China Floods Global Markets With Cheap Exports Amid Trump’s Tariffs

Key Takeaway: Despite facing US tariffs as high as 145%, China is on track for a record US$1.2 trillion (RM5.05 trillion) trade surplus by aggressively redirecting exports to new markets, sparking global alarm over cheap goods and competitive threats.

President Xi Jinping’s export machine is proving resilient, defying Washington’s steep tariffs and reshaping global trade flows. With the US market increasingly restricted, Chinese exporters have pivoted quickly, driving record shipments to India, Africa, Southeast Asia, and even Latin America.

Indian imports from China hit an all-time high in August, while exports to Africa are heading for a yearly record. Shipments to Southeast Asia have also surpassed their pandemic-era peak. The strategy is allowing Beijing to maintain growth even as the US tries to isolate it through trade barriers.

The surge has unsettled governments worldwide. Mexico is the only country to respond forcefully so far, floating tariffs of up to 50% on Chinese goods ranging from cars to steel. Elsewhere, authorities are treading carefully. India has received 50 applications for dumping probes, while Indonesia pledged to monitor imports after viral videos showed Chinese vendors offering jeans and shirts for as little as 80 US cents. Latin American nations like Chile and Ecuadorhave quietly imposed fees, and Brazil, despite threats of retaliation, granted BYD a tariff-free window to expand local production.

For now, meaningful pushback remains limited. Analysts say many governments are reluctant to spark a new trade war with the world’s second-largest economy, especially as they navigate separate negotiations with Donald Trump’s administration. Beijing is also leveraging both diplomacy and economic pressure, warning Mexico of consequences if it proceeds with punitive tariffs, while rallying BRICS nations against protectionism.

Yet this export boom masks deep challenges at home. Chinese industrial profits fell 1.7% in the first seven months of the year, with firms slashing prices to offload surplus capacity, worsening the country’s deflationary trend. The push abroad also risks undermining Beijing’s long-term goal of shifting toward domestic consumption, a theme expected to dominate upcoming Communist Party meetings.

Currency movements have further boosted competitiveness. The yuan has weakened to its lowest effective exchange rate since 2011, giving exporters a pricing edge, while the Fed’s latest rate cut could drag both the dollar and yuan lower, further fueling demand for Chinese goods.

One area drawing particular scrutiny is autos. Chinese carmakers including BYD, Nio, and Xpeng shipped more than US$19 billion worth of electric vehicles in the first seven months of 2025, with Europe as the largest buyer despite EU tariffs imposed last year.

Analysts warn that the glut of Chinese goods will be difficult to contain. Research by Absolute Strategy shows that nearly 50% of what China previously sold to the US overlaps with exports to BRICS nations, allowing Beijing to reroute products with relative ease.

Bottom Line: China’s ability to flood global markets with competitively priced exports underscores its manufacturing strength but intensifies trade tensions worldwide. While near-term growth is supported, the strategy deepens risks of deflation at home and heightens the possibility of coordinated global pushback led by the US.