On April 2, 2025, the United States announced a 34% tariff increase on Chinese goods and additional tariffs of 10% to 20% on products from multiple other countries. President Donald Trump referred to these as “Liberation Day Tariffs.” China responded swiftly on April 4, announcing a matching 34% tariff hike on U.S. goods and launching export controls.
Author: Botao Xu;
Intern: Leci Zhang
On April 7, the three major U.S. stock indices fell by over 5%, the Hang Seng Index plummeted by 13.22%, and the Nikkei 225 dropped by 7.83%. By April 8, the Nasdaq had recorded a cumulative weekly decline of 13.3%. On April 9, the total cumulative tariffs imposed by the United States on Chinese products had reached 104%.
This series of events marks a shift in globalization—from being driven by economic rationality to entering a new stage dominated by geopolitics. This conflict is no longer merely a trade dispute but a struggle for dominance over the global value chain. For Chinese enterprises, the challenge is no longer about managing risks in a single market, but about how to survive, adapt, and maintain upward momentum amid the continuous reshaping of global rules.
This new wave of tariff policies not only reshapes global value chains but also has a profound impact at the enterprise level, particularly on the “go-global” strategies of Chinese companies. Over the past few days, EqualOcean has interviewed a wide range of businesses, scholars, and local stakeholders in North America, and summarized three key insights:
Under the restructuring of global supply chains, the term “the West” has become outdated. With the rise of U.S. unilateralism, the future of the China–U.S. debt relationship is uncertain.
Globalization companies expanding overseas are transitioning from “economic actors” to participants in a “competition of national power.”
The United States’ global tariff strategy will serve as a form of “painful remedy” for China, forcing the acceleration of domestic industrial circulation and reform.
A major turning point in the history of globalization has arrived.
A bold speculation: Could Trump’s escalating daily tariffs on China actually be a means of forcing China to sell off U.S. Treasury bonds in exchange for concessions? According to an article published in the early hours of April 8, 2025, by Bridgewater Associates founder Ray Dalio, if we want to objectively understand the true reason behind Trump’s intensification of global tariffs, we must pay attention to one critical point:
“The monetary/economic order is collapsing because existing debt levels are too high, and new debt is being created too quickly—yet capital markets and the economy depend on this unsustainable mountain of debt. The reason this debt is unsustainable is due to a severe imbalance: on the one hand, the debtors (such as the United States) are burdened with heavy debt but continue borrowing to support their overconsumption because they are addicted to debt; on the other hand, the creditors (such as China) already hold too many debt assets and rely on exporting goods to these debtor countries (like the U.S.) to sustain their own economies. Immense pressure is calling for some form of correction to this imbalance, and that correction will significantly reshape the monetary order.”
The existing global monetary and economic order is, in fact, the result of the hyper-globalization that began in the 1990s. It reflects not only an increasingly networked and complex form of global production division, but also a new mode of industrial governance—one that determines who holds control within value chains and how value and wealth are distributed. The increasingly intricate global value chains have significantly deepened both interdependence and competition among national economies, while also becoming a major source of vulnerability.
The development and deepening of global supply chains has led to the emergence of the “Gilpin Dilemma”: while helping multinational corporations in developed countries expand their global market reach, these supply chains have also, often unknowingly, created their own future competitors. Against this backdrop, enhancing economic autonomy to reduce dependence on other countries within the global supply chain has become a strategic choice for developed nations in the new era of geopolitical economy.
Looking back at the history of U.S.-China trade relations: U.S. policy toward China has shifted from “engagement + hedging,” to “decoupling + containment,” and now to a unilateralism defined by “MAGA(Make America Great Again” Since China accelerated its globalization drive, the main strategy employed by the U.S. and its European allies has been to promote so-called reshoring, nearshoring, and friend-shoring through an aggressive toolkit of “policy instruments,” aiming to redesign supply chains and build a new, secure, and resilient global supply chain system.
What is in this Western “policy toolbox”? It includes: industrial policies, investment screening, export controls, import restrictions, and other less common measures such as outbound investment restrictions and entity lists.
However, throughout this process, significant differences have persisted between the U.S. and Europe. The U.S. primarily seeks to maintain its military and technological hegemony by pursuing national autonomy. For the U.S., therefore, economic autonomy is a means to a strategic end. The EU, by contrast, hopes to achieve economic autonomy through an open strategy of “strategic autonomy” in the midst of great power competition between the U.S. and China. In fact, the EU does not regard maintaining military superiority or technological leadership over China as goals of its security or China policy. For the EU, economic autonomy is the end goal.
