The escalating U.S.-China trade war, reignited by President Donald Trump’s sweeping tariffs on Chinese imports, is forcing a growing number of Chinese exporters to make the difficult decision to abandon the American market altogether. For many small- and medium-sized manufacturers who survived the first round of Trump-era tariffs and spent years cultivating U.S. consumer demand, the latest 145% tariff wall represents a financial breaking point.

The fallout is already visible across China’s manufacturing hubs. Assembly lines that once ran six or seven days a week are now idle for nearly half that time. Factories producing everything from yoga pants to kitchen appliances are pausing shipments to the U.S., offloading excess inventory at steep markups, and pulling out of American warehouses to cut costs.

European companies in China are now treating supply chains the way banks treat balance sheets in a crisis: stress-testing, ring-fencing and quietly moving risk off the China book. What was once a theoretical “de-risking” debate has become a concrete restructuring effort, driven by a combination of record Chinese trade surpluses, deep deflation in Chinese industry, a weaker yuan and Beijing’s growing willingness to weaponise export controls on critical materials.

According to a new report from the European Union Chamber of Commerce in China, more than 70% of European firms with operations in China have reviewed their supply-chain strategy in the past two years. Of those, over a quarter are doubling down inside China by localising more of their sourcing and production, while about 10% are actively building alternative supply chains outside the country.

Chinese steel producers are increasingly using a workaround to bypass rising global tariffs by exporting semi-finished steel products, particularly billets, in a trend that is both provoking international concern and triggering warnings from Beijing itself. As global trade partners take defensive measures against a flood of low-cost Chinese steel, exporters are turning to products that face fewer trade restrictions, raising new challenges for international regulators and China’s own industrial policymakers.

China, the world’s largest steelmaker, has seen a spike in global scrutiny amid record export volumes. Since January 2023, at least 38 anti-dumping investigations have been launched by countries including Vietnam, South Korea, and the European Union. These governments argue that Chinese steel is being dumped at unfairly low prices, damaging their domestic industries.