US-China trade tensions an opportunity for emerging economies: DHL Express CEO

The trade tensions between the United States and China have opened new opportunities. Countries like India, Vietnam, Mexico, Brazil and the UAE stand to gain from these shifts. They can use their locations and policies to take a larger role in global trade, says John Pearson, CEO of DHL Express.

Pearson tells CNBC-TV18 that countries without strong ties to the US or China have grown faster in trade over the last eight years. He explained that changes in supply chains have put Vietnam, Indonesia, the Philippines and India in the spotlight. This idea, called “China+1,” encourages firms to look beyond China.

India has particularly benefited. Its logistics and infrastructure developments attract more trade. India stands out in attracting foreign investment, just behind the US worldwide.

The US and China still rely on each other despite some cooling in their trade ties. Their trade has dropped from 3.5% of global trade in 2016 to 2.6% in 2024. Pearson believes global trade is flexible; it always finds new ways.

In past tariff fights, like those during Trump’s first presidency, each side took countermeasures and later engaged in dialogue. While a second Trump term suggests strict trade policies, they might only bring slight changes as trade bonds adapt gradually.

The DHL Global Connectedness Tracker report shows globalisation remains strong. Even with geopolitical issues and protectionism, global trade stays healthy. In 2023, 21% of all goods and services were traded globally, not much different from 22% in 2022.

Pearson is optimistic, dismissing de-globalisation concerns. “Trade and globalisation are incredibly resilient. When one door closes, another door opens,” he stated.

Edited excerpt.

Q: Have you also seen countries which are benefiting from the US-China trade war? If China’s contribution to global trade has gone down, have any of the countries like India benefited from it?

Pearson: I think there are countries that are benefiting from it, and I’ll say it in a couple of different ways. Countries that have no strong alliance with the US and no strong alliance with China have certainly grown their share of world trade over the last eight years.

Mexico, Brazil, UAE, Vietnam, and India are five great examples of that. Trade always finds a way, so some countries are being the beneficiary. Those that have no strong alliance are definitely growing faster. And then I’d go on to say countries that are the beneficiary of China+1 and diversification of supply chains into Vietnam, into Indonesia, into the Philippines, into India, not necessarily China diversification. India is benefiting enormously from a very successful national logistics policy, I think the terminology may be something slightly different, but building out the infrastructure that makes India attractive for inward and outbound trade and inward investment that delivers that trade. So, hats off to the administration in India for building that trade-friendly environment.

I learnt when I was in Delhi earlier in the year that India has attracted more inward FDI than any other country on the planet other than the USA.

Q: Has the US been able to decouple from China to the extent it wanted to do so about eight to 10 years ago?

Pearson: The first thing you would say about China-US trade is they’re both each other’s largest trading partner. Trade has come off a little bit from where it was at the peak of the pandemic, and you could imagine some things that were traded during the pandemic, PPE equipment and things related to COVID, really drove that level of integration between the two countries up. It has come back a bit. Maybe not to be expected, some of that tariff-related, some of it just global trade-related, but they are enormously coupled as countries. They both need each other in so many different senses of the word, and my own thoughts for that in the future is it’ll be rather incrementalism if it is on the way down, putting aside any rather more dramatic impact of tariffs, which then creates negotiations and discussions, and then those tariffs can quite often times come out, so tariffs aren’t always a thing for the future.

Q: Trump’s presidency is going to have a cabinet that will be hawkish on China. We are going to see a very tough stand vis-à-vis China. So, the trade between the US and China may go down even further. Considering the developments taking place in the US, how do you think this is going to affect globalisation going forward?

Pearson: We’ve been in these situations before, and the first Trump administration, I remember in 2019, which was my first year in the job, there were certain heavy tariffs put on the export of Chinese goods to the US. Some of them then were repealed and we get through these times.

It’s fair to say we can see an impact of some of these tariffs when they happen. But it is not a situation that is unfamiliar to us. We’re now going into a new administration that promises lots of things to be honest. One of them was there would be a 60% tariff on China goods and maybe 10% on all other countries that don’t have a free trade agreement.

What I know from the Global Connectedness Report and the Global Tracker is trade and globalisation is incredibly resilient. It’s still globalising rather than de-globalising. Water tends to find a way. Trade is rather mercurial. Remember, if you have mercury in your hand, it moves all over the place. When one door closes, another door opens. Trade will find its way between different partners somewhere, perhaps to China. So I think we just have to wait until the administration decides on what policies it wants to put in, and then we will adapt to whatever we see.

But no one is better positioned to understand global trade and globalisation than us, understand the early impacts of anything, and be able to share that with our customers. So we wait like everyone else waits.

Watch the accompanying video for the entire conversation.