China Research

China is about to become badly hit by President Trump’s sharply raised tariffs. As an answer to China’s first response, the American president has envisaged a further substantial rise of import tariffs from China, maybe by as much as another 50 percent.

The current situation can really be regarded as a global trade war with China as the main opponent for the United States. This is nothing new. Indeed, I had quite some articles and comments on this issue in the past (see, for example, from 2019 https://blogg.lnu.se/china-research/?p=2796).

Trump’s rude treatment of China may have different reasons. There be a link to what many observers in the West consider as China’s “unfair trading” by different direct and indirect export subsidies. But it may also be Trump’s objective to change China into a more comfortable competitor country, i.e. for the U.S. Or there may be both explanations.

China tries to find an answer

When studying reactions on Trump’s tariffs in Chinese media, quite some comments deal with desirable normalization of business contacts between the U.S. and China (http://en.people.cn/n3/2025/0407/c90000-20298634.html). Certain pragmatism still seems to exist when it comes to China’s commercial relations to the U.S.

But in my view, China will focus mainly on strengthening domestic demand in order to react on American tariffs and to give more steam to the economy – despite the serious debt situation (see also from 2024: https://blogg.lnu.se/china-research/?p=3606). Still, China obviously plays down the size of its enormous domestic debt – and so seem reactions of global financial markets (which is not really understandable, see my analysis from January 2025 https://blogg.lnu.se/china-research/?p=3615).

Finally, I would like to quote professor Jeffrey Sachs – expert on emerging markets – by using his words that Washington should not aspire to a world in which it alone is prosperous, while everyone else remains poor. Instead, it should strive for a world in which prosperity is widely shared, and all nations can reap the benefits of peace and openness .

All these positive aspects assume liberal and/or free trade conditions.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University

It finally came true: President Trump has now published his devastating list on tariffs for American imports from all countries. This is terrible news to all countries in the world – in my view the U.S. included! Both theory and practical experience reject trade protectionism as extremely harmful and underline that the American president does not understand macroeconomics – or does not care about it.

Not all emerging markets are major importers of the U.S. – but quite a number of them are indeed. The biggest are by size (in USD and the percentage of Trump’s new tariffs):

                                       Volume (in bill USD)                              Tariff (in %) *

Mexico                        510.0                                                                no new tariff, already targeted

China                          462.6                                                                34  (54 including previous tariffs)

Vietnam                     142.5                                                                46

India                               91.2                                                                26

Thailand                       66,0                                                                36

Malaysia                      53.9                                                                 24

Brazil                             44.2                                                                 10

Indonesia                    29.6                                                                 32

Colombia                    18.4                                                                 10

Chile                              17.4                                                                 10

South Africa               14.8                                                                  30

Philippines                  14.6                                                                 17

Cambodia                   13.4                                                                  49

Costa Rica                  12.0                                                                  10

Peru                                10.0                                                                   10

Source: Country list of the White House, https://www.newsweek.com/trump-reciprocal-tariff-chart-2054514 and Trading Economics. However, the list of the White House is not quite transparent and obviously based on uneven criteria.                                                                                                                                                —————————————————————–

Conclusion:  The table above should indicate clearly that the high new tariffs set by the U.S. will have considerable direct negative effects on exports from many emerging markets to the United States. But there will also be strong indirect negative consequences on many emerging countries because of dampened total global demand. Thus, emerging markets must find new market alternatives for their exports to countries outside the U.S. Candidates for this changing focus are obviously other emerging markets and hopefully the EU. It also will be interesting to see how China and Russia will react on this new situation.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University