Trade relations between China and the U.S. are predicted to experience a significant downturn by the World Trade Organization.
In a stark warning, the World Trade Organization's (WTO) chief economist, Ralph Ossa, has forecasted a potential collapse in trade between China and the USA, with the declines in global trade being most significant in North America, particularly the USA, Canada, and Mexico.
Ossa views the US government's trade policy as a wake-up call for Europe and the world, suggesting that managing these redirection effects cooperatively could prevent the conflict from escalating further.
According to Ossa's observations, China is likely to redirect its exports from the USA to Europe. This shift is already evident in the data, with exports to the US declining by 10.7% in the first half of 2025, while exports to Europe rose by 6.9%.
China's exports are also being redirected towards ASEAN countries, Africa, and the UK. Exports to ASEAN grew by 12-13%, Africa by approximately 19-21%, and the UK by 7.4% during the same period. This trend is further supported by China's tariff-free access to 53 African countries and a 12.4% increase in bilateral trade with Africa in early 2025.
The shift in China's export destinations is also evident in changing shipping patterns. Asia–Europe and Asia–South America trade routes are growing faster than Asia–US routes, which are experiencing excess capacity and lower freight rates.
This strategic diversification by China is not limited to Europe and Asia. Export growth is also strong to countries such as Japan, Taiwan, India, and Vietnam, with Vietnam seeing a 23.8% export increase possibly due to rerouting amid tariffs against China.
Europe, according to Ossa, is important for exports, but it's also crucial that the rest of the world sticks together in these challenging times. As global trade tensions continue to escalate, it remains to be seen how the world will navigate these complexities and maintain economic stability.
[1] DHL Global Trade Barometer, Q1 2025 [2] Customs Data, China General Administration of Customs, Q1 2025 [3] The Wall Street Journal, "China's Exports Are Shifting Away From the U.S.", April 2025 [4] South China Morning Post, "China's Exports to US Decline as Trade Diversifies", May 2025
- As China diversifies its export destinations to counter trade tensions with the USA, [Economic and social policy] considerations may necessitate adjustments in the [industry] sectors reliant on exports to North America, including those in the USA, Canada, and Mexico.
- With China's growing exports to Europe, the finance industry in Europe may witness increased opportunities for [business] collaborations and investments amid the changing trade dynamics with the USA.
