[Source/Author: Guancha.net Columnist Zuo Qianhu]
With the release of the "Joint Statement on the Geneva Economic and Trade Talks between China and the United States," the highly anticipated Sino-US tariff war, which began on April 2nd, has temporarily come to a halt.
Before proceeding with further discussion, let us briefly review the timeline of changes in US tariff policies toward China:
April 2nd: The US announced adjustments to tariffs for multiple countries and regions, setting up what was called a "10% benchmark tariff," including an additional 34% tariff on China.
April 5th: The so-called "benchmark tariff" took effect.
April 8th: The US increased its tariff rate on China to 84%.
April 9th: The US's so-called "reciprocal tariff" officially came into effect.
April 10th: The US announced a tariff increase on China to 125%, with a temporary deferral of 90 days for other trading partners, at a rate of 10%.
April 11th: The US Customs and Border Protection (CBP) exempted nearly 20 categories of electronic products from the so-called "reciprocal tariff."
May 12th: Both sides finally adjusted the bilateral tariff levels back to 10%, with an effective period set for 90 days.
President Trump of the United States, Video Screenshot
Changes in relevant industries after the US initiated the tariff war
For those engaged in trade-related industries, the tariff storm unleashed by Trump was expected. As early as before his victory in 2024, Trump had repeatedly signaled intentions to impose tariffs. Consequently, prior to his presidency, US importers had already preemptively stockpiled some inventory to buffer against potential impacts. (Related analysis can be found in the article "Did American Merchants Rush to Stockpile Chinese Goods Before Trump Took Office? Reality is Not So Simple.")
Despite widespread public perception viewing this Sino-US confrontation as a "tariff war," for trade-related industries, the parties involved are not limited to just China and the US; they also include European and American multinational corporations that currently dominate the Sino-US supply chain.
This becomes evident when examining the 2024 trade data: total bilateral trade between China and the US amounted to $688.28 billion, with China exporting $524.656 billion to the US and importing $163.624 billion from it. However, if we shift our perspective to actual corporate sales figures, we find that in 2024, Chinese enterprises' sales in the US totaled only $7.864 billion, while American enterprises' sales in China reached $49.052 billion.
This discrepancy arises due to differences in international trade statistical rules: electric vehicles exported from Tesla's Shanghai factory to the US are counted as part of China's exports to the US, yet they do not fall under Chinese enterprises' sales in the US. On the other hand, "Made in China" goods sold at Walmart's Chinese stores are considered part of American enterprise performance in China, but they do not increase US exports to China. Understanding these dual standards in statistical rules provides insight into the true picture behind international trade data.
The current trade pattern between China and the US is fundamentally determined by the previous globalization of supply chains dominated by Europe and America. Multinational giants like Walmart and Tesla have designated China as a production base—Walmart purchases hundreds of millions of dollars worth of goods annually from China destined for US supermarkets, while Tesla directly established a super factory in Shanghai to supply the North American market. These European and American multinational enterprises that hold sway over the supply chain not only determine the flow of goods and transportation rhythms but also shoulder the entire chain of responsibility from loading ships at Chinese ports to customs clearance at US ports, naturally becoming the direct bearers of US tariff policies.
In essence, the connection between Chinese manufacturing enterprises and US tariff policies is transmitted through the procurement pricing mechanism of multinational corporations.
For example, after the Trump administration announced a 10% tariff in February 2025, Walmart requested price reductions from Chinese suppliers during its mid-March procurement negotiations to offset the cost of the tariff. This price-shifting approach drew attention from China’s Ministry of Commerce, despite Walmart attempting to divert some orders to alternative origins such as Vietnam and India, large-scale capacity shifts could not be achieved in the short term.
Walmart, Photo Credit
By April, when Trump raised tariffs above 100%, the method of offsetting tariffs by reducing costs at Chinese factories clearly failed. Most European and American traders represented by Walmart chose to suspend shipments from China and awaited policy developments. Statistics from shipping data company Vizion showed that in early April, the number of scheduled import container shipments to the US fell by nearly 50% compared to late March. With a ship schedule of approximately 15 to 20 days from China's coastal ports to the US West Coast,果然, the number of vessel calls at the Port of Los Angeles and the Port of Long Beach in the US West Coast dropped significantly in late April.
