China’s Export Machine Faces a Broadening

Pushback

Export-dependent China has substituted Europe and the global south for the sales lost to American tariffs, but Beijing faces resistance from these new partners.

Although Chinese producers in 2025 were able to substitute markets in Europe and elsewhere for their tariff-burdened losses in the United

States, people in the new markets are now beginning to push back against the flood of Chinese goods and influence.

This growing hostility to China trade will take time to develop, but by 2027, it could spell trouble for Chinese exports. Given the substance of Beijing’s recent five-year plan, China will have difficulty coping with this changing environment.

The background of China’s problems lies fundamentally with the Chinese Communist Party and its obsession with production over consumption. Because these policies have long created a production surplus beyond what its domestic markets can absorb, China has long depended on exports for growth and accordingly is vulnerable to policies made abroad.

The more immediate cause of China’s problem is that U.S.

President Donald Trump decided on policies contrary to China trade, specifically, although not exclusively, high tariffs on Chinese goods sold in the United States. These tariffs erased China’s competitive edge—low costs and prices—and over the course of 2025, according to the U.S. Department of Commerce, Chinese goods exports to the United States fell by some 44 percent.

Sales to the global south, including nations involved in Beijing’s Belt and Road Initiative, increased so smartly that the region now takes 50 percent more of China’s products than the United States and the European Union (EU) combined. The substitution was so complete that China ended the year with a record trade surplus, the equivalent of $1.2 trillion.

Although this substitution gave Beijing bragging rights, it left a lot of dissatisfaction in Europe and the rest of the world.

In the global south, the

resistance has two components. One is protection for its fledgling industries that have a hard time competing against the flood of inexpensive Chinese imports.

Indonesia, for instance, has looked to restrictions on this basis, as have Mexico, Thailand, Malaysia, India, and others. Some have already put tariffs and other trade restrictions in place. Others have not yet gone that far, but all are advocating a need to curtail China trade.

Since the United States had been China’s largest trading partner, the drop in American sales made China’s export-driven economy desperate for substitutes, and it found them last year through tremendous pushes in Europe and the so-called global south. Overall sales of China-made products in Europe rose by some 8.4 percent in 2025. Car exports to Europe, where China has a great surplus in the production of electric vehicles, rose by some 26 percent.

For the global south, matters have a second component that goes beyond a surge in imports. A big part of their problem is Chinese investment, sometimes in search of cheaper labor but also in an effort to evade U.S. tariffs on China-made products. These transplanted Chinese operations not only import a great many inputs from China rather than from local producers, but also block growth opportunities for local producers. What is more, they can thwart local government policies on pollution and green matters.

Steel production offers one example that illustrates the broader nature of the concerns and resistance to Chinese influence. In Southeast Asia, local steel producers have long preferred electric arc technology, but

Chinese transplants prefer the more polluting, high-carbon blast furnace technology. This is just one industry, but the pattern persists across a number of examples and is impelling these nations to adopt industrial policies that will tend to redouble the global south’s resistance to Chinese connections.

Meanwhile, half a world away, Europe and Germany in particular have also begun to awaken to the dangers of China trade. The EU, in late 2025, placed a 10 percent tariff on Chinese-made electric vehicles and higher levies on Chinese-made batteries. It has also halved the amount of tariff-free steel allowed into the region, and led by France, it is considering more stringent restraints on China trade. One of the most telling aspects of Europe’s turn is a new assessment currently circulating in Germany, the continent’s economic powerhouse.

A well-regarded think tank, the Center for European Reform, has led in this reconsideration of Europe’s trade policies. It has made clear the dangers to Germany and Europe of Chinese competition. Reminding the authorities that what is called “China Shock 1.0” brought the loss of 2.5 million manufacturing jobs in the United States and hollowed out towns across what had been the industrial Midwest, it points to how Beijing’s new five-year plan will put “industry and jobs at risk across the world” and will impose a “China Shock 2.0” on Germany in particular.