China fears isolation as Trump speeds up trade talks with others

The Donald Trump administration of the US is actively negotiating trade agreements with Asian and European countries to limit the flow of Chinese-made goods into America.

These deals focus on ensuring that products exported to the US are not secretly sourced from China, a move driven by President Trump’s latest trade policies announced in April 2025.

The agreements aim to reshape global supply chains, creating “trusted” networks that exclude Chinese firms, which has raised concerns about trade disruptions and potential retaliation from Beijing.

Vietnam, Thailand, and South Korea restrict flow of Chinese goods

Countries like Vietnam, Thailand, and South Korea are at the forefront of these efforts. They have introduced strict controls to prevent Chinese goods from being rerouted through their borders to dodge US tariffs.

For instance, some companies try to pass off Chinese products as locally made by minimally processing them in these countries, a practice known as trans-shipment.

To counter this, Vietnam has agreed to a tiered tariff structure with the US. Under this deal, Vietnamese exports face higher tariffs if they contain Chinese components or are suspected of being transshipped from China.

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For example, a product assembled in Vietnam but made with Chinese parts could face a tariff rate of up to 25 per cent, compared to lower rates for goods proven to be locally produced.

This system incentivises Vietnam to closely monitor its exports and ensure compliance with US demands, though it complicates supply chains for manufacturers relying on Chinese materials.

India is also negotiating with the US, focusing on “rules of origin” to determine which products qualify for tariff benefits. These rules require a significant portion of a product’s value—such as labour or materials—to come from India rather than China.

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For instance, a smartphone assembled in India might need 60 per cent of its components to be locally sourced to avoid higher tariffs. However, the US and India disagree on the exact percentage required, with the US pushing for stricter thresholds to limit Chinese influence. These talks are critical for India, which exports electronics and textiles to the US but relies heavily on Chinese raw materials, making compliance a logistical challenge.

How is China reacting to it?

China has reacted strongly, warning of retaliation if these deals harm its economic interests. Beijing’s foreign ministry issued statements vowing to “resolutely counter” any trade restrictions, hinting at potential tariffs or sanctions on countries aligning with the US.

“China firmly opposes any party reaching a deal at the expense of Chinese interests in exchange for so-called tariff reductions,” China’s Ministry of Commerce said in a statement Saturday (June 28). “If this happens, China will never accept it and will resolutely counter it to safeguard its legitimate rights and interests.”

This has put Asian nations in a bind, as they depend on the US for market access but rely on China for supplies like electronics components, steel, and chemicals.

For example, South Korea’s semiconductor industry, a major exporter to the US, sources critical materials from China, and adhering to US rules could raise costs and disrupt production.

The urgency of these negotiations is heightened by a looming deadline. A 90-day pause on new US tariffs, set to expire on July 9, gives countries a narrow window to finalise agreements. Failure to do so could trigger tariffs as high as 30 per cent on goods from non-compliant nations, significantly raising costs for exporters and US consumers.

This pressure is particularly acute for smaller economies like Thailand, which lack the negotiating leverage of larger players like the EU.

Beyond goods, the US is pushing its partners to tighten export controls on high-tech products, such as advanced semiconductors and AI technologies, to restrict China’s access. This aligns with broader US efforts to limit China’s technological advancements, citing national security concerns.

The EU, caught between US pressure and its trade ties with China, faces a delicate balancing act. China fears the EU might adopt similar restrictions, further isolating its tech firms from global markets.

The broader implications are significant. These US-led efforts could fragment global supply chains, forcing countries to choose between aligning with the US or maintaining ties with China.

For instance, a manufacturer in Vietnam might need to replace Chinese suppliers with more expensive local or US alternatives, driving up costs. China warns that this push for “trusted” supply chains could marginalise its economy, potentially leading to higher prices and shortages worldwide. As negotiations continue, the risk of a broader trade conflict looms.