Fudan index tracking global supply chains points to Chinese shift away from US market

China's consumer goods retailers, especially those in the export trade, often have to make quick decisions based on their assessment of what's ahead in the next few weeks or months. That's never been more critical than now, amid the global confusion created by flip-flopping US tariff policy.

"The uncertainty is daunting," said Professor Wu Xiaole, director of Fudan University's research center on global supply chains.

"This time, the impact encompasses not only China, but also America's trade partners around the world," she said. "So the effects on global supply chains and trade dynamics will far exceed the Trump tariff regime of 2018. They are already showing up."

US President Donald Trump's tariffs on imports since he began his second term in January have hit China the hardest. The accumulated 2025 duties total 145 percent, and the White House claims levies may be as high as 245 percent on some products if pre-existing duties from the Biden administration are included.

The rates and scale of tariffs have far exceeded the series of duties Trump imposed on China, starting in March 2018 during his first term.

Observing significant changes in different Chinese export categories following the 2018 tariffs, Wu said her team has built quantitative tools to evaluate real-time changes in China's export trade and global supply chains.

The "Perturbations Index of China's Exports and Global Supply Chains" was published by the Fudan Center for Global Supply Chains last week. It points to a shift in China's exports to Southeast Asia, Mexico and other countries among its 2022-2024 indicators of change.

"We felt this is exactly the time for such an index to be published, amid tariffs, rising geopolitical risks and intensified technological competition," she told China Biz Buzz. "That will help policymakers and corporate executives develop timely responses to changes in global supply chains."

According to China Customs, Chinese exports to the US in 2019 dropped nearly 9 percent from a year earlier following Trump's tariffs, while its imports from the US tumbled over 17 percent.

"Many Chinese firms were caught by surprise back in 2018," Wu said. "Most responded by adjusting supply chains, upgrading technology and improving productivity."

As a result, China's exports to the US as a percentage of its global shipments dropped to about 14 percent in 2024 from nearly 22 percent in 2018 – a rare adjustment of such volume between major economies and trading partners like China and the US.

The index clearly points to quantitative changes in China's exports to an upward trade trend toward Southeast Asia, Mexico and the BRICS trading bloc of Brazil, Russia, India, China and South Africa.

"This time, most Chinese companies are better prepared," Wu said. "What's surprising is Trump's decision to impose high tariffs on so many countries, though some of them have been temporarily paused for 90 days to allow trade negotiations."

Wu said she believes the tariffs will create a kind of "clustering effect," with traditional US trading partners seeking further ties with each other. In that sense, the overseas expansion of Chinese trading firms may be strengthened.

"Chinese companies can build a flexible supply chain network and enhance supply chain resilience through multi-point distribution," she said.

US Commerce Secretary Howard Lutnick last week told CBS News that "the army of millions of human beings screwing little screws to make iPhones is going to come to America."

Wu doesn't think bringing manufacturing back to US soil will be as easy as Lutnick and other Trump allies suggest.

"The biggest constraint for the US is lack of skilled talent," she said.

The professor pointed to a video interview of Apple Chief Executive Tim Cook explaining why the company has such extensive manufacturing in China.

"It's not because of low labor costs," he said in a video interview with Fortune magazine that resurfaced and went viral recently. "China stopped being a low-cost labor country years ago."

He added that "you could have a meeting of (US) engineers and I'm not sure we could fill the room" whereas in China, "you could fill multiple football fields."

According to various Chinese media reports and research papers, China currently has over 20 million scientists and engineers, and that number is expected to reach 35 million within 10 years.

"Of course, some suggest the use of automation can solve that," Wu concluded. "It's just not at that level yet."