This fundamental divergence has planted the seeds of discord within the current “transatlantic” game. With the escalation of events such as the Russia–Ukraine war and the “Liberation Day” global tariff hikes, the last semblance of unity between the U.S. and Europe has been thoroughly torn apart.
But what does all of this have to do with businesses—and with Trump’s tariff escalation?
The rise of globalization also signifies the intensification of geopolitical economic rivalry. At the heart of this lies a crucial contradiction:
corporate interests—which aim at maximizing profits and expanding global market share (economics)
must now subordinate themselves to national interests that seek to uphold so-called economic autonomy or even national hegemony (strategy).
This gives rise to a potential conflict of interest between the two.
If corporate interests align with national interests, their cooperation can produce a force-multiplying effect. On the other hand, if the two diverge or even conflict, governments attempting to curtail corporate autonomy and global influence for strategic purposes will face strong resistance. In such cases, businesses may mobilize all available resources to mitigate government actions that harm their operations.
The ultimate flashpoint, then, is this: Trump is attempting to resolve the “Gilpin Dilemma” of globalization through global tariffs—while pursuing his overarching goal of maintaining U.S. military and technological supremacy. This goal is to be achieved by reinforcing U.S. economic independence within global supply chains.
Thus, in a sense, Trump’s tariff policy is not merely aimed at stifling the economic and technological rise of emerging market firms—especially Chinese ones—it is also meant to restructure the supply chains of U.S.-based companies.
According to Dalio, Trump’s tariff policy will simultaneously stimulate closer China–EU economic and trade relations, shifting the global economic structure from a triangular relationship (U.S.–China–EU) to a binary one: the U.S. system vs. the China + EU system. Europe, at this moment, becomes a pivotal player in the rivalry between two major powers. If Europe chooses to realign with the U.S. and jointly target China's emerging-market allies, this could become a nightmare scenario for Chinese enterprises.
At the Global UK Trade Expo on May 29, 2025, business leaders and scholars will have a valuable opportunity to discuss Europe’s next moves in depth with local lawmakers and politicians—thereby helping mitigate risk.
The Overseas Expansion of Chinese Enterprises Is Shifting from an Economic Activity to a Form of National Power Competition
What’s replacing the old model is a fundamental transformation in the logic behind Chinese enterprises going global. In the past, overseas expansion was largely viewed as economic behavior—seeking new markets or optimizing supply chains. But now, amid the intensifying upheaval in global geopolitical and economic structures, it is being pushed to the forefront of “national power competition.”
Especially against the backdrop of escalating U.S.–China rivalry, multinational corporations around the world are increasingly being used by the U.S. government as a key tool to contain China’s national power. This is no longer a simple market game; it is a contest between states—of capabilities, resources, and discursive power. Structural shifts in industries such as retail, textiles, and chemicals are continually sending signals of this transformation.
Retail Industry: “Scissors Gap Extraction” in the Global Consumption System and China’s Strategic Defense
The retail industry has long been a key battleground for U.S. capital exports and its control over global supply chains. Even before the Trump administration pushed forward its tariff policies, retail giants like Walmart had already begun pressuring Chinese suppliers to lower prices—effectively offloading their global operational costs onto them.
In March 2025, Walmart was summoned by China’s Ministry of Commerce due to its pricing pressure tactics. Behind this lies a deeper struggle over global pricing power. Sam’s Club continues to expand in the Chinese market, leveraging a premium membership model to increase profitability. Walmart, on the other hand, relies on its massive scale to push down supplier prices and convert the resulting cost savings into low-price benefits for American consumers.
What this creates is a “scissors gap model”: suppressing procurement prices in China while obtaining high markups in U.S. and European markets—essentially forming a mechanism of profit extraction.
This is not a simple competition between businesses. Rather, it represents the United States using multinational retail corporations to forcibly reshape the power structure of global value chains. For Chinese enterprises, the challenge is strategic: the erosion of pricing power.
Textile and Apparel Industry: Trade Policy as the U.S.’s “Weapons System” for Forcing National Concessions
The textile and apparel industry has long been a hallmark of manufacturing in the Asia-Pacific region. However, since the Trump administration revived the logic of trade wars, this sector has increasingly become a tool of political instrumentalization.
When the United States announced a 46% tariff on Vietnamese apparel products, Vietnam’s capital market collapsed almost instantly. With just a single phone call to Vietnamese leadership, Trump was able to force Vietnam into “voluntary negotiations” within days, ultimately leading to a willingness to “exchange zero tariffs for a trade deal.”
