Newsletter N°80 - September 2025 

The announced tariff increase on Chinese exports to the US has been postponed—once again— during the summer. The average effective tariff rate remains currently at around 40%, according to Fitch.

 

Several key economic indicators published recently suggest that China is preparing for the next stage, and the current reprieve may give it even more time to refine its position in a potential trade war while getting ready for upcoming negotiations. The overall economic backdrop appears solid: the country reported 5.8% growth for the first half of the year, ahead of even the most optimistic analysts’ expectations. Although the US remains the top destination for Chinese exports, its share of total trade has steadily declined, falling below 14% in June. This confirms a diversification trend, as exports overall are rising at a robust pace (7% year-on-year in June), driven largely by Southeast Asia and Africa.

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China’s deliberate strategy to create “asymmetric dependence”—eliminating foreign inputs from its own supply chains while becoming indispensable in specific strategic sectors—has been reinforced through a tightly controlled export-license scheme covering roughly 700 products, many not end products but components or cornerstones of a specific supply chain. This policy has shown results in recent months: in April.

 

China retaliated against newly announced US tariffs by abruptly restricting magnet exports to the carmaking industry, prompting Washington to quickly seek a truce.

To obtain such an export license, a Chinese producer must declare and report the end products and end users of their goods, giving authorities the ability to target specific economic areas very precisely by suspending export licenses. In certain sectors—such as chemical precursors for pharmaceuticals—China already holds an almost monopolistic position.

 

However, this strategy remains delicate. Fully blocking certain supplies, or even hinting at such measures, would push trade partners to quickly seek alternatives. 

At the same time, China is striving to project its image of a stable and reliable trade partner…