China is once again shaking up global trade, but this time the disruption isn't hitting the United States directly. After being squeezed by President Trump's tariffs, Chinese factories are redirecting exports—everything from toys to electric vehicles—to markets in Southeast Asia, Europe, and Latin America. The result: China's trade surplus has ballooned to nearly $500 billion this year, up more than 40% from last year, per the New York Times.
Meanwhile, China's exports to the US in May plummeted nearly 35% from a year earlier—the biggest decline since February 2020, when the pandemic hit, per CNBC. The Wall Street Journal notes that drop followed a 21% decrease in April. The shift isn't all about tariffs. It's partly a response to a real estate crisis that has led to Beijing pouring money into manufacturing, creating an oversupply of goods that domestic consumers can't absorb, the Times reports. As Chinese companies flood other markets instead of the US, new tensions have arisen, with some countries considering their own tariffs to protect local industries.
The export surge isn't limited to high-tech products. Despite efforts to move up the value chain, China is still churning out cheap goods. Economists say this is putting pressure on manufacturers worldwide. In places like Indonesia, for example, garment factories have closed, costing hundreds of thousands of jobs, while Thai auto parts makers and Brazilian carmakers are also feeling the squeeze. Countries now face a tough choice: Accept the hit to their own industries or raise trade barriers and risk retaliation. (This content was created with the help of AI. Read our AI policy.)
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