Take Nike as an example: 51% of its footwear production capacity is concentrated in Vietnam, and 25% in Indonesia—precisely targeting the pressure points of U.S. tariff leverage. To avoid heavy tariffs, Nike would have to shift production of more than 200 million pairs of shoes within 18 months—an almost impossible feat. After Trump’s “preliminary agreement via phone call,” Nike’s stock price rose 5.25% during the trading session.
This demonstrates that U.S. tariff pressure on other nations is also a way of “bailing out American companies.” From this perspective, China’s Anta—driven by domestic demand—fully surpassed Nike in both revenue and market share in 2024 for the first time. Local substitution is not merely a market reaction, but a proactive strategic move by Chinese companies to find openings in an “asymmetric contest.”
At the same time, the EU has taken a more “independent” stance in this wave of global trade restructuring, with many countries refusing to follow the U.S. tariff approach. For Chinese apparel companies expanding overseas, the European market will be the next strategic growth pole—not only as a growth frontier, but also as a potential battleground for “strategic hedging.”
Chemicals: A Technology Competition Battle Amid the Retreat of Globalized Supply Chains
Compared to the price wars and supply chain restructuring seen in consumer goods sectors, the overseas expansion of chemical products is now facing a direct and intense struggle over “technology and raw material control.”
Take plastic products as an example: since 2018, the U.S. has imposed a 25% tariff on Chinese exports in this category, which was further raised to over 80% during the Biden administration. In 2024, with yet another round of tariff increases, the White House explicitly stated that “new taxes will be added on top of existing tariffs,” thereby creating a compounded and escalating tax mechanism.
This not only means that export profits are being severely compressed, but also reflects a broader U.S. strategy: to use policy tools to suppress China’s global dominance in mid- and low-end raw materials and processed components.
China’s response has gone beyond merely “seeking new markets.” Instead, it is focusing on restructuring its export mix and increasing the share of high-end products.
Data from 2018 to 2024 show that China’s overall share of chemical exports to the U.S. has declined, with the share of plastic and rubber products (HS codes 39 and 40) falling by 6.26% and 8.32%, respectively. Meanwhile, Chinese enterprises have begun to expand aggressively into markets in the Middle East, Eastern Europe, and Latin America, setting up local manufacturing facilities and redistributing strategic resources.
This is no longer just a matter of “economic optimization”—it is a systemic response to bypass geopolitical contestation and overcome technological chokepoints.
But “the sky won’t fall”—life goes on, and people still have to eat.
The United States sees itself as a “land-based civilization centered on maritime power,” relying on sea power and the occupation of strategic territories to ensure access to global markets and build a worldwide supply network. China, as a continental power, has historically adopted a strategic focus on “inward development” and the extension of land-based geopolitical influence.
Since 2020, China has proposed a “new development pattern” centered on the domestic circulation of its economy, with mutual reinforcement between domestic and international dual circulation. This reflects the inward-oriented tendency of a continental civilization in the face of external risks.
The U.S.’s global tariff escalation presents China with an opportunity to deepen domestic reforms, and its global competitiveness is likely to further improve in the medium to long term. By building a stronger domestic market, Chinese enterprises can achieve economies of scale, iterate on products, and from there, re-enter international markets.
Historically, both Japan and South Korea responded to trade conflicts with similar “internal upgrading” strategies, eventually cultivating globally dominant companies. China now appears to be following that path.
For example, after facing U.S. sanctions on telecommunications equipment, Huawei shifted its focus to the domestic market (deploying 5G and developing the HarmonyOS system), maintained high levels of R&D investment, and in 2023 launched a smartphone equipped with a domestically produced 7nm chip.
This adaptability shows that tariffs are, in fact, pushing Chinese companies to become more autonomous, efficient, and innovative—qualities that are essential for strengthening China’s global competitiveness within a “non-U.S.-led” international system.
Chinese Enterprises Are Responding Much Faster Than Expected
The day after the tariff hike was announced, a Chinese company specializing in product line relocation and automation engineering received a sudden order from a U.S. client worth 10 million yuan—to help establish a fully automated production line for water bottles in the United States. Despite the high costs of local manufacturing in the U.S., the client still chose to “produce locally,” indicating that cost is no longer the primary concern—risk avoidance has become the driving force.
This suggests that Chinese companies offering local factory setup capabilities, integrated system solutions, and automation transformation services could actually find new growth opportunities in this crisis.
Meanwhile, more mature companies with global deployment capabilities are demonstrating strong resilience and diversified market strategies. A leading silver jewelry wholesaler from Shuibei, Shenzhen, reported that after the U.S. tariff hikes, American clients demanded cost-sharing and labor fee reductions, bringing all U.S.-related business to a halt. However, the company noted that the U.S. market only accounted for 13% of its total revenue, with major orders coming from India and Turkey.
