The Trump administration closed the duty-free de minimis route for low-value imports from China and Hong Kong in May 2025, later widened the suspension, and continued tightening enforcement into early 2026. China’s platform exports to the U.S. did not just slow. They were cut in half.
The apparent deficit with Ireland is misleading, for reasons we have explained in previous issues of SOAPBOX.
The U.S. has started treating medicine supply as a security issue, with new tariffs on innovative drugs opening a transatlantic clash with the EU. This is less classic trade policy than strategic industrial policy. To understand it, one has to look at both sides of HS 30 trade: who exports, who imports, and where China fits today and may fit tomorrow.
HS 30 is not the whole pharmaceutical supply chain. It covers pharmaceutical products, but not all the upstream chemicals, intermediates and ingredients that sit elsewhere in the tariff system. That means these numbers may understate China’s upstream importance, especially in inputs rather than finished branded medicines.
Still, the main picture is hard to miss. By 2025, the EU and U.S. together accounted for 49% of world pharma exports. In pharma, value is heavily shaped by patented products, brand ownership, corporate structures and a handful of very high-value categories. So these shares tell us a great deal about who dominates high-value trade, even if they say less about who supplies every physical input in the chain.
On the import side, the U.S. is the world’s biggest pharma buyer. That reflects not only huge demand, but also the fact that many major drugmakers serving the U.S. market manufacture high-value products abroad. In pharma, trade data show where products are shipped from and to, not who ultimately owns the profits, patents or the corporate group behind them. Large pharmaceutical multinationals also tend to spread production, ownership and profits across jurisdictions offering regulatory or tax advantages.
Taken together, the numbers show that the current structure of pharma trade is transatlantic. The EU is the main export platform in HS 30, while the U.S. is the main import market. That is why the current clash is mainly transatlantic.
But the strategic shadow is China. Because HS 30 is only part of the pharma chain, China may matter far more upstream, and perhaps more over time in adjacent biotech capabilities, than its small trade share here suggests.
China is a major jet-fuel exporter and can curb exports by administrative order, a sign of both domestic supply strength and state control. The EU, by contrast, is exposed and vulnerable to disruptions in Middle Eastern jet-fuel exports.
By 2025, Italy’s auto exports to China were down 83% from their 2017 peak. The days when wealthy Chinese buyers proudly drove off in Ferraris and Lamborghinis are long gone. Our 2026 forecast points to a twenty-year low, with exports falling below even their 2007 level.
Our 2026 forecast points to UK car exports to China falling nearly 75% from their 2014 peak, more than a decade ago. Export value in 2025 was already lower than in 2011.
AI may make global trade more efficient, in both goods and services. But it may also widen the digital divide. Poorer countries may struggle to afford the token volumes needed to compete, just as SMEs may be outmatched by larger firms. There is also a less visible trade-policy risk: when governments reduce the real cost of tokens or computing power for domestic firms, they may confer an advantage that functions much like a subsidy, even if it is not easily captured by conventional trade statistics.
China is a case to watch. In a system long used to supporting competitiveness through policy, cheaper state-backed access to token capacity could become yet another lever with clear trade implications.
Perhaps surprisingly, the sharpest increase looks set to come in the segment above 500 cc, where our forecast points to growth of more than 300% by value compared with 2025.
Qiushi, the Party’s flagship ideological journal, has sounded an alert on the surplus in a piece that reads less like a personal opinion than as an authorised Party voice under a generic byline.
The article reads as a warning that China’s giant surplus has become a strategic liability: internally because it makes economic rebalancing harder, externally because it invites backlash. What it points to is not an export retreat, but a politically manageable way to ease that liability without cutting exports.
This is less a call for policy change than a strategic warning wrapped in continuity language. The article says, literally, that the surplus should be reduced “moderately” and “gradually”, while leaving no doubt that Beijing does not intend to abandon the export machine, only to manage a surplus that has become more dangerous.
In short, the message is clear: manage the liability, do not change the ideological course.
China’s imports from Russia reveal not a broad commercial partnership, but a concentrated strategic bargain. In Jan-Feb 2026, they reached almost US$21bn, roughly double the level of early 2021. Yet the striking point is the narrowness of the trade: crude and gas alone account for more than half, and around a dozen energy and mineral products make up nearly three quarters of the total. But the relationship also runs the other way. If Russia is a resource pillar for China, China has been an economic lifeline for Russia since the invasion of Ukraine. The lifeline, however, is not symmetrical. For China, Russia matters mainly as a source of strategic inputs. For Russia, China matters more broadly: as a buyer of sanctioned commodities, as a supplier of consumer and industrial goods, and as a channel that has helped cushion the impact of Western isolation.
Our estimates suggest Q1 retail sales will reach roughly RMB 12.8tn. If so, Beijing’s trade-in programme would have supported sales equal to about 3.4% of the quarterly total. That is meaningful enough to shape the headline number. But it says less about a broad recovery in consumer confidence than about the state’s ability to steer spending towards subsidised durable goods.
Cars were the main driver: auto trade-ins alone generated just over half of all programme-linked sales in the first quarter.
Absent the scheme, headline retail growth might have been flat or even slightly negative. Some purchases were probably brought forward from later quarters, and some would have happened anyway.
Although roughly three quarters of global NAND supply remains in non-Chinese hands, some of the leading producers manufacture in China. At the same time, China has built a large domestic ecosystem in the more cost-sensitive segments and plays an important role as a hub for packaging, testing and final assembly.
Overall, exports in the first two months of the year more than doubled, jumping to US$2.9bn from US$1.4bn a year earlier.
The March 2023 bounce now looks like an outlier. Three years later, China’s factory employment gauge is still stuck below 50.
The same Chinese licensing regime still governs key permanent-magnet exports, yet outcomes now differ sharply by market. The EU still received more volume, the U.S. less, and world exports rose only modestly. That points to selective friction inside one restrictive system.
