a determined America under President Trump to challenge the CCP in every influential sphere, and leverage its advantages in regulation, legal recourse, financial leadership, and technological innovation to do so.As a result, Beijing is desperately trying to make up the losses by deepening economic ties with other countries, such as Argentina, Brazil, and Russia. But China’s biggest economic hopes are pinned on the European Union, which is less than enthusiastic about adding more economic risk.
How effective will the CCP’s efforts be in weathering the radical changes underway in the global manufacturing and trading system?
It remains to be seen.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
