Written by Riddhi Khajanchi
Research Intern, Jindal Centre for the Global South, O.P. Jindal Global University, India
M.A. Diplomacy, Law and Business (2024-2026), Jindal School of International Affairs, O.P. Jindal Global University
Email: 24jsia-rmkhajanchi@jgu.edu.in
Introduction
Since 2018, the US-China trade war has been building great walls in the form of reciprocal tariffs, trade imbalances and intellectual property disputes. But by 2025, this trade war has evolved and is not just about taxes on goods. It has become a strategic rivalry which reflects major shifts in technology, security, and global alliances. This intense competition has not just changed the relationship between both the countries but has also challenged the entire global economy. While most headlines keep talking about high-tech tensions and global rivalries, for businesses, governments, and consumers, the risk and uncertainty is directly tied to concerns based on security and politics. The ongoing intense rivalry with the use of aggressive strategic trade tactics, has created challenges for many countries in the Global South as well.
This article will explore the impacts of this strategic competition in a diverse group of emerging and developing nations in the Global South. It examines about the shifts of global supply chains, the uneven effects on commodity exporters, the rise of financial instability, and the broader implications for trade and financial globalization.
Emerging Markets and Shifting Supply Chains
One of the major consequences of the US- China trade war has been a shift of supply chains. Countries like Vietnam, India and Mexico have emerged as manufacturing hubs for many companies just to avoid US tariffs of Chinese goods (Klatee, 2025). As a result, there have been new chances for growth through a rise in foreign investment for countries like Malaysia and Vietnam (Klatte, 2025). This shift presents these Global South countries with economic opportunities but also puts them with an intense pressure of adaptation to global demand and expectations. It is imperative for these emerging economies to have a resilient workforce, factories and a transportation system that ensures long term success.
Commodity Exporters and Demand Shock
While some Global South countries have benefitted from new foreign investments, others who export a lot of raw materials to China have faced economic slowdowns. For instance, Brazil has seen reduced demand for China for its main exports like Soyabean and iron ore, which has led to lower earnings from exports and also slower economic growth (Watanabe & Fagundes, 2025). This highlights the risk of over dependence on one country, in this case China. It also shows that not all developing countries benefit the same way from changes in global trade and a country’s ability to take advantage during these trade shifts depends largely on the diversity of its export economy.
Financial Instability
The harmful effects of the US-China trade war can be seen through the unstable financial conditions in some Global South countries. Canceled export orders, lower production, and rising unemployment have already started to hurt the overall economy in many developing nations (Ghosh, 2025). This uncertainty can also be witnessed in financial markets. Maldives, Gabon, Sri Lanka and Zambia are dealing with heavy debts and the value of their government bonds have dropped by 10% (Ghosh, 2025). This decline is an indication that borrowing money can be even more expensive for these countries. This signifies that the US-China trade war, which has led to many economic problems and less demand for goods, has also made it harder for weaker countries in the Global South to keep their finances stable, to recover and grow their economy as well.
Repercussions for Trade and Financial Globalization
This trade war has also raised rethinking on the concept of globalization. It used to be seen as a way for everyone to grow and succeed together. Now, it’s often seen as risky because countries are overdependent on each other. For developing countries, it’s a sign that they need to diversify their trading partners to build stronger and resilient economies. However, many countries in the Global South are economically weak, have small market size, lack strong institutional strength or the right technology to quickly move towards new development models. As a result, these countries are always caught up in the cycle between opportunity and risk. Without the ability of quick adaptation, they struggle to turn their short term gains from the shifting flows of trade into long term development. This leaves them dependent on external powers like the US or China, rather than shaping their own economic future.
Global South makes up only 11% of the world’s stock market value, which means it is more vulnerable when global financial markets become unstable (Sachdeva et al., 2025). This low share of global financial power reflects that Global South has less control over the movement of International markets and even less ability to protect itself when any crises arise.
Future Outlook
With the ever evolving world it is vital that the countries act early and plan wisely. With the current situation, people are becoming more aware about the importance for countries to work together. Strengthening of trade deals in their regions, working better in global meetings, and pushing for fair financial rules can give developing countries the support to handle global challenges more effectively. This means that teamwork with shared responsibilities can bring mutual benefits and better preparedness to face global challenges, including the trade war.
Conclusion
The US- China trade war can be seen as a part of a power struggle and it has serious effects on the developing countries. Some of these countries have benefited in the short term by picking up parts of the supply chain, but overall, many face economic struggles, financial risks, and political uncertainty. To deal with such risks and uncertainties, many developing nations need to work on building stronger economies , work together with other economies and plan keeping long term strategies in mind. With politics having more influence on the global trade, the Global South must stay strong by being strategic, resilient and most importantly united. This is the only way to reduce the impacts of big power rivalries and move towards developments that are fair and lasting.
References
Ghosh, J. (2025, April 16). The global south will pay for Trump’s Trade War: By Jayati Ghosh. Project Syndicate. https://www.project-syndicate.org/commentary/developing-countries-bearing-brunt-of-trump-tariff-pain-by-jayati-ghosh-2025-04#
Henley & Partners. (2025, January). US–China trade war: Applying lessons 1.0 to address reality 2.0. Henley Global Mobility Report. https://www.henleyglobal.com/publications/global-mobility-report/2025-january/uschina-trade-war-applying-lessons-10-address-reality-20
Lukas Kornher & Clara Brandi (2025, March 24). Trump’s tariffs as a risk for the Global South and possible options. German Institute of Development and Sustainability (IDOS). https://www.idos-research.de/en/the-current-column/article/trumps-tariffs-as-a-risk-for-the-global-south-and-possible-options/
Mukherjee, D. (2025, May 27). Post US-China 90 Day Trade Deal: Strategy for India and Global South. Daily Excelsior. https://www.dailyexcelsior.com/post-us-china-90-day-trade-deal-strategy-for-india-and-global-south/
Sachdeva, M., Sidorov, P., Deutsche Bank, & Deutsche Bank Research Institute. (2025). The Global South: A strategic approach to the world’s fourth bloc. Deutsche Bank AG.
Singh, L. (2025, April 11). US-China trade war: Economic fallout and strategic realignment. Asia Times. https://asiatimes.com/2025/04/us-china-trade-war-economic-fallout-and-strategic-realignment/
Watanabe, M., & Fagundes, Á. (2025, May 12). Brazil has limited room to gain in U.S.-China trade war. Valor International. https://valorinternational.globo.com/economy/news/2025/05/12/brazil-has-limited-room-to-gain-in-us-china-trade-war.ghtml
The opinions expressed in this article are those of the author (s). They do not purport to reflect the opinions or views of the Jindal Centre for the Global South or its members.
Global South Studies Series 