Free to Read: Why China’s Exports Are Strong Enough to Survive Trump’s Tariffs

Certain economic advantages mean that U.S. tariffs have not been able to stop the rise in China’s share of global exports

Despite the imposition of U.S. tariffs since 2018, China’s export share has continued to rise

In late November, U.S. President-elect Donald Trump said on social media that his administration would impose a 10% tariff on all imports from China and a 25% tariff on imports from Mexico and Canada, in response to America’s ongoing fentanyl crisis.

This move kickstarted the tariff strategy Trump promised during his campaign. As concerns grow over the impact of “Trump 2.0” in 2025, analysts fear that the new tariffs could further weaken China’s export performance, after a decline in U.S. reliance on Chinese imports following the previous round of tariffs.

Various factors affect China’s exports, including U.S. tariffs, global demand and trade conditions. While tariffs may reduce Chinese exports to the U.S., past trends suggest strong export sectors will continue to perform well. As a result, China’s share of global exports is likely to rise despite the challenges.

【Subscribe now and check more challenges China is facing in Trump 2.0. Less than $0.7/week!】

Reshaping global supply chains

When Trump took office in 2016, his administration made priorities of bringing manufacturing back to the U.S., securing supply chains and enhancing America’s economic influence. While there were significant differences between the Democratic and Republican parties, both shared common ground on these goals. American economic policymakers have sought three objectives: reviving high-end manufacturing, bolstering America’s technological leadership and restructuring global supply chains for mid- and low-end products.

Trump’s first term and Biden’s administration have concentrated a top-down framework in U.S. policy, characterized by fiscal and monetary easing domestically and the use of global influence through seigniorage, political pressure and tariffs.

1. This approach has reshaped global manufacturing supply chains. Following the pandemic, four factors have accelerated this change:

2. The U.S. expansion in electronics, automotive and new energy industries has driven a global supply chain shift around these sectors.

U.S. tariff increases and non-tariff barriers have disrupted non-U.S. supply chains, encouraging more emerging economies to integrate into global supply chains.

3. Geopolitical tensions have altered traditional trade dynamics, with China challenging the dominance of developed economies such as Europe and Japan in mid- and high-end manufacturing.

4. Pandemic-induced disruption has led countries to rethink supply chain security, encouraging the localization of supply chains or diversification.

The reshaping of global manufacturing has been driven by two trends. First, emerging industries such as renewable energy and semiconductors are leading the transformation of global supply chains.

Secondly, new manufacturing players, including China, Mexico and Vietnam, are challenging existing supply chains.

China, with its low energy costs and strong industrial base, has quickly captured market share in Europe and Japan. Meanwhile, the U.S. and Europe are promoting domestic manufacturing while supporting neighboring emerging economies in the development of complementary industries. This strategy is reshaping global supply chains outside China and driving manufacturing growth in countries such as Mexico, Turkey and Vietnam.

The imposition of tariffs during Trump’s next term will play an important role in the reshaping of global manufacturing.

Trump’s 2025 policy is expected to be largely consistent with his 2016 approach, focusing on trade protectionism and a tough stance on China. He has repeatedly said he will impose a 10% tariff on all trade partners and up to 60% on Chinese imports. Trump 2.0 tariffs will be set at a higher rate and have a broader scope.

If these promises are fulfilled, they could drive significant changes in supply chains, with countries less affected by tariffs gaining a competitive edge.

Despite the imposition of U.S. tariffs since 2018, China’s export share has continued to rise. By 2023, China accounted for 14.2% of global exports, a 1.5 percentage point increase from 2018.

China has remained “global leader” in most industries, with export shares continuing to grow. For example, exports of new energy vehicles, automotive parts and construction machinery increased by 11.6%, 5.6%, and 7.2%, respectively, between 2018 and 2023.

This resilience underscores China’s competitive advantage in global markets and highlights the importance of evaluating its strengths in international trade.

