China’s trade surplus surpassed one trillion U.S. dollars in 2025, prompting questions about whether former U.S. President Trump’s tariff policies against China have failed. Hsien-Ming Lien, President of the Chung-Hua Institution for Economic Research (CIER), argues that China’s ability to maintain its substantial surplus is not due to ineffective tariffs, but rather to its successful diversification of export markets toward the European Union, Africa, and Southeast Asia. The pressure that the United States has absorbed may now shift to other major trading partners in the future.
President Hsien-Ming Lien notes that if imports merely represent a change in sourcing, the impact on most countries remains limited, leaving political room for tolerance. However, once foreign goods displace domestic industries and affect employment, political backlash becomes inevitable. Whether China can continue to use massive foreign trade surpluses to compensate for insufficient domestic demand while avoiding retaliation from major trading partners will be a critical issue to monitor closely in 2026.
The core of the Trump administration’s trade policy centers on national security and supply chain resilience rather than traditional comparative advantage. China’s distinctive industrial policies and cost structure have made certain products highly price-competitive, creating substantial impacts on industries and employment in various countries. Even sectors with competitive advantages find it difficult to fully withstand this pressure.
Furthermore, President Hsien-Ming Lien points out that China has achieved dominant market positions in recent years in critical industries such as solar energy, electric vehicles, lithium batteries, and rare earth elements. China has progressively weaponized trade, heightening concerns among countries about supply risks. The United States, through rebuilding domestic manufacturing and strengthening cooperation with allies, is attempting to mitigate such risks.
While China’s diversification of export markets has temporarily deflected the impact on the United States, the underlying structural problems have not disappeared. Ultimately, countries will still face difficult choices among industrial security, employment, and low-cost imports.
Author: CIER Editorial Team
Date: January 2, 2026