How China's trade dependencies have evolved in a higher-tariff era

We're continuing our exploration of how tariff policies influence China's trade relationship with the US and other nations.

Our first chart is a heatmap exploring China's exports of vehicles and auto parts, comparing the importance of different markets over the past decade. In 2015, China's exports in this category were quite dependent on the US and Japan. But dependence on these markets has faded -- especially post-pandemic.

Meanwhile, as China diversifies its trade, vehicle exports to Mexico, Brazil and the oil-rich Gulf monarchies have seen their importance steadily increase.

Our second chart looks back at the long-lasting effects of Donald Trump's first presidency and his early trade policies on China in 2018-19. His tariffs indeed had a suppressive effect, but the US and Chinese economies remained quite intertwined.

Export categories subjected to additional tariffs during this time frame experienced a noticeable decline in export value. By contrast, non-tariffed products demonstrated remarkable resilience, with export value rising sharply -- particularly after 2021.

Our third chart considers one of the more remarkable cases: electric vehicles. On the US side, it wasn't just Trump's two terms: the Biden Administration also raised tariffs on Chinese EVs. (While the Biden tariffs did not kick in until 2024, the administration had been targeting Chinese imports since early in its term, aiming to protect the domestic supply chain through tax credits and other measures.)

The result has been a global Chinese export boom for EVs even as shipments to the US slow to a relative trickle. This market accounts for less than 3% of Chinese EV exports, as our chart shows -- down from 33% when Trump began his tariff campaign in mid-2018.

Our fourth chart considers both import and export relationships for China, and tracks the electrical equipment sector to demonstrate how emerging markets have become more important in the trade mix.

Vietnam has rapidly risen as a key trading partner for China, with both import and export dependency increasing significantly. China used to depend highly on Japanese imports in this sector, but that has faded over the past 20 years. China's dependence on the US, meanwhile, was more pronounced for electrical-equipment exports at the start of the 2000s.

We conclude by revisiting a recent theme: the relationship between China's dependence on certain categories of imports from the US and how those sectors are tariffed by China. To protect local producers, China imposes higher tariffs on industries with low import dependencies on the US (food and apparel categories, for instance) while applying lower tariffs on US import categories seen as strategic to China's own development (i.e. optical instruments, chemicals).