Although since 2022 the trade war (between US and China) de-escalated, it seems that a new, expanded and greater scale trade war version is around the corner. Trade war 1.0 was primarily about basic commodities trading, livestock and intercontinental (shipping) transportation whereas now, it is more about FMCG products (like smartphones, cars, and fashion).

Western automakers first realized it when they started losing sales in Chinese local market, (for example VW Group China dropped a ~5% market share – internal combustion engines vs EVs from 2020-2022). Tesla’s giga factory in China raised the stakes, by setting the local EV production to higher standards and regulations. BYD and tens more Chinese EV manufacturers enjoyed significant governmental subsidies, invested in R&D, improved their EVs and for the first time topped in local sales which proved to be relatively easy, cheap (logistics) and profitable, especially since they were already producing (& selling globally) their own batteries which is half the EV cost. China soon reached the market saturation point and needed to expand to new, international markets like the EU and the US. First reaction from western governments was to consider significant tax increase for Chinese imported EVs. US plans to impose taxes of up to 100%. EU -starting next month – announced to impose a new tax of up to 38% on Chinese imported EVs.

At the same time Westerns, expect Easterns’ reactions regarding the luxury fashion brands they export. SHEIN and TEMU are two of the most successful Chinese e-shops selling worldwide at extremely low prices, with good design and of decent quality. A few weeks ago, there were news all over the western world, claiming that there were found toxic and potentially dangerous substances in some of SHEIN apparels and accessories. Some say that these two hyper e-shops directly sell from Chinese producers, allegedly the same ones that produced clothes and accessories for famous western brands like Zara, H&M, and other more luxurious brands. Is it a coincidence? Incidentally a few days ago, the renowned Dior Srl luxury brand was exposed with a big scandal: The Italian subsidiary of French LVMH Group, was put under court administration for a year, over immigrants’ labor exploitation and terrible working and hygiene conditions…

Regarding Smartphones and other hi-tech appliances, Xiaomi is already in war with Apple and has developed an advanced ecosystem (aka HyperOS), only comparable to Apple’s (if not more advanced, hence the upcoming Apple Intelligence OS update). Recently, Xiaomi launched the SU7, a spectacular sports premium EV -directly competing with the Porsche Taycan at 1/3 of its price-, while Apple abandoned the “AppleCar” project…

All the above converge to a new, grater scale trade war this time between East and West. And although China is large enough to be considered the “East” all by itself, it won’t be the only one, as India and other “Eastern” countries will join this trade war soon…