Trump’s Trade Battle in a Larger Cold War with China

7/14 - Geopolitical Analysis Piece - Part 2

The Cold War analogy is no longer metaphorical. Much like the U.S. and Soviet Union once fought via proxies across the globe, today’s U.S.–China economic conflict is being waged through trade partners caught in the crossfire. After initial rounds of tariff warfare and diplomatic sparring, the Trump administration is now targeting countries like Vietnam, Thailand, and Mexico—not for what they do independently, but for how they intersect with China’s export machine.

On July 7, President Trump sent formal notices to Japan, South Korea, and over a dozen other nations, extending the deadline for bilateral trade talks to August 1. Alongside that extension came tariff warnings: 25% for Japan and South Korea, 36% for Cambodia, and 40% for Myanmar and Laos. The rationale? To prevent Chinese goods from reaching the U.S. through third-party “transshipment.” While China wasn’t explicitly named, no one missed the implication. “Any goods transshipped from elsewhere,” the letter warned, would be penalized under the new regime.

This approach is reshaping global trade incentives. To gain favor with the U.S.—still the world’s largest consumer market—nations must curtail Chinese participation in their supply chains. That includes allowing U.S. regulators access to Chinese-owned factories and submitting to scrutiny of procurement practices. Britain, for example, secured favorable treatment for aluminum and pharmaceuticals in May, but only by pledging to “secure” its supply chains against Chinese influence.

This strategic use of bilateral deals to weaken Beijing’s global trade networks is no longer just about direct tariffs—it’s about conditional alliances designed to isolate China without saying so explicitly.

Behind this pressure campaign is a growing concern in Washington that Chinese exports are being relabelled or disguised to evade U.S. tariffs Products may be minimally altered, repackaged, or simply rerouted through friendlier ports. Vietnamese sweaters, for example, may contain Chinese fabrics. Thai auto parts may include Chinese components. The Trump administration fears such “substantially transformed” goods are merely Chinese products in disguise.

For countries like Vietnam, this could be economically devastating. Since Trump’s initial trade war, Vietnam’s dependence on Chinese inputs has surged. According to Natixis, China contributed just 6% of the value of Vietnam’s U.S.-bound exports in 2017. By 2022, that figure was 16%. Manufacturers fear they will be punished for their own success in integrating with Chinese supply chains.

Mineral Wars

Nowhere is this rerouting strategy more evident than in the trade of critical minerals. When Beijing restricted exports of gallium, germanium, and antimony in late 2023—metals vital for electronics, semiconductors, and military tech—it sparked a quiet but intense supply chain scramble. By mid-2024, U.S. imports of antimony had rebounded to pre-ban levels—only now they were arriving via Thailand and Mexico.

Shipping data reveals the contours of this workaround. Thai Unipet Industries, a subsidiary of Chinese antimony giant Youngsun Chemicals, sent over 3,300 tons of antimony products to the U.S. between December and May—nearly 27 times what it shipped during the same period a year earlier. Mexico, with only one operational smelter, also became a top exporter. Industry experts confirmed that while paperwork pointed to Thailand and Mexico, the materials still originated in China.

Some shipments were even relabelled as “iron,” “zinc,” or “art supplies” to avoid detection.

While Chinese authorities have officially launched a crackdown on such smuggling and re-export tactics, enforcement remains patchy. The export controls themselves are clear, but extraterritorial application—especially for goods routed through foreign intermediaries—has proven difficult. Chinese sellers who fail to vet their end users could face fines, bans, or even prison sentences under Chinese law, but prosecution is rare.

China’s Counterpressure

Beijing has taken note of Washington’s indirect pressure. “China will not accept it and will take resolute countermeasures,” the Ministry of Commerce declared in response to the U.S.–Vietnam deal. “Countries must remain on the right side of history.”

At the core of China’s frustration is the perception that Washington is not just targeting Chinese exports, t’s attempting to dismantle China’s ability to trade with the world by proxy. Xi Jinping’s Cold War strategy had assumed time was on China’s side. But the new American tactic—economic encirclement by way of others—threatens to shift the playing field.

For now, Xi has responded with patience, not escalation. His administration continues to court the Global South, reform Belt and Road lending, and lure Western influencers to spread curated images of Chinese modernity. But behind the steady hand lies strategic concern. If too many countries begin restricting Chinese inputs under U.S. pressure, Beijing’s position as the world’s factory, and its technological ambitions could suffer.

Analysis:

Trump’s trade strategy has evolved from brute-force tariffs to strategic realignment. The U.S. is now using trade agreements, indirect pressure, and regulatory ambiguity to rewire global supply chains. But this tactic comes with costs: rising prices, monitoring enforcement, and growing resentment among countries forced to choose between America’s market power and China’s manufacturing muscle.

The rerouting of minerals and manufactured goods suggests that trade is proving more fluid than Washington expected. No matter how many letters Trump sends or how many thresholds he defines, economic incentives continue to shape global behavior. Countries will seek workarounds and smugglers will find cracks.

The modern Cold War between China and the U.S. has reached the proxy conflict stage and is being fought economically across supply chains, legal frameworks, and shipping lanes.