| 2025 | $3.58 trillion |
| 2018 | $1.94 trillion |
| 2010 | $0.32 trillion |
* UNCTAD World Investment Report
Unusual for a U.S.-China summit event: The Chinese President, set to arrive in D.C. next week, will apparently have a swarm of Chief Executive Officers tagging along behind. No delegation list as yet, but the execs reportedly make electric vehicles, manage financial firms and Internet companies, run aerospace factories, etc.. The Trump admin’s hope thus seems less for top-tier policy achievements than for a spreadsheet of purchase orders and investment promises. All a little startling after 2025’s U.S.-China tariff volleys, and the administration’s early hopes to “decouple” at least the U.S. and possibly other countries from Chinese manufacturing. A Chinese-angle status report 18 months after Mr. Trump’s later, and the reason Xi et al may feel pretty pleased with the outcome:
U.S. Imports of Chinese Goods Down, Sort Of: In the fall of 2018, the first-term Trump administration put tariffs of 25% and 7.5% on about half of most Chinese imports. These stayed on through the Biden administration, and the second-term Trump admin added others.
At the “headline” level, U.S. imports of Chinese goods have turned sharply down. A convenient Census summary says in 2018 Americans bought $539 billion worth of Chinese-made goods — about $45 billion a month — which was 23% of the U.S.’ worldwide $2.56 trillion total. By comparison so far in 2026, the monthly average is $22 billion, the Chinese share of all imports is a modest 7.5%, and China ranks only fourth as a U.S. import source behind Mexico, Canada, and Taiwan. Seems like a lot; but a close look last month by Peterson Institute scholars Mary Lovely and Christine Wan suggests this shift in the trade data rankings is more “storm on the surface” than “change in the deep currents.”
Lovely & Wan explain that Americans actually buy nearly as much “Chinese” material as before, but now more often embedded in goods assembled in developing countries than in final retail-shelf form. China exports the “components” its factories used to buy from Taiwan and Korea (specialized glass, circuit boards, lighting, speakers) to facilities abroad, mostly though not solely in Southeast Asia. These affiliates then put it all together and send the resulting phones, TVs, appliances, etc., on to American industrial and retail customers. Thus, the apparent drop in U.S. imports from China is really more “supply-chain reworking” than a basic change in trade patterns. Lovely & Wan estimate a drop from 17.7% of “value-added” of U.S. imports in 2017 to 15.4% as of 2024. Global data from the WTO, meanwhile, show China’s share of world exports trade noticeably up since 2018:
GOODS EXPORTS 2018 2025
World total $17.74 trillion $26.26 trillion
China $2.26 trillion $3.77 trillion
Chinese share 12.7% 14.4%
WTO
Foreign Investment & Outsourcing: Investment data adds some color to the trade statistics by data by showing a decade-long Chinese foreign direct investment and outsourcing binge. UNCTAD’s World Investment Report series, the standard source, finds China now behind only the U.S. and Japan as an overseas investment source, and puts Chinese FDI stock abroad — that is, the value of Chinese-owned plants, labs, sales offices, real estate holdings, etc., abroad — at $3.58 trillion in 2025. This is nearly double the $1.94 trillion UNCTAD reported in 2018.
One consequence is that fewer Chinese now go to work in factories — Geneva-based economist Richard Baldwin finds Chinese manufacturing employment down by 18 million, from a 12-million peak in 2013 to 134 million in 2022. But the “outsourcing” and falling factory job totals don’t mean Chinese output has peaked. To the contrary, the World Bank finds Chinese manufacturing “value-added” up in dollar terms from $3.87 trillion to $4.82 trillion since 2018, and its share of the world value-added total has risen modestly as well, from 27.1% to 27.4%. In effect, as the consumer-electronics and appliance assembly work of the 2000s has moved out of China, China’s own output has shifted toward capital-intensive industrial inputs, electric vehicles, robots, and medicines.
In the United States: The U.S. is a relatively small part of this; in fact, China’s U.S. stake shrank a bit last year from $32 billion to $19 billion. (Mainly divestment of financial and real estate holdings, with some contraction in manufacturing.) About half of the current stock is in manufacturing: the Commerce Department reports 360 Chinese firms employing about 113,000 Americans, with $19 billion worth of annual output. Refrigerator and washing-machine plants in Kentucky and South Carolina, the aluminum extruder in Indiana, the automated garment factory in Arkansas, the auto parts and glass production in Ohio, Georgia, and Michigan, all illustrate the pattern. Pres. Xi’s CEO entourage presumably is getting some encouragement to add more.
So: Nobody really “won” the 2025 trade war, but China — having prepared by rewiring supply chains, outsourcing assembly, and moving up the industrial ladder — at minimum doesn’t seem to have lost. President Xi et al. are presumably pretty pleased with that outcome, and probably see a few purchase orders and investment pledges as well worth it.
The WTO Agreement:
PPI’s four principles for response to tariffs and economic isolationism:
Analysis:
Mary Lovely and Christine Wan of the Peterson Institute for International Economics look beneath the trade-data surface to explain the “Limits of Decoupling.”
Richard Baldwin counts Chinese manufacturing workers, finds a lot fewer than before.
How does China’s industrial economy work? IMF economists Rotunna, Ruta, and Verma tabulate subsidies, using a relatively narrow definition — basically cash grants, setting aside low-interest loans and other subsidy forms — and conclude that:
(a) Chinese subsidies made up about 1.8% of value-added in goods production between 2013 and 2023, as against 1.3% for the U.S. and 0.6% for the European Union, and were at 2.5% by early 2020s; and
(b) China spends much more than the U.S. subsidizing emerging-industry fields, e.g. EVs, robotics, advanced semiconductors, and so on, while the U.S. and EU subsidy programs are relatively heavier in agriculture and mining.
… and see Gillian Tett in the Financial Times (subs. req.) for an admiring review of this paper.
Data:
UNCTAD’s World Investment Report has figures (see the Statistical Appendix) on FDI flows and stock for all countries. The report $174 billion in Chinese FDI outflows last year, about 8% of the world’s $1.86 trillion total and behind only the U.S.’ $262 billion and Japan’s $186 billion. Hong Kong adds another $95 billion.
The Commerce Department’s Bureau of Economic Analysis’ most recent “Activities of U.S. Affiliates of Foreign Multinational Enterprises” release (out last July, with data through 2024), for snapshots of Chinese and other international firms’ U.S. investments, output, employment, trade, etc.
The WTO’s “World Trade Statistics” dashboard has exports and imports of goods and services for the world and all countries through 2025, with industry detail through 2024.
The IMF’s World Economic Outlook tracks GDP growth and lots more for the world, China, the U.S., etc..
Case studies:
Appliance-maker Hai’er’s Kentucky-based GE Appliances subsidiary.
Nanshan USA’s Indiana aluminum extrusion facility.
The Wall Street Journal reports (subs. req.) on the roughly 60 Chinese auto-parts manufacturers in the United States.
And from the government, the Committee on Foreign Investment in the United States regulates FDI for security.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
