Trump’s latest moves to squeeze China by clamping down on its shipments through third countries could undercut a large share of the nation’s exports to the United States and chip away at its economic growth.
Analysts at Bloomberg Economics say China has leaned more heavily on other nations to make finished goods or parts destined for the U.S. market. This trend picked up pace after Trump first launched his trade wars and slapped steeper restrictions on China.
Their research shows that the share of China’s manufacturing tied to U.S.‑bound goods routed through partners such as Mexico and Vietnam climbed to 22 percent in 2023, up from 14 percent in 2017.
If the Trump administration follows through on plans to impose extra duties or strict supply‑chain rules on those transshipments, it could threaten roughly 70 percent of exports from China to the United States.
That, in turn, would put over 21 percent of China’s GDP at risk, analysts estimate. They also caution that the damage could spread further if countries grow wary of trading with China at all.
“Trade flows via third countries are substantial and have helped cushion the blow from existing U.S. tariffs,” wrote Bloomberg Economics experts Chang Shu, David Qu, and Rana Sajedi in Tuesday’s research note. “Tighter controls on these shipments would increase the damage from the trade war and could erode growth opportunities in the long term.”
Indirect shipments from China will face tougher actions
The White House has signaled tougher action on what it sees as indirect shipments of Chinese goods. In recent weeks, U.S. officials sent letters to multiple governments warning that, unless new bilateral trade pacts are struck by August 1, they will face higher levies on products transshipped from China.
While the letters gave few details, they suggest the administration may widen the net to cover many more Chinese‑made items entering the U.S. under the flag of other nations.
Mexico and Vietnam top the list of countries China uses to funnel goods into the U.S., with the EU also serving as a major pathway. Those links could reshape upcoming U.S. negotiations with partners. For instance, the U.S.–U.K. trade agreement signed earlier this year includes clauses aimed at securing supply chains and limiting foreign control in sensitive areas.
Still, the Bloomberg team notes that it remains unclear how strictly Washington can enforce new transshipment rules. The U.S. government’s definitions of what counts as locally made goods are vague, and methods for verifying origin have not been spelled out.
China’s rare earth exports to the US jumped by 660%
In the meantime, China’s rare earth magnet exports to the US jumped dramatically in June, following a breakthrough trade pact between the two sides. Data from China’s General Administration of Customs showed outbound shipments of these critical minerals rose to 353 metric tons last month, a 660% increase compared with 47 metric tons in the month prior.
The surge came after Washington and Beijing reached agreements in June to sort out bottlenecks around rare earths and magnet exports. As part of those talks, chipmaker Nvidia has said it will resume H20 AI chip sales.
China, which supplies over 90 percent of the world’s permanent magnets, had added several of these items to an export control list in early April in response to US tariffs. Overall, Chinese firms shipped 3,188 tons of permanent magnets around the globe in June, an increase of 157.5 percent from May’s 1,238 tons, though that total remained 38.1% below the 5,160 tons exported in June 2024.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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