Yusuf Bangura
Dec 10, 2025
Despite Trump’s tariffs, China has recorded the highest trade surplus in history—USD1.08 trillion! This is truly remarkable. Meanwhile, in August 2025, the US had a trade deficit of USD889.3 billion.
Three important things have happened in delivering this result.
First, China has drastically cut its exports to the US— by 29%. The US market now accounts for only about 10% of China’s exports (Catherine Baab, 2025).
Second, China has massively diversified its exports to East, South, and South East Asia; Latin America; Europe; Australia; and Africa. For instance, exports to Australia surged by 35%, to the EU by 14.8%, and to South East Asia by 8.2% from November 2024-November 2025. (ABC Net Australia, 2025).
And third, Chinese consumers are buying less foreign goods. China, instead, is making use of its huge 1.4 billion population to absorb the goods that it can’t export. PWC China reckons that the Chinese market has emerged as the second largest in the world, even though household spending at 40% of GDP is far less than what obtains in Western industrial economies (China Economic Quarterly Q1-Q2 2025 Combined issue).
Prior to the trade result, most analysts believed it would take more than a year before China could become less dependent on the US market. Well, they’ve done it in record time.
The tariff war is a resounding defeat for Trump. He banked on the glory days of the US market and mythical notion of American exceptionalism to reverse the US’s manufacturing decline and win the tariff war. His bullying tactics are based on a belief that the US is the envy of the world—every country, in his mind, wants to trade with the US because it’s the richest country, and Americans are big spenders rather than savers.
China has shown that a country that is no longer the factory of the world (manufacturing accounts only for about 10% of US GDP and less than 10% of employment) cannot win a trade war with a country that is the manufacturing powerhouse of the world.
The US is not only underperforming in exports, reports suggest that the policy of incentivising US companies to take jobs back to the US is not working. There’s no revival of US manufacturing.
Some manufacturing is leaving China (Jayant Menon, 2025). However, the firms that are leaving (including Chinese firms) are going to places like Vietnam, other East Asian countries and Mexico to curcumvent the Trump tarifs. Manufacturers are not betting on Trump’s eratic tariff policy to shift production to the US. Why should they base their investment strategies on a policy that changes so often?
The US is also not an attractive place for manufacturing today because it no longer has the integrated supply chain infrastructure or ecosystem that powers much of modern manufacturing. Analysts have estimated that despite the tariffs, it is still more costly to produce in the US than in China and other countries (Guankai Zhai, 2024).
To add insult to injury, China has drastically reduced its imports of agricultural goods from the US by diversifying to countries like Brazil, Argentina, Australia, Canada and Vietnam. This has greatly harmed US farmers. The US government just recently spent USD12 billion to bail out farmers who’ve lost the Chinese market because of the tariff war. (Steve Kopack and Gabe Gutierre, 2025).
We are truly witnessing a mega shift in power dynamics in the global economy. If China dominates global trade, the yuan will, over time, gain influence as a world currency at the expense of the dollar. Economic power will feed other dimensions of power, especially at the geopolitical level.
In addition, China is crafting an alternative global economy that doesn’t need the US, through it’s Belt and Road Initiative, BRICS and the use of the yuan and currency swaps as alternative payements arrangements. It also has its own internet platforms that rival Amazon, Twitter, Facebook, Netflix, YouTube, Instagram, and ChatGPT. What a world!
All of this spells trouble for Trump: China is thriving, jobs aren’t going back to the US, the US is spending lots of money to bailout US farmers because of a failed policy, and American consumers believe his tariffs are hurting them through high prices even when inflation is not yet a huge problem.
