USA Trump Tightens the Trade Noose: How Tariff Diplomacy Is Challenging Xi’s Hold on Asia

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Trump Tightens the Trade Noose: How Tariff Diplomacy Is Challenging Xi’s Hold on Asia

 

Donald Trump’s return to the White House has reignited a sweeping and confrontational trade strategy aimed squarely at undermining China’s economic stronghold across Asia. While the US president did strike a temporary agreement with Beijing last month, he’s showing no signs of stepping back. Instead, he’s accelerating efforts to encircle China with a web of bilateral tariff deals, drawing in countries across the continent and putting immense pressure on Xi Jinping’s export-driven economic model.

 

Trump’s latest manoeuvres extend far beyond his initial targets. Even after imposing fresh tariffs on traditional allies like Japan and South Korea, he is rapidly negotiating agreements with countries including Indonesia, Thailand, and Cambodia. The ambition is unmistakable: to restrict China’s ability to use neighbouring markets to absorb its surplus goods and support its growth.

 

“What we are witnessing is no passing trade war,” said Neil Shearing, an economist at Capital Economics. “Rather, it is the manifestation of a deeper, more durable superpower rivalry between the world’s two largest economies.”

 

Trump’s deals with the UK and Vietnam have already laid down a playbook. The UK pact includes provisions that allow Washington to effectively veto Chinese investment in Britain, while the Vietnam deal introduces punitive tariffs on so-called “transshipments”—Chinese goods routed through Vietnam to avoid US duties. The 40% levy on these items is double the tariff for domestically-produced Vietnamese goods, signaling Washington’s determination to punish deceptive rerouting.

 

Hanoi is now under pressure to play by American rules or risk severe consequences. Trump has warned other Southeast Asian nations to strike similar agreements within weeks or face escalating tariffs—25% for Malaysia, 32% for Indonesia, and 36% for Thailand and Cambodia. It’s a high-stakes ultimatum, aimed at boxing in China by severing its supply routes.

 

The economic logic behind this campaign is compelling. Vietnam’s imports of machinery and electrical goods from China have soared—from 17% of total exports in 2017 to nearly half today. Meanwhile, its exports to the US have climbed in tandem. This pattern reflects China’s strategy of maintaining growth by fueling manufacturing and exports, rather than domestic consumption.

 

“Whenever Chinese domestic spending growth sags, export growth accelerates,” said David Lubin, senior research fellow at Chatham House. “And that’s simply because Chinese companies can’t sell stuff domestically, so they sell it abroad.”

 

But China’s traditional export routes are narrowing. While exports to the US have plummeted by over 40% year-on-year, total global exports have still increased—driven largely by a 15% rise in shipments to ASEAN nations. Still, Beijing’s response to the US-Vietnam pact was sharp. “A typical act of unilateral bullying,” declared commerce ministry spokesman He Yongqian, warning that China would “take resolute countermeasures.”

 

Countries like Vietnam, caught between the two superpowers, now face a fraught choice. Trump has amplified the pressure by threatening new tariffs on any country aligning with Brics, the expanding bloc led by Brazil, Russia, India, China and South Africa. His post on Truth Social made it clear: a 10% tariff awaits those “aligning themselves with the Anti-American policies of Brics.”

 

Brics nations responded by condemning “unilateral” trade restrictions that “reduce global trade” and “disrupt supply chains.” Chinese foreign ministry spokesperson Mao Ning insisted that Brics was “not a bloc for confrontation” and warned, “Tariffs should not be used as a tool for coercion and pressuring.”

 

Yet China isn’t only relying on diplomacy—it’s also wielding soft power through infrastructure funding and multilateral banks. Xi Jinping pitches China as a partner of the Global South, as reflected in the $1 trillion Belt and Road Initiative and institutions like the Shanghai-based New Development Bank.

 

Beijing is also investing strategically. Indonesia’s president recently hailed a $6 billion joint Chinese-Indonesian nickel and battery factory as a “colossal, extraordinary breakthrough.” But China’s subtle retaliation is also underway. Reports have emerged of Chinese engineers at Foxconn’s India-based iPhone factories being recalled—a quiet but significant step to slow Apple’s shift out of China.

