Indian officials are facing significant challenges as they engage in trade negotiations with ASEAN countries, particularly when trying to make concessions within the review of a regional trade deal. The presence of Chinese companies that have set up operations in the 10-member bloc adds complexity to the discussions. This is not just an issue for India but for nations across the globe, with the US particularly impacted due to its massive trade deficit with China, which stood at $295 billion in 2024, with exports amounting to $439 billion.
Over the past 15 years, the US trade deficit has risen dramatically from $882 billion in 2008 to $1.2 trillion in 2023, while China's trade surplus surged from just under $300 billion to an astounding $823 billion, edging closer to the $1 trillion mark. This growing imbalance has heightened US concerns, especially amid increasing distrust of China, a sentiment exacerbated by the COVID-19 pandemic.
Former President Donald Trump notably sought to address this trade imbalance with a series of aggressive tariffs. In his second term, Trump imposed a 54% tariff on several Chinese goods, including a 34% tariff announced on Tuesday. These tariffs, added to those from his first term, aimed to curb the impact of cheap, often subsidized exports from China, a country labeled as a “non-market economy.”
One of the significant challenges is the shifting of Chinese goods through other countries like Vietnam and Indonesia. These nations, which became hubs for Chinese companies seeking to circumvent tariffs, have faced increased reciprocal tariffs. During Trump’s first term, Vietnam became a key location for "restamping" Chinese goods, a practice where products originating from China were rebranded as non-Chinese to avoid tariffs. As the global supply chain diversification strategy, known as "China-plus-one," took hold, Vietnam's economy became increasingly reliant on exports, with estimates indicating that nearly a quarter of its GDP is tied to export activity.
Mexico, too, has seen a surge in Chinese manufacturing due to its proximity to the US and the desire of Chinese companies to avoid tariffs by crossing the border. While Mexico has thus far avoided retaliatory tariffs, it remains at risk of higher duties as trade tensions with China continue to escalate.
As China retaliates with its own tariffs on the US, the global trade landscape grows more complicated, and US officials, including Trump, remain steadfast in their position, refusing to back down on tariffs. The ripple effects of China’s trade practices continue to reshape global manufacturing strategies, creating challenges for nations like India, the US, Vietnam, and Mexico, all of which must navigate the complexities of global trade and competition with China.
(This story is published from a syndicated feed)