Recent actions by the Trump administration in trade may significantly undermine China's exports to the US. Analysis shows that new restrictions could impact substantial volumes of Chinese production.
Trump's Plan and Its Impact on Exports
Analysts at Bloomberg Economics point out that China has become more dependent on routing goods through third countries like Mexico and Vietnam. The share of products destined for the US increased to 22% in 2023 from 14% in 2017. Should the Trump administration impose additional tariffs on such shipments, it could threaten around 70% of China's exports to the US, placing over 21% of China's GDP at risk.
Increasing Measures to Control Goods Transit
The White House has hinted at tougher measures against indirect shipments of Chinese goods. In recent weeks, U.S. officials sent notices to multiple governments warning of potential tariff hikes on products transshipped from China unless new bilateral agreements are reached. Mexico and Vietnam remain the primary countries employed by China for these operations.
Surge in China's Rare Earth Exports
In the meantime, China's exports of rare earth magnets to the US surged by 660% in June compared to the previous month, reaching 353 metric tons. This increase follows recent agreements between Washington and Beijing that have helped resolve supply bottlenecks for rare earth exports. Despite this, the overall volume of exported permanent magnets remained below last year's figures.
Changes in Trump's trade policy could significantly affect China's economy, putting considerable volumes of its exports to the US at risk. Stricter controls on goods transit through third countries may pose additional challenges for the Chinese economy.