On April 21st, Walmart urgently met with the Trump administration, and then on April 26th, notified Chinese factories to resume shipments with unchanged purchase prices, with Walmart bearing the tariffs itself. This round of negotiation over tariff costs ultimately concluded with the compromise of a multinational giant.
It is worth noting that the impact of US tariff policies on the domestic market differs significantly from what some domestic Chinese public opinion imagines or speculates.
The tax base for US import tariffs is the declared price of imported goods, not the terminal retail price. For example, if a product purchased from China costs $100, even with a 125% tariff added, bringing the cost to $225, it might still be sold at a high price of $2000 in the US market. In other words, the proportion of tariffs in the gross profit of a product is not very significant (net profit is another matter).
Walmart adopted a "price investment" strategy, planning to leverage its financial advantage to absorb tariff costs and seize sales opportunities during shortages, thereby expanding market share; Apple Group simply implemented a "tariff-specific exemption" for electronic products. In contrast, smaller importers in China's cross-border e-commerce face more severe pressures: if their operating product margins are low and sensitive to tariffs, once inventory runs out leading to interrupted sales, they still need to bear fixed operational costs such as rent and labor, which may directly result in losses or even bankruptcy risks.
Chinese factories, affected by the halt in shipping orders from European and American supply chain leaders, have already produced goods that can only be stored in port warehouses and their own factory warehouses. Due to non-delivery of goods, delayed payment settlements lead to cash flow pressure for companies. Under the FOB (Free On Board) terms, some Chinese factories also have to bear demurrage and storage fees for goods stored at ports. To address this, Suzhou, a major foreign trade hub, urgently introduced a policy on April 18th offering three months of free storage support for export containers.
In normal logic, if European and American multinational companies halt shipments, it would lead to a decrease in demand, causing freight rates to drop rapidly. However, shipping companies on this route promptly withdrew capacity within a very short time, and compared to the whole year of 2024, there was no noticeable fluctuation in the Shanghai export rate to the US West Coast. This indicates that ocean carriers had contingency plans for Trump's tariff war. Data source: Shanghai Shipping Exchange website.
In summary, the entire trade industry chain responded to the tariff war initiated by the Trump administration with a wait-and-see attitude and activated some temporary response plans.
American “friend-shoring” policy faces collapse
Not only domestically, but many countries related to Sino-US trade are also adopting a wait-and-see stance.
It is noteworthy that traditional “Yangcheng Lake” areas such as Thailand, Vietnam, and Malaysia have temporarily ceased transshipment businesses.
From current information analysis, this is directly instructed by the governments of these countries. It is more objective to say that their economic development is largely constrained by great power competition rather than suggesting their governments “kowtowed.” In other words, these countries' policy adjustments are essentially responses to the dynamics of Sino-US relations, not single-minded inclinations toward either side. As Trump publicly stated, “Sino-US cooperation can dominate many global affairs,” which reveals the core characteristic of the current international economic and trade landscape.
Since the tariff war was initiated by the US and China responded passively, the key variable determining the evolution of the situation still depends on the policy direction of the US government. President Trump's clear hostility toward transshipment trade means that during the adjustment period, all countries will restrain transshipment activities to avoid angering the Trump administration and becoming targets for further sanctions. Unlike China, which has comprehensive countermeasures, once any country is specifically targeted by US sanctions, its industrial system and economic stability will suffer severe damage, potentially leading to social unrest. Therefore, it can be said that the measures taken by other countries to avoid escalating conflicts are pragmatic strategies based on balancing national interests.
During the Sino-US tariff war in April, the only tangible measure visible internationally was the accelerated relocation of semi-finished and raw material supply chains from China to Southeast Asia. Essentially, this trend continues the US “friend-shoring” policy.
