Beijing’s repeated pledges to increase imports contrast sharply with the reality that began in Xi Jinping’s second term in 2018, after his re-election at the 13th National People’s Congress and the removal of presidential term limits. In 2020, Chinese scholars, cloaked in academic jargon, formalized Xi’s ‘dual circulation’ strategy. However, this strategy, which had effectively started in 2018, is simply about boosting exports as much as possible while restraining imports, thereby maximizing the surplus, which reached one trillion USD in 2024.
The sign of the times is a flood of tariffs and counter-tariffs among countries or blocs, heralding a future spaghetti bowl of overlapping trade rules. It sounds like Marty McFly traveling backward in time aboard his DeLorean.
For years, the U.S. has been the world’s top importer, a position that has benefited the global economy and improved living standards worldwide—one for which we should be grateful. But now, it embraces bilateralism, demanding reciprocity from individual partners as if the global trade network never existed. This approach contradicts the complexity of trade, where goods pass through multiple stages of the supply chain, crossing borders many times before reaching their final destination as finished products.
Trump’s “new normal” in product trade dominates discussions, overshadowing the U.S.’s predominant role in service trade. By 2023, the U.S. surpassed $1 trillion in service exports, tripling China, which remains far from being a services trade powerhouse largely due to political constraints imposed by its own regime.
As an example, Netflix generated more than 50% of its $39 billion revenue from exporting digital services outside the U.S. Such service exports did not exist just a few years ago.
The Trump administration begins its tenure at a time when the EU is deeply concerned about its imbalanced trade relationship with China. China’s economic model has created systemic distortions and negative spillovers for both the EU and the U.S.
With the U.S. demanding reciprocity in trade through one-on-one relations, and China’s stubbornness in blaming others for global trade issues while failing to acknowledge its own faults, the EU has no choice but to act pragmatically—even if it incurs in contradictions, because one thing is certain: the road ahead will be filled with them.
U.S. Increases Tariffs on Imported China-Made Goods
The measure was expected and explains the frantic front-loading activity by China in December to ship as much as possible to the U.S. In December 2024, China’s exports to the United States surged year on year by 16%. The Trump Administration’s measure has, in a way, made the yuan appear to appreciate against the dollar.
Germany’s exports to China are a benchmark for EU trade — see the downturn.
February brings the Fruit Logistica trade fair in Berlin, but China is no longer a hot topic among EU fruit producers. Long transit times, initially exacerbated by COVID and China’s prolonged lockdowns, compounded by claims—contrary to scientific consensus—that traces of the virus were found on imported fruit packaging, have all taken their toll. Later disruptions, such as route diversions via the Cape due to Houthi attacks, and a stagnant import market for foreign fruits (with the exception of durians), have driven EU exporters to seek alternative markets. It seems doubtful that they will refocus on China anytime soon.
In 2024, EU exports to China are expected to be just one-third of what they were five years ago.
On February 4, the Ministry of Commerce announced decisions to implement export controls on items related to tungsten, tellurium, bismuth, molybdenum, and indium.
China has announced a new tariff plan, including a 15% tax on coal and gas imports from the U.S., and a 10% tariff on large displacement vehicles, agricultural machinery, and crude oil. Given that President Trump’s executive order came during a time when top Chinese officials were on holiday, it seems likely that the task of selecting products for retaliation was left to a junior staff member, while the rest of the team was away.
In reality, these categories combined represent a CIF value of about $22 billion in U.S. imports for 2024, or roughly 13% of total Chinese imports from the U.S.
However, coal (9%), crude oil (27%), and gas (63%) make up 99% of that CIF value. It’s likely that the junior staff member was tasked with justifying the 15% and 10% tariff distinctions. The reasoning? Simple.
-
Gas and coking coal imports from the U.S. are increasing, so a 15% tariff makes sense.
-
On the other hand, crude oil imports from the U.S. are decreasing, and in fact, the amount China is spending on U.S. crude oil imports in 2024 is lower than the final year of Trump’s first term. Therefore, a smaller 10% tariff is applied.
-
As for the other categories, they represent just 1% of the total — so who cares?
As part of its retaliation against the U.S., China recently added several items to its export control list, including tungsten. Most tungsten exports are in the form of carbide. However, this action comes after China had already been dramatically reducing its tungsten carbide exports over the past few years. Additionally, over 80% of China’s tungsten carbide exports go to South Korea, Japan, and the EU
With a $2 billion investment, the joint venture aims to build a battery supply chain. The Chinese company has the majority with 50.03% while 49.97% is the hands of the royal family holding
An Executive Order signed on Feb 1, imposing duties to address the synthetic opioid supply chain in the People’s Republic of China, includes, among other measures, the cancellation of the de minimis treatment that allowed products under $800 entering the U.S. to be duty-free.
Aimed primarily at containing the flood of fentanyl, the measure will also indirectly impact China’s cross-border e-commerce operators, such as Shein, Temu, and several others.
On November 17, 2017, China and Panama signed a Memorandum of Understanding (MoU) as part of China’s Belt and Road Initiative. Initially valid for three years, the agreement was automatically renewed in 2020 and 2023. However, Panamanian President José Raúl Mulino has now announced that the MoU will not be renewed when it expires in November 2026.
China has expressed dissatisfaction, accusing the U.S. of exerting pressure following the visit of current U.S. Secretary of State Marco Rubio.
Following a meeting between U.S. Secretary of State Marco Rubio and Panamanian President José Raúl Mulino, both officials stated that the U.S. Navy would have free passage through the Panama Canal, suggesting a waiver of transit fees.
However, the Panama Canal Authority later reworded this claim, stating that the arrangement grants the U.S. Navy priority access
Switzerland signed a Free Trade Agreement (FTA) with China, which came into effect on July 1, 2014. Other than being China’s first and only FTA with a continental European country, it was not particularly remarkable. Then, in 2018, came the gold fever. By 2024, for every $10 China procures in Switzerland, $7 is gold
China’s fruit imports present a somewhat misleading picture, masked by the fever for durian imports. While imports of other fruits have grown at a modest 4% per year, the passion for the pungent fruit has propelled durian to account for one-third of the $20 billion worth of fruit imported by China last year.
As of this week, the electricity systems of the Baltic States have been disconnected from the Russia-controlled IPS/UPS system. Simultaneously, the electricity transmission system operators of Estonia, Latvia, and Lithuania are ready to synchronize with the Continental European grid.