As the US-China trade war intensifies under President Donald Trump’s renewed administration, emerging markets are rapidly turning into crucial battlegrounds for global trade influence. China, facing steep tariffs exceeding 100% on many goods destined for the US, is strategically shifting its manufacturing and export focus away from the American market toward developing economies worldwide.
China’s investment in low-cost manufacturing hubs across emerging markets like Pakistan, Vietnam, Malaysia, and South Africa is a clear sign of this pivot. Chinese brands such as BYD and Xiaomi are expanding their footprint by setting up production facilities in these countries, enabling China to tap into a vast consumer base outside the US, which accounts for 7.5 billion people globally. This diversification allows China to sustain its massive trade surplus, which topped $1 trillion over the past year, despite restricted access to the US market.
Exports from China to major developing economies have more than doubled since 2017, reaching $1.35 trillion, now constituting over a third of China’s total exports. Meanwhile, exports to G7 countries have declined to less than a third of the total, underscoring Beijing’s strategic reorientation. This shift explains China’s confidence in retaliating against US tariffs, as it no longer relies heavily on the US consumer market.
However, this trade realignment is not without consequences. Emerging market manufacturers in sectors like steel, chemicals, textiles, and electronics face intense competition from cheap Chinese imports, threatening their traditional export-driven growth models. Countries including India, Brazil, South Africa, Turkey, Mexico, Indonesia, Thailand, and Malaysia have responded by imposing anti-dumping duties and trade barriers to protect domestic industries from the flood of low-cost Chinese goods. African nations, while benefiting from tariff removals on Chinese imports, often lack the manufacturing capacity to leverage these concessions fully. Larger emerging economies brace for increased Chinese goods diverted from the US market, which could exacerbate trade imbalances and domestic industry pressures.
This evolving trade landscape reveals a paradox: while US tariffs aim to curb China’s economic rise, they have inadvertently accelerated China’s integration with the Global South, strengthening its influence in emerging markets. For India and other BRICS members, this dynamic complicates their economic strategies, as they navigate between protecting domestic industries and engaging with China’s expanding trade network.