The Hidden Risks Behind China's Retaliatory Tariff Strategy

Table:

Rank	Country	Tariff Rate (%)	Trade Deficit/Surplus with China (USD)	Trade Surplus with U.S. (USD)	GDP (USD Trillion)
1	China	54%	0 (Home country)	+$279 billion	$18.5 T
2	Cambodia	49%	-$11 billion	+$11 billion	$0.03 T
3	Vietnam	46%	-$60 billion	+$104 billion	$0.53 T
4	Sri Lanka	44%	-$4 billion	+$2.5 billion	$0.08 T
5	Thailand	36%	-$29 billion	+$50 billion	$0.56 T
6	Indonesia	32%	-$17 billion	+$20 billion	$1.46 T
7	Taiwan	32%	+$33 billion	+$40 billion	$0.88 T
8	Switzerland	31%	-$3 billion	+$45 billion	$1.13 T
9	South Africa	30%	-$5 billion	+$2 billion	$0.40 T
10	Pakistan	29%	-$15 billion	+$4 billion	$0.34 T
11	India	26%	-$84 billion	+$41 billion	$4.10 T
12	Canada (non-USMCA-compliant)	25%	-$50 billion	-$39 billion	$2.24 T
13	Mexico (non-USMCA-compliant)	25%	-$75 billion	+$152 billion	$1.72 T
14	South Korea	25%	+$22 billion	+$28 billion	$1.79 T
15	Japan	24%	-$46 billion	+$59 billion	$4.40 T
16	Malaysia	24%	-$12 billion	+$31 billion	$0.45 T
17	European Union (27 countries)	20%	-$250 billion	+$202 billion	$18.4 T
18	Israel	17%	-$8 billion	-$5 billion	$0.53 T
19	Algeria	10%	-$2 billion	-$2 billion	$0.19 T
20	Australia	10%	+$78 billion	-$13 billion	$1.70 T
21	Brazil	10%	+$35 billion	-$7 billion	$2.13 T
22	Canada (USMCA-compliant)	10%	-$50 billion	-$39 billion	$2.24 T
23	Chile	10%	+$22 billion	-$5 billion	$0.35 T
24	Colombia	10%	-$5 billion	-$1 billion	$0.33 T
25	Maldives	10%	Small deficit (data limited)	Small surplus (minor)	$0.006 T
26	Mexico (USMCA-compliant)	10%	-$75 billion	+$152 billion	$1.72 T
27	Singapore	10%	-$6 billion	+$12 billion	$0.52 T
28	Turkey	10%	-$30 billion	+$3 billion	$1.15 T
29	United Kingdom	10%	-$42 billion	+$5 billion	$3.44 T

A closer look at recent trade data reveals an important dynamic in global trade relationships, especially when it comes to China and the United States. Most countries, with the notable exceptions of South Korea and Taiwan, record significant trade deficits with China. Meanwhile, many of these same countries enjoy substantial trade surpluses with the United States.

This structural reality complicates China's strategy to rally global support for retaliatory tariffs against the U.S. following the implementation of mutual tariffs. While political leaders may voice emotional support for China's stance, the hard economic truth is that most countries simply cannot afford to antagonize the United States. They rely too heavily on the American market for their exports.

The European Union (EU) is a prime example. Although the U.S. has imposed significant tariffs on EU goods — a move that understandably provokes frustration — the EU maintains a large trade surplus with the U.S. and a trade deficit with China. Thus, despite political tension, the EU ultimately has little choice but to seek compromise with the United States rather than align with China.

Similarly, Vietnam and most Southeast Asian nations find themselves in a difficult position. They run trade deficits with China but enjoy healthy trade surpluses with the United States. Cooperation with China to retaliate against the U.S. would risk vital economic interests, making such an alliance highly unlikely.

Moreover, much of China's exports to the U.S. are now indirectly routed through Southeast Asian countries. This suggests another hidden motive behind America's reciprocal tariff policy: to block China's use of third countries to bypass direct tariffs and maintain access to the U.S. market.

In summary:

• Only South Korea and Taiwan maintain trade surpluses with both the U.S. and China.

• Most countries have trade deficits with China but trade surpluses with the U.S.

• Political rhetoric aside, economic realities push most countries toward cooperation with the U.S., not China.

• The U.S. reciprocal tariff strategy also aims to curb China's rerouted exports through Southeast Asia.

Understanding these dynamics is crucial. Global trade alliances are shaped not just by political sentiment but by deeper economic dependencies that cannot be ignored.