The global trade landscape is shifting rapidly as renewed tariff threats, regulatory crackdowns, and retaliatory measures reverberate through B2B supply chains from Asia to Europe and North America. Here’s an update on the latest developments.
Trump Tariffs: Escalating Threats and Economic Fallout
US–EU Tensions Intensify
US President Donald Trump has renewed threats to dramatically raise tariffs on European imports unless the EU agrees to what he calls a “fair deal.” As reported by Le Monde, Trump warned, "Either we find a good deal, or they will pay what we tell them to pay." The current pause in the trade war ends July 9, and the US is prepared to impose tariffs of at least 10%, with the possibility of 50% on some goods.
EU Commission president Ursula von der Leyen confirmed that US and EU teams would “accelerate work towards a fair and good [trade] agreement.”
German Industry Braces for Impact
The Federation of German Industries (BDI) expects Germany’s economy to shrink this year due to the US tariff dispute, warning, "US tariffs, unless withdrawn, will cost the German economy about 0.3 percentage points of GDP." BDI expects a 2% drop in German exports this year, with the second half particularly challenging.
A study by the Ifo Institute, cited by DER SPIEGEL, warns, "German exports to the US would fall by 38.5 percent." The auto and pharmaceutical industries are especially at risk, with value-added losses of up to 6% and 9%, respectively.
Japan and South Korea Push for Exemptions
Japan’s chief tariff negotiator Ryosei Akazawa is arranging a seventh US visit, focusing on US tariffs on Japanese automobiles, which “have a severe impact on the Japanese economy” (Reuters). Japan faces a 24% tariff rate starting in July unless a deal is reached.
Similarly, South Korea’s trade minister "again sought exemptions from U.S. President Donald Trump’s 'reciprocal' tariffs as well as tariffs on items such as automobiles and steel" (Reuters). Prospects for a renewed FTA are being discussed.
Regulatory Retaliation: Europe Strikes Back
EU Excludes Chinese Firms from Medical Procurement
In a major move, the EU Commission announced the exclusion of Chinese companies from public healthcare tenders over €5 million, affecting a €150 billion market. The measure, reports Le Monde, “aims to encourage China to end its discrimination against EU-made medical devices.” Chinese suppliers will be capped at 50% of components in accepted bids.
A Chinese Foreign Ministry spokesperson criticized the move as "double standards," claiming the EU is moving toward protectionism.
China: Sourcing Risks and Policy Challenges
‘Zero Mileage’ Used Car Exports Inflate Data
A Reuters exclusive reveals that Chinese local governments have boosted "zero mileage" used car exports—registering brand new cars as "used" and shipping them overseas, mostly to Russia, Central Asia, and the Middle East: "These so-called ‘zero-mileage’ cars have never been driven but they are being exported as used... allowing Chinese automakers to show growth and to dispose of cars that it would be difficult to sell domestically."
Local governments are "actively encouraging" the practice to meet Beijing’s growth targets, with 90% of the 436,000 used vehicles exported in 2024 estimated to be ‘zero mileage.’ This artificially inflates sales, creates “dumping” accusations, and may expose importers to regulatory and reputational risks.
Critical Minerals and Forced Labor
A new report from Global Rights Compliance, as covered by Radio Free Asia, warns: "Major Chinese producers of critical minerals are using state-imposed forced labor programs in the Uyghur region to meet rising global demand, putting international brands they export to at risk of complicity in human rights violations." The report identifies 77 companies in Xinjiang at risk, with minerals such as lithium, magnesium, titanium, and beryllium entering global supply chains—often through “opaque mineral distribution channels.”
The report states: "Minerals mined and/or refined in the region routinely enter global supply chains... significant portions of the world’s economy are potentially exposed to products tainted by forced labor and high carbon footprints."
China’s Domestic Consumption Dilemma
Trade war pressures are pushing China to pivot to domestic demand, but as Chen Gang writes for the Hinrich Foundation, “Government stimulus fails to expand consumption.” Despite a 12 trillion yuan package, “the stimulus has failed to expand China’s household consumption, which peaked in September 2024 and then dropped to a new low in the year.”
Structural issues persist: “SOEs and the state financial system currently skew wealth and credit toward industry and investment, limiting household income and consumption. Reforming SOE governance and addressing financial distortions is essential.” Deflationary pressures, high youth unemployment, and a wave of restaurant closures further dampen domestic prospects.
Anti-Dumping and Tariffs in Southeast Asia
Malaysia Maintains Duties on Steel from China and Japan
Malaysia will “maintain anti-dumping duties on imports of Chinese and Japanese cold rolled coils of iron and non-alloy steel more than 1,300 mm wide,” with duties of up to 26.39% for Japanese exporters and similar rates for Chinese suppliers (Reuters). Duties for South Korea and Vietnam will be terminated.
Significance for B2B Sourcing
These developments have direct implications for global sourcing professionals:
- Tariff Volatility: As US-EU-Japan-Korea negotiations remain unresolved, B2B buyers face growing uncertainty and possible sharp increases in landed costs, especially for automotive, steel, and electronics sectors.
- Supply Chain Due Diligence: EU and US regulatory scrutiny on forced labor and “dumping” means buyers must heighten supplier audits. As Radio Free Asia notes, “significant portions of the world’s economy are potentially exposed to products tainted by forced labor.”
- Data Reliability: The Chinese “zero mileage” export scheme highlights the need for source validation—reported sales growth may mask inventory dumping, impacting resale value and after-sales support.
- Market Access Risks: Retaliatory exclusion of Chinese suppliers from EU public tenders could prompt further tit-for-tat measures, with ripple effects across diverse sectors.
Conclusion
The coming months will be critical as tariff deadlines approach and new regulations take effect. For B2B sourcing, the key takeaways are: build flexible supply chains, diversify sources, double down on compliance, and keep abreast of both regulatory and political developments. As DER SPIEGEL observes, “Geopolitical conflicts as well as an unpredictable US tariff policy are weighing on the global economy, but in view of the global political upheaval, it is surprisingly robust” – global supply chains remain resilient, but the risks are rising.
Photo by Martin Damboldt
