Trump's tariffs: What will happen to Chinese outbound brands?

After threatening tariffs as high as 60% against China while on the campaign trail last year, US President Donald Trump is set to impose a 10% tariff on all Chinese imports from February 4. Geopolitical negotiations are currently ongoing, with China and other tariff-afflicted markets like Canada and Mexico vowing to implement economic strictures of their own.

The uncertainty and anti-China sentiment, however, creates a difficult business environment for Chinese outbound brands. The value of imports from China to the US in 2024 stands at $401.4 billion according to data from the US census. Among the top categories for imports are communications equipment (including mobile phones and televisions); computer equipment (laptops and monitors), and miscellaneous manufactured commodities (including toys, jewellery, and silverware). A tariff-influenced price increase could dent one of the key competitive advantages of China-based brands and affect their growth trajectory in what has so far been a large and lucrative market.

How the West was won

Chinese brands made inroads into Western markets in a phased manner. Acquisitions were a key part of the initial strategy: Lenovo absorbed IBM’s PC business in 2005, and Geely acquired Volvo in 2010.

In the second phase, Chinese companies leveraged a massive supply-chain advantage to build brands that were feature rich, while offering them at a low asking price.

In the currently ongoing third phase, several Chinese outbound brands are moving past their price-warrior reputation, focusing instead on design and innovative marketing. Bryce Whitwam, marketing consultant and co-host of the ShanghaiZhan podcast said, “The successful global expansion is forged in the crucible of China’s intensely competitive domestic market—arguably the toughest place in the world to build a brand. They have mastered digital-first marketing, adapting China’s social commerce playbook to Western platforms.”

For instance, Anker evolved from a supplier of peripherals to a consumer electronics brand in the US due to its pioneering use of livestreaming on TikTok to integrate entertainment with commerce and reduce friction in the customer journey. The company simultaneously became an expert at leveraging Amazon as a platform.

Deric Wong, chief business officer (global), EternityX said, “On Amazon, Anker optimised for search visibility, encouraged positive consumer reviews, and redefined its offering based on feedback. It is a data-driven, consumer first approach that many legacy brands have struggled to implement effectively.”

However, a more protectionist approach in the US could result in a huge drop in such cross-border success stories. A 100% tariff on Chinese manufactured EVs is already in place—a decision that predates the Trump presidency—resulting in the market being closed off to China’s largest EV manufacturer BYD. With a fresh tariff regime imposed on Chinese imports, many branding experts believe it is an opportune time for China’s outbound brands to start looking further afield for growth, particularly to regions like APAC and the Middle East.

The APAC and Middle East opportunity

In H1 2024, Chinese toymaker Pop Mart saw 40% of its overseas revenue, which stands at RMB 1.3 billion ($179 million), come from Southeast Asia. BYD recently overtook Toyota in Singapore to become the city-state’s most popular car brand, besides emerging as Thailand’s bestselling EV with a near 40% share of the market.

This would be good news under any circumstances for China’s outbound brands. But it is particularly welcome at a time when the US is starting to look less promising than before.

Deepak Goel, founder, and CEO of Drizzlin Media said, “While the holy grail of one monolith is still missing, in terms of country clusters, Southeast Asia and the Middle East will be the biggest. The Singapore plus or minus one time zone is bigger than the US economy. Under plus one, we have Japan and Korea. And minus one gives you access to Southeast Asia.”

Adding to the attractiveness of these markets are favourable tax regimes, a rising middle class, strong digital ecosystems, and particularly in the case of Southeast Asia, familiarity with Chinese brands.

Jocelyn Tse, a China strategist observed, “Following the central government’s One Belt One Road initiative, the Middle East, ASEAN, and Africa now account for the bulk of China’s outbound business. These markets combined make up 2.5x the volume of the US, and almost three times the volume of some of its close European allies.”

L-R clockwise: Bryce Whitwam, Deepak Goel, Jocelyn Tse, and Deric Wong 

The Southeast Asia story is already yielding rich dividends. Mobile brand Oppo from BBK Electronics has a 21% market share in Southeast Asia according to Canalys research. Oppo’s sister brand Vivo has a 10% share with other Chinese brands like Transsion and Xiaomi having a commanding presence in the region.

