In the ever-evolving landscape of global trade, geopolitical rivalry between the United States and China is increasingly shaping alliances, strategies, and economic futures—especially for Asia. Recent statements from Beijing warning retaliation against countries that limit trade with China in favor of U.S. tariff relief have stirred debates globally.
China & U.S. Trade Alliances
Defensive Posturing or Strategic Coercion?
China’s warning to countries considering limiting their trade with Beijing reflects more than rhetorical bravado. It signals an assertive attempt to maintain its strategic position in global trade. By threatening countermeasures, China hopes to deter smaller economies from aligning with U.S. trade demands, which have escalated under the Trump and Biden administrations.
The language used by China’s Commerce Ministry—“resolutely take countermeasures” and “negotiating with a tiger for its skin”—invokes nationalistic themes aimed at framing the U.S. as a hostile actor. From Beijing’s perspective, such rhetoric reinforces sovereignty and resilience.
Countering U.S. Geoeconomic Warfare
The U.S., under President Trump, imposed a 145% tariff on Chinese goods and encouraged its allies to sever trade ties with Beijing in exchange for economic relief. China’s threats can be seen as a counter-response to what it perceives as geoeconomic coercion. This is not just about trade; it’s a battle for global influence, especially in Asia.
Are New Trade Alliances About to Be Formed?
The Rise of Minilateralism
With the global order shifting away from large multilateral agreements like the WTO, countries are now favoring smaller, strategic partnerships. These “minilateral” arrangements—like the Indo-Pacific Economic Framework (IPEF), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP)—are shaping the next phase of global trade.
For example:
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IPEF, led by the U.S., includes 14 countries (like India, Japan, and South Korea) and focuses on fair trade, supply chain resilience, and digital economy standards.
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RCEP, championed by China, includes 15 Asia-Pacific countries and represents about 30% of global GDP.
These alliances may not replace traditional free trade agreements but can serve as strategic buffers against external pressure.
Bilateral Economic Diplomacy
China has responded by deepening its bilateral relations with countries like Vietnam, Cambodia, and Malaysia—signing cooperation agreements and investing heavily in infrastructure. These moves are part of Beijing’s broader Belt and Road Initiative (BRI), designed to pull countries into its economic orbit.
Trade Pressure on Asian Countries?
Economic Dependency and Strategic Influence
Asian countries, especially Southeast Asian nations, are heavily reliant on Chinese trade:
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Over 30% of ASEAN’s total trade is with China.
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China is the top trading partner for countries like Indonesia, Vietnam, and Thailand.
Given this dependency, China has leverage. It can:
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Withhold key raw materials (e.g., rare earths).
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Impose tariffs or non-tariff barriers.
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Divert foreign direct investment (FDI) to other “friendly” countries.
This form of economic pressure is subtle but powerful. Even rumors of reduced Chinese investment can impact stock markets and political decisions in trade-dependent countries.
Information Warfare and Economic Signaling
Besides material pressures, China uses media and diplomatic signaling to dissuade countries from joining U.S. efforts. The narrative is often: siding with the U.S. is a zero-sum game that leads to economic decline and regional instability.
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Trade Volume
Japan
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Trade Volume (2023): ~$218 billion with the U.S.
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Japan is a cornerstone of the U.S. presence in Asia, with military bases and economic partnerships.
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However, Japan also trades heavily with China (~$310 billion), making it cautious.
South Korea
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Trade Volume (2023): ~$190 billion with the U.S.
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A strong U.S. ally with shared tech and defense initiatives.
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China is South Korea’s largest export destination, creating a strategic dilemma.
India
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Trade Volume (2023): ~$120 billion with the U.S.
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India is emerging as a strategic alternative to China in manufacturing and supply chains.
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While not aligned with either bloc, India benefits from U.S. trade tensions with China.
Philippines, Vietnam, and Malaysia
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These countries are increasingly aligning with U.S. trade and military goals.
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Trade volumes with the U.S. are growing due to relocation of supply chains from China.
How Can the U.S. Respond?
Strengthening Economic Alternatives
The U.S. is already working to reroute supply chains away from China:
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“Friend-shoring” critical industries to allies like India, Mexico, and Vietnam.
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Funding infrastructure and green energy partnerships in Asia to rival the BRI.
Export Controls and Investment Screening
Washington has imposed restrictions on advanced semiconductor exports to China. It is also reviewing outbound investment into sensitive sectors to prevent technology leakage.
Digital Trade Agreements
Digital services and e-commerce are the next frontiers. The U.S. is pushing for digital trade norms that exclude Chinese tech giants (e.g., TikTok, Huawei), thereby building an economic firewall.
Impact:
Dual Dependency Dilemma
Many Asian nations are now stuck between two giants:
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U.S. offers security, tech partnerships, and market access.
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China provides investment, infrastructure, and manufacturing scale.
Navigating this dual dependency is difficult. Aligning too closely with one risks economic retaliation from the other.
Strategic Hedging
Countries like Vietnam and Indonesia are pursuing a hedging strategy—accepting U.S. economic cooperation while maintaining close ties with China. This avoids choosing sides while maximizing gains.
Long-Term Rebalancing
In the long term, new trade blocs may encourage:
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Greater intra-Asian trade, reducing dependence on external powers.
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Stronger regional institutions like ASEAN and the Asian Infrastructure Investment Bank (AIIB).
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A multipolar trade order with diverse nodes rather than U.S.-China bipolarity.
China’s recent threats
China’s recent threats to retaliate against countries that comply with U.S. trade demands mark a turning point in global trade politics. What appears as a mere tariff dispute is in fact a battle for influence, norms, and economic allegiance in Asia. The emergence of new trade alliances, shifting supply chains, and complex diplomatic balancing acts reflect the transformation of global trade into a high-stakes geopolitical arena.
For Asian countries, the challenge lies in maintaining autonomy while navigating pressures from two superpowers. For the U.S., the opportunity lies in crafting inclusive economic frameworks that don’t rely solely on coercion but offer real alternatives to China’s model. As trade wars escalate and alliances evolve, the world may be witnessing the birth of a new global trade order—fragmented, strategic, and highly competitive.
References
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Ministry of Commerce, People’s Republic of China. (2025). Official Statement on U.S. Trade Pressure.
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The Wall Street Journal. (2025). Trump Administration’s Tariff Strategy and Global Pressure Tactics.
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NBC News. (2025). Asian Countries Caught Between China and the U.S.
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Office of the United States Trade Representative (USTR). (2024). Trade Agreements and Strategic Frameworks.
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ASEANStats. (2024). ASEAN-China Trade Figures.
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International Monetary Fund (IMF). (2024). World Economic Outlook Database.
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Nikkei Asia. (2025). China’s Bilateral Agreements in Southeast Asia.
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World Bank. (2024). Trade Volumes Between the U.S. and Asian Nations.
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Council on Foreign Relations (CFR). (2024). Digital Trade and Geopolitics.
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Asia Society Policy Institute (ASPI). (2025). RCEP, CPTPP, and Emerging Trade Blocs.
