Author: Maria Pechurina, Director of International Trade @ Peacock Tariff Consulting
China is thriving. In recent months, its exports surged despite ongoing US tariff chaos and the decline of US-bound exports by 27%. In September 2025 alone, China’s exports climbed 8.3% year-on-year, reaching a seven-month high of $328.6 billion, even as shipments to the US plummeted. This stark divergence signals Beijing’s success in pivoting to alternative markets: exports to the EU rose 14%, to ASEAN nations 16%, and to Africa – by a striking 56%. The current US trade policy and tariffs, once endorsed as a powerful tool, are instead eroding the very leverage of the access to the US consumer market that the administration has relied on since January. This economic reality acutely contrasts the noise from Truth Social posts; China’s 5.2% GDP growth in the first three quarters of 2025, driven by a 14.8% year-over-year increase in exports to diversified markets, underscores the effectiveness of its export diversification. Much like economic sanctions lose bite over time as countries adjust, tariffs’ impact weakens as workarounds emerge. The globalized, rules-based trading system, as highlighted by experts at CSIS, is unlikely to unravel just because new barriers are raised.
From a pro-China perspective, countries hit hard by US tariffs or facing major infrastructure needs are increasingly drawn to China’s economic statecraft, which emphasizes fewer strings attached and “respect” for sovereignty. Even nations economically dependent on both powers or with histories of diplomatic flexibility aim to avoid escalating tit-for-tat conflicts by diversifying alliances, sourcing, and partnerships. This pragmatic balancing act reflects a global trading environment that is simultaneously competitive and interdependent.
To comprehend the breadth of China’s resilience and strategic outreach, and how it’s reshaping global trade far beyond US-centric narratives, the nuance must be taken into account.
Numbers tell the story
Across the board, China’s export surge signals a deliberate pivot in trade strategy to reduce reliance on the US market. That being said, diversification has its challenges: the US remains a homogenous, high-consumption market, while Africa, the ASEAN bloc, and the EU each display distinct consumption habits and economic capacities. But if any country can rapidly shift production to meet varied demands, it’s China. The EU saw a 14% increase in Chinese imports, though Europe is actively working to limit fallout from erratic US trade policies, likely by tightening regulations such as the de minimis exemption on Chinese goods, following US’ suit. Meanwhile, exports to ASEAN countries jumped 16%, highlighting the benefits of regional integration under RCEP and underscoring China’s strategic deepening ties there. Africa’s remarkable 56% export growth reaffirms China’s position as the continent’s largest trading partner, especially in mechanical and industrial equipment destined for countries like Nigeria, South Africa, and Kenya. However, it’s important to note that China’s Q3 growth slowed to its slowest pace this year at 4.8%, weighed down partly by tariff pressures and a lethargic property market. The 4th Plenum of the CCP, commencing October 20th, is expected to unveil stimulus measures aimed at boosting the economy and shoring up investor confidence amidst these headwinds. This nuanced landscape reflects China’s resilient but cautious adaptation to ongoing global trade frictions.
US tariff-all strategy is backfiring
The United States’ all-in tariff strategy is proving increasingly counterproductive. Positioned as an effort to protect national security, re-shore manufacturing, and re-create industrial jobs, the approach has instead pushed the average effective tariff rate to its highest level since the Great Depression, driving the deterioration of U.S. consumer welfare and diplomatic leverage. Current research from Yale’s Budget Lab shows American households are absorbing an average annual income loss of nearly $1,800 as prices rise across sectors like metals, leather, apparel and electrical equipment. Washington’s allies, from Canada to Japan and Australia, are growing frustrated as unilateral U.S. tariffs, typically ranging from 10% to 15%, penalize even the most loyal trading partners, eroding the credibility of America’s leadership on global economic cooperation. Meanwhile, President Trump’s push for onshoring has not produced an investment surge; reshoring levels in 2025 remain flat compared to 2024, as companies grapple with higher input costs and immigration constraints that limit labor supply. Analysts from Reuters and JP Morgan note that U.S. firms and consumers are shouldering most of the costs, contradicting the administration’s claims that foreign exporters will bear the burden. Though official statements and occasional Truth Social posts portray tariffs as a patriotic shield, they often create unnecessary chaos and uncertainty into global markets, signaling economic nationalism and political messaging rather than driving systematic industrial outcomes.
Global trading patterns are shifting
Global trading patterns are changing, but globalization is here to stay, even if the United States cedes its center position. While Washington doubles down on high tariffs and industrial protectionism, other economies are building new routes and systems to bypass chokepoints in global commerce. Trade flows through South Asia, Africa, and Southeast Asia continue to rise despite unprecedented tariff uncertainty, and manufacturing is shifting to new hubs in India, Vietnam, and the UAE. The OECD highlighted that G20 exports grew 2.6% in Q2 2025 despite the contraction in U.S. imports, illustrating how trade adapts rather than stops. Tariffs are not economic sanctions, defined as financial and economic penalties designed to influence a nation’s behavior, and they were never meant to operate as such; they may disrupt traditional flows but cannot halt technological progress or financial integration. The Brookings Institution recently documented how Chinese goods and investment are rerouting through Mexico and Canada to maintain access to the U.S. market under USMCA’s rules of origin, reflecting how multinationals adapt to, rather than collapse under, tariff barriers. The China factor is likely to emerge in full force in the upcoming 2026 review of USMCA.
Moreover, the rise of yuan-denominated payment settlement channels is redefining trade finance across Asia and beyond. China’s Cross-Border Interbank Payment System (CIPS) now connects nearly 1,700 participants worldwide, up 10% year-on-year, facilitating over ¥175 trillion in annual payments. By mid-2025, 54% of China’s cross-border trade was settled in yuan, up from 30% just a few years back. The currency overtook the euro as the world’s second most used in trade finance. This is complemented by a growing range of yuan-based instruments in commodity trades such as iron ore, where settlement in Chinese currency is reducing dependence on the dollar. Even major global banks like Singapore’s DBS are reporting surging demand among exporters to transact in renminbi, particularly with trading partners in the Middle East and Latin America.
In short, the world is not “de-globalizing” but rather shifting. Supply chains, payment systems, and trade settlements are reorganizing around more decentralized and multi-currency frameworks that reflect a post-American trade order, not an anti-global one.
China’s Draw
China’s pull on the global stage is progressively getting stronger. Countries see an appeal in China’s commitment to infrastructure financing without western-style conditionality and China’s principals of “non-interference” in the political systems. At the same time, commodity rich countries seek a dependable partner amidst US protectionism at the cost of trade alliances. Nations wealthy in resources, especially in Africa, Latin America, and parts of Asia, increasingly turn to Beijing, boosting China’s influence not just economically but geopolitically. Meanwhile, some nations are keen on maintaining a trade relationship with both the US and China. By assuming a stance of quiet neutrality and pragmatically recognizing the need for engagement with both sides, nations are able to maintain economic growth and meet security needs without fully committing to either side.
So what’s next?
For the US, continuous deterioration of leverage that the consumer market presents is likely, especially as consumers continue to foot the bill of high import tariffs. America is on a trajectory of a declining influence in global trade governance and inability to standard-set worldwide. The effects will diminish US’ dominant position in innovation, investment flows and the advanced technology sector, potentially risking the loss of the dollar’s dominant position as Chinese Yuan Settlement mechanisms rise.
For China, the signals point to increasing soft power, fueled by deepening economic ties with countries other than the US and strategic immigration policies like the K visa, which aims to attract global young talent in science and technology. Despite domestic hindrances, China is on a good trajectory to secure its position as the prime driver of innovation and global diplomacy.