Such a globally diversified client portfolio is a strategic response to geopolitical volatility: rather than betting on a single market, the company has built a risk-resilient structure from a global perspective.
In core manufacturing supply chain sectors, the impact is more direct and complex. Dr. Meng Xinghua, Secretary-General of the Changzhou Battery Technology Association, said that many new energy firms he’s familiar with are feeling the real pressure from this latest tariff escalation—especially those deeply tied to the U.S. market. During the Qingming Festival holiday, several companies quickly moved into “information gathering” and internal decision-making phases. While most remain in a “wait-and-prepare” mode, some have already initiated daily executive meetings to closely monitor policy and market developments.
Some of these companies had already adjusted their structures in previous rounds of the trade war—reducing the share of exports to the U.S. from 60% to below 50% and expanding into markets like Japan, South Korea, and Europe. More importantly, some firms have reached an agreement with clients to “share the tariff burden,” maintaining long-term supply relationships under a baseline of “no significant losses.” The emergence of such burden-sharing mechanisms shows that long-term trust and customer stickiness are becoming critical “moats” for firms to withstand external shocks.
What’s most encouraging is that certain high-end manufacturing firms—thanks to their technological monopolies—have become the only available suppliers for U.S. partners. As tariffs increased, their American clients were forced to shoulder all the extra costs, and even pay additional “compensation for inconvenience.” Unfortunately, these companies are still a small minority in China, while the U.S. is simultaneously accelerating its “domestic substitution” efforts.
Even so, whether Chinese companies should build factories abroad remains an open question. Most are choosing to observe policy implementation before making structural decisions. EqualOcean believes that the key issue going forward is how Chinese firms can align with local policies in overseas markets.
At this stage, most companies should prepare multiple contingency plans—neither rushing to expand nor hastily retreating. This is a form of strategic conservatism born of careful calculation—not passive hesitation.
At the macro industry level, frontline observer Zou Shu (founder of GlobalHub and CEO of HuasLion GoGlobal) pointed out that the current wave of tariffs is inflicting real damage on China’s traditionally strong sectors, especially consumer electronics, textiles and apparel, new energy, and home appliances.
Apple’s supply chain partners, such as Luxshare Precision and GoerTek, are experiencing both declining export margins and order outflows. In textiles, firms like Hengyuanxiang and Youngor have lost part of their U.S. orders to Vietnam and Bangladesh. Solar companies like LONGi Green Energy have been forced to open factories in Malaysia due to anti-dumping duties from the U.S.—but are simultaneously facing exorbitant setup costs and margin compression due to clients renegotiating prices. Meanwhile, home appliance manufacturers are caught in a difficult dilemma: raise prices, or absorb losses.
Zou noted that to cope with earlier rounds of trade conflict, many Chinese companies chose to establish facilities in Vietnam and Indonesia. But now, even these countries have become targets of U.S. tariff hikes. For example, the U.S. recently imposed a 46% tariff on Vietnamese electronics, making “Made in Vietnam” an increasingly unviable transshipment strategy.
Additionally, the U.S. has tightened rules of origin, requiring products to undergo “substantial local manufacturing” rather than mere assembly in Vietnam. This regulatory escalation is forcing firms to increase local sourcing rates, employment compliance, and labor structure adherence in Southeast Asian plants—thereby driving up overall operating costs and complexity.
In the face of such structural challenges, Chinese companies are also undergoing a profound strategic shift. Zou emphasized the need to build a “triangular capacity network”—with the mother factory based in China, production shifted to Southeast Asia, and a backup node in a third country. This kind of distributed risk-resilience system will become the new paradigm of global manufacturing.
At the same time, companies must acknowledge the rising trend of stricter rules of origin and digital compliance. This includes adopting blockchain-based traceability systems, engaging in technology licensing cooperation, and using “white-glove” holding structures to improve transparency and regulatory alignment.
Ultimately, EqualOcean believes that this wave of global manufacturing restructuring is not just a continuation of the trade war, but rather:
“A systemic reprogramming centered around the control of global value chains.”
The United States is attempting—through multinational corporations and the leverage of tariffs—to exclude Chinese enterprises from the rule-making process. In response, Chinese companies must pivot from a singular focus on cost leadership to a dual strategy of rule adaptation capability + technological autonomy.
History doesn’t repeat itself, but it rhymes. Today’s Chinese enterprises are learning to navigate risk not by avoiding it, but by internalizing it as fuel for evolution—entering the next round of global competition with greater resilience.
