Is the Normalisation of US Tariffs on China Driving the Decoupling From China in Global Value Chains?

The United States has sustained high tariffs on imports from China. This study explores the impact of these tariffs on China's export performance and its position within global value chains. The findings reveal that additional US tariffs caused a moderate decrease in the prices of Chinese exports to the United States, accompanied by a sharp contraction in both quantity and value. For non‐US markets, tariffs depressed prices but left aggregate quantities statistically insignificant. This masked pronounced heterogeneity, indicating that uneven trade diversion failed to offset the sharp decline in exports to the United States. Following the normalisation of tariffs, the negative effects intensified as the relocation of production capacity from China to third countries (e.g., ASEAN) increasingly displaced direct exports. This structural shift accelerated the decline in China's exports to the United States and dampened export growth to other Asia‐Pacific countries since 2020. However, as of 2024, this industrial migration has neither triggered substantial manufacturing reshoring in the United States nor significantly decoupled GVCs from China. Instead, it appears to have fostered a new, triangular international division of labour involving China, other Asia‐Pacific countries, and the United States.