A question before Trump meets Xi: Has China trumped the US in trade war?

As US President Donald Trump prepares to meet Chinese President Xi Jinping next month, the question hanging over the global economy is not who will win the next round of tariffs but whether the United States has already lost the strategic ground in the trade war it began seven years ago.

Despite Washington’s aggressive tariffs, export curbs and efforts to ‘de-risk’ supply chains, China’s economy has not only shown resilience but also repositioned itself in critical global trade and manufacturing networks.

According to report, Chinese exports have continued to diversify despite the imposition of US tariffs, allowing the country to sustain economic growth in key sectors. While US tariffs initially disrupted trade flows, China has successfully redirected its exports to other global markets, mitigating some of the impact from American measures.

The trade imbalance, which became a central issue in the 2018-2020 US-China trade dispute, has shown signs of stabilisation. Reports indicate that China’s manufacturing sector has maintained production levels and export destinations beyond the US have absorbed much of the demand, illustrating the country’s ability to withstand prolonged pressure.

China’s counter-move: Export diversification and self-sufficiency

Beijing’s response to years of US tariffs and sanctions has been to double down on supply-chain resilience and domestic innovation. The Nikkei Asia analysis shows that China’s export ecosystem has evolved: the country is now shipping more to Southeast Asia, the West Asia and Latin America, offsetting reduced US demand.

At the same time, China has expanded its influence in the manufacturing of electric vehicles, solar panels and semiconductors, sectors that Washington explicitly targeted in its industrial policy. The nation’s outbound shipments of EVs and green technologies surged through 2025, while its state-backed firms have made major investments in raw-material supply chains from Africa to Latin America.

This strategic pivot suggests Beijing’s long game: to reduce dependency on Western markets while embedding itself deeper into the developing world’s industrial growth. As a result, despite the decoupling narrative, China remains the world’s largest trading nation.

Washington’s costly gamble

The US, meanwhile, has struggled to sustain its protectionist strategy without inflating domestic costs. According to the South China Morning Post, the Biden-era supply-chain diversification efforts continued under Trump’s second term have led to higher input costs for American manufacturers.

The so-called “friendshoring” policy, which encourages US firms to move operations to allied countries such as Vietnam, India and Mexico has had mixed results. Many companies continue to rely on Chinese components, even when assembling products elsewhere. Economists argue that this reveals not true decoupling but “re-routing” where China’s goods reach US markets indirectly through third countries.

The result: America’s trade deficit with China has narrowed on paper but persisted in substance. Meanwhile, inflationary pressures tied to tariffs have hurt US consumers, particularly in electronics and household goods.

A geopolitical paradox

Trump’s renewed rhetoric about “winning the trade war” resonates politically at home, but global trade dynamics tell a more complex story. China’s GDP growth may have slowed but its export industries have adapted faster than Washington expected. More critically, China’s global partnerships from the BRICS expansion to infrastructure investments in Africa have given it fresh leverage against Western economic pressure.

Analysts note that Beijing’s ability to absorb short-term pain for long-term strategic autonomy contrasts sharply with Washington’s politically driven cycles of tariffs and relief. As one European diplomat told Nikkei, “The US treats tariffs as a tactic; China treats them as a lesson.”

What Trump’s next move may reveal

When Trump and Xi meet, the optics will be as important as the outcomes. The US will likely push for new restrictions on technology exports and seek reassurances on rare earths and semiconductors. But China, now more confident in its post-pandemic positioning will use the meeting to project that it has outlasted America’s containment strategy.

If Washington enters the talks still defining success in terms of tariffs and deficits, it may find itself negotiating from a weaker hand. The real measure of who “won” the trade war may lie not in trade balances but in who controls the next generation of global supply chains and increasingly that answer points east.