Global Trade Resilience Amid U.S. Tariffs; Risks of Chinese Export Diversion

This report is based on the December 10, 2025 Wall Street Journal (WSJ) article [1] which highlights that global trade flows have shown unexpected resilience despite higher U.S. tariffs, but warns of potential strain if Chinese goods diverted from the U.S. market flood other international markets at discounted prices.

China’s successful pivot to non-U.S. markets (Southeast Asia, European Union) has driven its 8% 2025 export growth [5], allowing it to achieve a record $1 trillion trade surplus in the first 11 months of 2025 [2][4]. This surplus is linked to tariff-related diversion of shipments from the U.S. to other markets, which has already put pressure on manufacturing sectors in those economies [2]. Early backlash to this diversion is evident: Mexico is considering higher tariffs on Chinese goods, and French President Macron has warned of “unbearable imbalance” in trade with China [4].

U.S. tariff policies remain a source of uncertainty, with a Supreme Court ruling on the legality of Trump administration tariffs impending [3]. Additionally, the Asian Development Bank projects Asia’s economic growth will slow to 4.6% in 2026, a trend likely connected to tariff-related trade strains [3].

1. Unintended Consequences of U.S. Tariffs
   : Tariffs have shifted Chinese exports rather than reducing them, leading to global trade reconfiguration and emerging tensions with non-U.S. markets.
2. China’s Diversification Vulnerability
   : While successful in expanding to new markets, China faces growing risks of retaliatory tariffs from regions like Mexico and the EU.
3. Global Growth Linkages
   : The resilience of 2025 global trade may be temporary, with projected 2026 slowdowns in Asia tied to tariff-induced trade strains.
4. Policy Uncertainty Amplification
   : The upcoming U.S. Supreme Court ruling on tariffs adds further volatility to global trade dynamics.

• Escalating Trade Tensions
  : Backlash from Mexico and France could spread, leading to a cycle of retaliatory tariffs disrupting global supply chains [4].
• Manufacturing Pressure
  : Discounted Chinese exports may squeeze profit margins for local manufacturers in non-U.S. markets [2].
• Growth Slowdown
  : Asia’s 2026 growth is projected to slow to 4.6% due to ongoing tariff strains [3].

• China’s Export Resilience
  : Continued diversification to non-U.S. markets could sustain China’s export strength if it navigates trade relations carefully [4][5].
• U.S. Retail Adaptation
  : U.S. retailers may adjust sourcing strategies to mitigate tariff impacts, potentially stabilizing U.S. import trends [0].

• Global trade showed unexpected strength in 2025 despite U.S. tariffs, driven by China’s market pivot [1][5].
• China recorded a $1 trillion trade surplus in January–November 2025 due to tariff-diverted exports [2][4].
• Mexico and France are early responders to diverted Chinese exports with tariff proposals and warnings [4].
• Asia’s 2026 economic growth is projected to slow to 4.6% amid tariff-related strains [3].
• U.S. Supreme Court tariff ruling adds policy uncertainty [3].