Global manufacturers are fleeing China in favor of less expensive and more stable and predictable nations.
For the Chinese Communist Party (CCP) and CCP leader Xi Jinping, U.S. President Donald Trump’s second term of tariff mania is “déjà vu all over again”—only much worse.
Trump Tariffs in 2018
You may recall that in 2018, the first Trump administration deployed $250 billion worth of tariffs against China, and the impact was felt almost immediately. In the ensuing months, the level of U.S. imports from China declined sharply.
Predictably, the U.S. decline in imports from China was largely balanced by a rise in imports from other countries with low manufacturing costs. However, even throughout the Biden administration, the outflow of manufacturers from China continued. It is also important to note that the Biden administration largely left Trump’s tariffs against China in place.
Trump 2.0 Tariffs in 2025 Are Even Harder on China
Fast forward to today, and we’re seeing a massively expanded tariff policy from the Trump administration that’s altering entire global trading relationships.
We’re also seeing tremendous pushback from Beijing.
Where will this latest round of reciprocal tariff escalation lead?
Furthermore, the manufacturing shift away from China is not purely a consequence of the Trump administration’s tariff policies.
U.S. Firms Leading Stampede out of China
Another factor is the rising cost of doing business in China. Its labor force is not nearly as economically desirable as it once was. China has a growing middle class and an aging population, which means that the pricing and reliability advantages it once enjoyed are much less significant than they used to be. That fact isn’t likely to change as long as the CCP is in power.
Beijing’s Behavior on the World Stage Is Problematic
Another compelling reason is the rising geopolitical tensions in that part of the world that go well beyond Beijing–Washington competition. Many of China’s customers’ concerns are driven largely by the CCP’s global ambitions and its aggression against neighboring countries and the Asia-Pacific region as a whole.
War games by Chinese military forces near Taiwan and other aggressive moves against the Philippines, Vietnam, and Japan have soured customers on doing business with China.
European companies are at least as pessimistic as U.S. ones, if not more so. In a 2024 survey, nearly half (44 percent) of European Union Chamber of Commerce members said they saw the future of business in China as bleak in terms of profitability. They raised concerns similar to those of their U.S. counterparts and noted that Beijing had restricted access to China’s market. This was before the Trump administration took off in 2025 and the latest round of tariffs.
Other Countries Attracting Manufacturers
Companies that once had all their factories in China have now opened plants in Vietnam, India, Turkey, Mexico, and other locations that are closer to the markets where the products are sold and that offer other competitive advantages, including lower labor costs, market access, and infrastructure.
This trend is unlikely to revert to China’s favor in the near future.
In fact, the United States may see a reshoring trend as the business conditions and regulatory environment continue to improve. Indeed, a significant number of foreign companies have announced plans to relocate their manufacturing to the United States to avoid tariffs. There have been recent overtures from international firms such as Japan’s SoftBank; Taiwan’s TSMC chip manufacturing company; South Korea’s Hyundai, which has pledged a $21 billion investment in steel and automotive plants; and some wealthy Gulf states, among others.
Welcome to the China Hustle
Today, China finds itself in hustle mode. It faces a United States under Trump that is determined to challenge the CCP in every influential sphere and to leverage its advantages in regulation, legal recourse, financial leadership, and technological innovation to do so.
How effective will the CCP’s efforts be in weathering the radical changes underway in the global manufacturing and trading system?
It remains to be seen.