China’s advantages

China’s competitive edge in manufacturing exports is primarily based on its capability to offer top-quality products at lower prices. This advantage stems from three factors, which are expected to sustain China’s position for years to come.

The first is China’s energy cost advantage. The price of electricity in China is significantly lower than the global average, giving Chinese manufacturers a substantial cost edge. For example, in the third quarter of 2024, the electricity price for American businesses was $0.145 per kWh, while in China it was only $0.088 per kWh. In contrast, German businesses paid $0.252 per kWh — almost three times China’s rate, according to Global Petrol Prices.

This cost advantage is particularly beneficial for energy-intensive industries such as ceramics, glass, non-ferrous metals and chemicals, enabling China to maintain a strong export position in these sectors.

Second, industrial clustering gives China a clear efficiency advantage in manufacturing. With a complete industrial system — encompassing 41 major categories, 207 sub-categories, and 666 smaller categories — China is the only country to cover all industrial sectors in the United Nations’ classification.

This broad industrial base has enabled China to build a fully integrated supply chain, from raw materials and components to finished products and supporting equipment. This comprehensive supply chain gives Chinese manufacturing a distinct competitive advantage.

In consumer electronics, for example, China’s supply chain spans critical sub-sectors such as chips, displays, RF/antennas and cameras. Most countries lack the complete upstream and downstream infrastructure needed to replicate this clustering effect.

Third, China’s huge talent pool offers advantages in R&D across its industrial chain. The country’s strong focus on STEM education has produced a vast talent reservoir, with 5.19 million STEM graduates in 2021, including 330,000 postgraduates, far surpassing other countries.

This talent pool has contributed to a surge in patent applications, with China’s share in key fields rising dramatically. From 2010 to 2023, China’s global patent share in electrical engineering, instrumentation, chemicals, and mechanical engineering reached 35.6%, 19.5%, 17.5% and 18.4%, respectively.

China’s export structure is also shifting toward higher-end products, with its “high-quality, low-cost” advantage enabling it to capture more market share from developed economies such as Japan, Europe, and the U.S. Key exports in 2024 include automobiles, consumer electronics, machinery, ships and home appliances.

Promising sectors

Some exports, with strong competitive advantage, are better positioned to withstand the imposition of tariffs in Trump’s second term. These include:

1. Energy-intensive industries: such as ceramics, glass, non-ferrous metals, and chemicals.

2. Industries with strong industrial clustering: including transportation equipment, entertainment products and construction machinery. Sectors such as general equipment, communication devices, textiles, consumer electronics and home appliances are seeing a growing clustering effect.

3. High R&D growth industries: such as batteries, power equipment, consumer electronics and construction machinery.

Exports from these sectors have seen a significant increase in their global market share since 2018. Despite the impact of tariffs, U.S. reliance on Chinese products in these categories has remained stable.

Exports to emerging markets outside China’s traditional trading partners are also noteworthy. From 2018 to 2023, China saw significant growth in export share to these regions. Russia led with a 1.4% increase, followed by Malaysia, Vietnam, Mexico, Saudi Arabia and Thailand, all of which experienced growth of more than 0.5%.

This growth is down to two main factors: First, new demand from the re-industrialization of regions such as Southeast Asia, Central Asia, the Middle East and parts of Africa. Second, China’s increasing market share in sectors traditionally dominated by the U.S., Japan, and Europe, with Chinese products now able to partially or fully replace foreign-made mid- to high-end goods.

As China continues to advance bilateral trade agreements, its exports to non-U.S. countries are expected to maintain strong growth. Industries with higher overseas revenue from non-U.S. markets are expected to demonstrate greater resilience.

Currently, China has signed 22 free trade agreements with 29 countries and regions, covering about a third of its total foreign trade. It is also currently negotiating agreements with the Gulf Cooperation Council, Japan, South Korea, Sri Lanka, Norway, Moldova, Panama and Palestine.

Key export sectors to focus on include automobiles and parts, non-ferrous metal products, consumer electronics, chemicals and both specialized and general machinery.