The post-pandemic return of retail has played a huge role in the success of brands like Pop Mart, alternating between flagship outlets and pop-up stores. A Pop Mart store in Thailand themed after its popular Labubu character smashed single-day sale records clocking in $1.4 million in sales.

The Middle East is relatively untapped but starting to gain momentum for Chinese brands. Tse said, “By 2023 Chinese exports to Saudi Arabia made up $38 billion: the majority consisted of consumer goods (50%) while the rest were electronic products (24%). Anecdotally, most briefs I receive from Chinese consumer electronics brands since early 2023 are for Middle East markets and Türkiye.”

For certain categories, Latin America could emerge as a frontier market. Whitwam said, “Ultimately, Latin America presents massive growth opportunities for ecommerce, fintech, and price-value products while APAC remains the ideal launchpad for innovation and market adaptation.”

However, these regions are a work in progress for a variety of reasons—from geopolitics to logistics. The Philippines and India have border tensions with China which have affected the scope for Chinese businesses in these markets.

The diversity of APAC, the Middle East, and Latin America in terms of language, purchasing power, political systems, and regulatory frameworks also makes it hard to implement a one-size-fits-all approach. With a complete replacement for the US still some time away, brand experts caution against a hasty withdrawal.

The US is more than just a business opportunity

A global brand being present in the US market has value that exceeds mere revenue potential. Succeeding in the US sends a message about the competitiveness of a Chinese outbound brand, thanks to the outsized influence of American social media platforms and influencers who often function as global tastemakers. Wong said, “A Chinese brand that makes it there can make it anywhere.”

As a result, brands that exit the market completely stand to lose much more than just market share. Wong said, “They will lose relevance, brand momentum, and customer loyalty, and the key partnership opportunities that they have built in the past.”

Pointing to an unlikely ally in this geopolitical quagmire, Whitwam said, “While political rhetoric may suggest a shift toward protectionism, the reality is that American consumers prioritise affordability and value over nationalism. Returning to a world where most consumer goods are made domestically is unrealistic—Americans are not willing to pay double for the same products, especially in a country where housing, healthcare, and other essentials are already prohibitively expensive.”

Brand experts recommend that rather than wait for a change in policies, Chinese brands ought to invest, adapt, and find new pathways to reach consumers.

Helping Chinese brands crack markets—old and new

Chinese brands can find workarounds to tariffs including supply chain diversification—moving production to Mexico or Southeast Asia—or even M&A. These strategies are already being put in place in other difficult markets. For instance, Shein which withdrew from India following an escalation in geopolitical tensions in 2020 has made a comeback via a licensing agreement with Indian conglomerate Reliance.

Whitwam recommended the direct-to-consumer, social commerce, and ecommerce routes using platforms like TikTok Shop, Temu and Amazon to bypass traditional retail and limit exposure to tariffs. Brands like TCL and HiSense have invested in US market-specific branding and localised engagement which has built recognition in the American TV and home electronics market despite intense competition. Whitwam added, “Instead of retreating, Haier expanded its presence by acquiring GE Appliances, allowing it to operate as a trusted US brand while maintaining Chinese efficiency.”

Marketing has a recent history in China. To forge a fresh path into new markets or consolidate in existing strongholds, Chinese brands will need to rely on extant marketing ecosystems in these countries—a network of local partners, influencers, and distributors. Chinese brands will have to stop treating APAC like a monolith.

Whitwam said, “Brands expanding into the region must recognise its diversity in consumer behaviour, pricing expectations, and retail habits. While ecommerce is critical, many APAC markets still rely heavily on in-store experiences, making a hybrid strategy essential.”

Apart from translation localisation, this also involves using regionally preferred payment methods, marketing channels and distribution networks to build trust. Whitwam added, “Instead of competing solely on price, successful brands will tier their offerings, positioning premium products in developed markets like Japan and South Korea while maintaining affordability in price-sensitive regions like India and Southeast Asia. Brands that strike the right balance between digital reach, local adaptation, and retail presence could thrive in APAC.”

For global acceptance, China will also have to build soft power which requires a concerted effort involving diverse stakeholders, including its entertainment industry. American brands owe their existence not just to the corporations that created them but to the country’s cultural exports including Hollywood and music.

Goel said, “Soft power helps ease brands into various nations. China needs to get away from the mentality of a producer economy to a creative, innovative one which understands brands in an emotive way.”