Strategically containing China and promoting “decoupling and disconnection” in the supply chain is a long-term consensus and predetermined policy of both the Democratic and Republican parties in the US. This has remained unchanged; the difference lies in the methods used. During the Biden administration, the core policy to achieve this goal was the “friend-shoring” initiative. This concept was first systematically expounded by then US Treasury Secretary Yellen in her speech at the Atlantic Council on April 13, 2022. Its core logic involves using tariff levers, legislative restrictions, and industrial subsidies to push original Chinese supply chains to "friendly shore" countries such as Vietnam, Indonesia, Malaysia, Mexico, India, and Bangladesh. The US aims to cause hollowing out of China's supply chains and ultimately isolate China from the world supply chain.
A Chinese brand computer manufacturer has a factory in Mexico responsible for assembling servers priced at $1 million each. Source: The New York Times
This policy balances industrial reality with national strategy, thus gaining high compliance execution from the US business community. For instance, some European and American multinational enterprises issued instructions to their controlled Chinese factories and contract manufacturers dependent on their orders, requiring them to relocate production capacity out of China within a specified timeframe and clearly stating that future purchases of specific products made in China will be discontinued. Academia categorizes such behaviors as "anything but China."
In response, China accelerates its industrial upgrading strategy, guiding labor-intensive manufacturing and other low-end industries overseas through policy guidance while concentrating resources on developing high-end industries such as semiconductors and new energy vehicles. Affected by this, a large number of factories in sectors such as automotive parts and electronic components are relocating to Vietnam, Thailand, and Mexico. These transfers objectively bring employment growth and technology spillover effects to receiving countries, prompting them to actively cooperate with the US "friend-shoring" policy.
Under the framework of the "friend-shoring" policy, the objective result of the combined policies of the two countries significantly accelerates the overseas expansion of Chinese enterprises. Traditional overseas investment theories suggest that manufacturing going global typically follows a gradual path of "export trade - establishing sales networks - local production," where building overseas factories, as a capital-intensive investment phase, requires verifying market stability and constructing security mechanisms before implementation. However, the current policy environment reconstructs the logic of corporate decision-making: European and American multinational corporations leverage their purchasing power to make relocating production out of China a prerequisite for orders, transforming strategic decisions from "whether to go overseas" to "how to efficiently implement."
Notably, this directive relocation method objectively solves the long-standing issue of overseas supply chain security for Chinese enterprises. Enterprises going overseas often face safety risks, but through the implementation of US "friend-shoring" policies, Chinese enterprises can now expand their overseas markets utilizing the US security guarantee system.
In this context, apart from saving costs, Chinese enterprises only need to focus on one issue: how to expand local sales to achieve a balance between factory construction and operation costs. The sales limitations imposed by procurement channels under the OEM model force enterprises to adopt a self-brand strategy. This transformation forms a strategic synergy with local production, allowing them to enjoy US tariff benefits and even subsidies from the host country after moving to the country, providing significant assistance in expanding market presence for Chinese brands.
It can be said that the execution of the "friend-shoring" policy by European and American multinational enterprises and the overseas expansion of Chinese enterprises form a "mutual pursuit" in a certain sense.
The trade war between China and the US has not yet determined a winner or loser at this stage.
Using a tariff war against China to curb its rise is the stance of another faction within the US, with Trump merely representing this viewpoint. Moreover, Trump, as a political novice plus a charismatic leader, is an appropriate candidate to make such decisions.
According to The Wall Street Journal: The Trump administration planned to use tariff negotiations to pressure US trade partners to limit trade with China. US officials planned to negotiate with more than 70 countries, requesting them to ban transshipment of Chinese goods, prevent Chinese enterprises from setting up factories on their territory to circumvent high tariffs, and refrain from absorbing China's low-priced industrial products in their economies. One of the masterminds behind this strategy was Treasury Secretary Besen.
After agreements were signed between China and Vietnam, Trump posted comments on social media suggesting that China and Vietnam were conspiring to "destroy" the US. Countries like Vietnam and Mexico, which were "friendly shores" helping the US achieve supply chain transfers during the Biden era, became "accomplices" helping China take advantage of the US during the Trump era.
