By Chen Li
Just last month, the European Union recently decided to impose temporary tariffs on imports of battery electric vehicles (BEVs) from China. Concurrently, the U.S. and Mexico jointly announced measures to bolster the North American steel and aluminum supply chain, with Mexico imposing tariffs of 25% and 10% on steel and aluminum imports from China, respectively.
In recent years, there has been a notable increase in trade barriers targeting Chinese goods. Reports from American media indicate that beyond the U.S. and EU, emerging economies such as Brazil, India, Mexico, and Indonesia have initiated anti-dumping investigations into competitively priced Chinese products.
These protectionist actions against China represent a long-term trend in global trade, driven by shifts in the international economic landscape. This transformation is both widespread and structural, impacting not only China’s relationships with the U.S. and EU but also influencing global trade dynamics overall. China must adapt to these evolving trade rules and prepare for sustained strategic competition.
The global trade environment has undergone significant changes. The momentum towards global economic integration that followed World War II has diminished, giving way to trends of de-globalization and regional economic integration. Since the financial crisis, developed countries have increasingly pursued the reshoring of manufacturing due to weakened consumer demand and advancements in technology, as well as efforts to mitigate supply chain risks. Simultaneously, countries like China have reduced their reliance on intermediate goods trade while upgrading their industries, contributing to a slowdown in global trade growth and a restructuring of global value chains. The trend of nearshoring marks a departure from previous models of international division of labor and underscores the rise of regional economic integration, inevitably fostering trade protectionism in the process.
This rise in trade protectionism has undermined the rules-based multilateral trading system established under economic globalization, including the General Agreement on Tariffs and Trade (GATT) and the WTO. Regional trade agreements are increasingly supplanting the WTO’s global rules, accelerating the fragmentation of trade and industrial spaces. Challenges to the Most-Favored-Nation (MFN) principle within the WTO further complicate international trade dynamics, particularly concerning issues of market access, trade imbalances, and intellectual property protection. Moreover, economic and trade issues have become increasingly politicized, pushing the WTO to the sidelines of global economic governance and jeopardizing its trade rules.
In addition, the COVID-19 pandemic has heightened awareness among countries of the need to diversify supply chain risks, further amplifying trends toward unilateralism and populism. Geopolitical considerations increasingly influence economic and trade policies, reinforcing alliances while potentially weakening economic ties beyond these groupings. Despite sustained efforts, negotiations under the Doha Round have faltered, and the WTO’s appellate body has remained paralyzed since December 2019.
The evolution of international trade rules has been a dynamic process since the Age of Exploration. Before significant maritime discoveries, global commerce operated on regional scales. Maritime trade interconnected the world, establishing a truly global trading system that reshaped international relations, disrupting ancient tribute systems and continental-centric perspectives. Following World War II, the establishment of GATT and later the WTO laid the foundation for a multilateral trading system based on mutual benefit. China’s accession to this framework facilitated deep integration into global value chains, enabling its economic rise through economic globalization and achieving remarkable economic growth.
Today, the global trade landscape is once again undergoing profound structural changes, necessitating new frameworks and disciplines within the evolving trade system, and under such circumstances, the world itself must in turn adapt strategically to navigate these shifts effectively.
About the author:
Chen Li, is an Economic Research Fellow at ANBOUND