 

David Lubin sees this as part of a broader pattern of “asymmetric decoupling.” China is cementing its dominance in critical sectors like rare earths, electric vehicles, and solar panels. “The result of establishing China as a manufacturing powerhouse is to make the world more dependent on China,” Lubin said. “And that gives China leverage.”

 

As Trump’s tariff diplomacy tightens its grip and Xi counters with subsidies and strategic dominance, Asia’s emerging economies must now choose: align with Trump’s economic nationalism or continue reaping the benefits of China’s global integration. The balance of power in Asia—and possibly the trajectory of the global economy—may hinge on which way they lean.

 

  Adapted by ASEAN Now from Daily Telegraph  2025-07-10

 

 

[Tug]

Trump’s bleating again pretty soon the powerbrokers are going to get sick of his shenanigans they got their tax break this trade nonsense is killing their bottom line.not to mention the rest of us paying the TRUMP TAX…..enough!

[Paul Henry]

Any positive result from any Trump action is purely an accident.TACO could not plan a 1 year olds birthady party. 

[peter zwart]

Whether it’s luck or wisdom, I believe starting this trade war is the right decision. For years, we’ve all been chasing profits—companies, investors, even governments. And in doing so, we’ve helped China grow into an economic giant. Now, China holds a powerful position in the world, one that seems to be turning into something too dominant.

Let me be clear, I don’t think China shouldn’t have wealth or success. But I do think there should be a healthy balance in global power. Right now, that balance is shifting too far, and that’s something we can’t ignore.

I can understand why Trump wants to make America stronger again. (No, I’m not a Trump supporter.) But I do get his point. He wants to protect American interests—just like Xi wants to protect China’s, and Putin wants to protect Russia’s. It’s a tough game, and every country is trying to win.

Will this trade war bring quick benefits for the American people? Probably not. In fact, people will likely feel some pain first—maybe higher prices, maybe job uncertainty. But sometimes, you have to go through short-term difficulties to fix long-term problems.

We let things go too far. Now it’s time to push back and find a better balance. That might not make everyone happy right away, but it’s a necessary step toward a fairer and more stable global economy.

[thesetat]

4 hours ago, Social Media said:

Yet China isn’t only relying on diplomacy—it’s also wielding soft power through infrastructure funding and multilateral banks. Xi Jinping pitches China as a partner of the Global South, as reflected in the $1 trillion Belt and Road Initiative and institutions like the Shanghai-based New Development Bank.

AS i recall. Many countries are backing out of this Belt and Road initiative. China is using it to exert control over the countries as collateral for loans to make it happen. 

[spidermike007]

Trump is up to his usual whining, moaning, and complaining, that's just who and what he is, he is a weak victim and a snowflake. 

 

The reality is that his policies are making America weaker by the day, and strengthening China on a dozen different levels. He's pushing the world towards China and even countries that were hesitant to do business with China are now seeing them as a more attractive option. Nobody wants to do business with a bully and the world is saying no to America, and who's going to pay the cost for that? The American people.

 

We are witnessing a very simple-minded man who is dramatically precipitating the downfall of the American Empire. 

 

The Trump administration does not intend to immediately impose an additional 10% tariff against BRICS nations, as threatened, but will proceed if individual countries take policies his administration deems "anti-American," according to a source familiar with the matter.

At the end of the BRICS summit in Rio de Janeiro, Lula was defiant when asked by journalists about Trump's tariff threat: "The world has changed. We don't want an emperor."

"This is a set of countries that wants to find another way of organizing the world from the economic perspective," he said of the bloc. "I think that's why the BRICS are making people uncomfortable."

 

With forums such as the G7 and G20 groups of major economies hamstrung by divisions and Trump's disruptive, opens new tab "America First" approach, the BRICS group has presented itself as a haven for multilateral diplomacy amid violent conflicts and trade wars.
In a joint statement released on Sunday afternoon, leaders at the summit warned that the rise in tariffs threatened global trade. 

 

The original BRICS group gathered leaders from Brazil, Russia, India and China at its first summit in 2009. The bloc later added South Africa and last year included Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates as members. Saudi Arabia formally accepting an invitation to full membership, but is participating as a partner country. BRICS now represent more than half of the world's population. Goodbye America. See ya. You had a good run. 

 

More than 30 nations have expressed interest in participating in the BRICS, either as full members or partners.