The US adjusting its tariff policies externally indicates that the previous "friend-shoring" policy has effectively failed, and the US policy shift has been decided. How to face a different US has become a challenge for all countries.
Prepare for new changes
The most pointed clause in the "Joint Statement on the Geneva Economic and Trade Talks between China and the United States" regarding the future sets a "tariff ceasefire period" of 90 days. This is akin to a halftime break in a boxing match. Both sides have reached a stage where they assess their opponents and the current situation, finding further fighting disadvantageous and needing to prepare. In fact, during the tariff war in April, both countries simultaneously launched enhanced supply chain control plans, revealing a similar preparation logic.
On April 15th, US Customs enabled a new origin verification system to severely crack down on transshipment trade and tariff evasion, requiring the provision of detailed traceability documents including product production process flowcharts. The target countries for supervision are Vietnam, Malaysia, Thailand, Indonesia, and Mexico.
Nearly simultaneously on April 11th, the China Semiconductor Industry Association released a notice titled "Notification on the Rules for Determining the 'Origin' of Semiconductor Products," changing the determination of the origin of integrated circuits from the packaging location to the wafer processing location. In the field of rare earth controls, following the reinforcement of export restrictions in April, on May 12th, the National Export Control Coordination Mechanism Office organized multiple departments and provinces to convene a meeting to deploy full-chain control of strategic mineral exports.
Both China and the US simultaneously strengthened fine-grained control over their respective import and export trade supply chains. Clearly, both sides are preparing in advance for potentially more intense struggles in the future.
If we must identify the greatest victims in this round of tariff wars, the European and American multinational conglomerates currently dominating global supply chain layouts are undoubtedly the biggest losers.
These multinational interest groups, through a business model that relocates production bases abroad while keeping sales networks in their home countries, became the biggest beneficiaries of the US low-tariff era: reducing costs through offshore production, designing tax structures with legal teams to maximize profits and achieve legal tax avoidance, while simultaneously hollowing out the foundation of US manufacturing. During this process, American manufacturing workers who suffered losses became Trump's political base.
US Steel Corporation's headquarters is located in Pennsylvania, a crucial swing state. Photo Credit: AP
Trump faces enormous financial pressure to repay US debt while seeing massive capital flows. Using the method of increasing tariffs to harvest is undoubtedly the best option. Moreover, there are reasonable reasons at the national level and promises fulfilled politically. Whether for public or private purposes, Trump's administration will adjust its tariff policies again, continuing its games with China and European and American multinational conglomerates.
China does not necessarily aim its struggle at European and American multinational conglomerates at present, but it cannot avoid regulating attempts by these conglomerates to pass on tariff costs. The investigation into DuPont China during the tariff war briefly exposed the vast interests of American enterprises in China to consumers' eyes. With the rise of Chinese enterprises, the conflict between China and European and American multinational conglomerates will inevitably become increasingly acute.
The Sino-US tariff war signals that the good times for European and American multinational companies are coming to an end. The temporary ceasefire in the tariff war between China and the US gives European and American multinational conglomerates a brief respite, which can be foreseen that they will utilize this 90-day "ceasefire period" to rush shipments to the US to replenish inventories nearing depletion and secure more buffer time to expect stabilization of policies in both countries. Under dual pressures, their profit margins are likely to shrink further.
In the short term, China's coastal ports will迎来 a peak in shipping. Currently, the US imposes a 54% tariff on small packages, higher than ordinary goods, coupled with the freight advantage of container shipping over postal packages, which will also see a batch of e-commerce small packages switch to container shipping. Shipping carriers will try to supplement and expand the capacity of the China-US routes, coincidentally driving up freight rates again.
China, with its highly developed infrastructure and efficient industry collaboration, is fully capable of handling such busy situations. However, the US port-related industries and distribution systems may face challenges. Ports in the US that cannot accommodate vessels larger than 20,000 TEUs and the disorganized railways will limit the speed of inventory buildup by European and American multinational conglomerates. Let's hope there won't be a repeat of the massive congestion seen during the pandemic.
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