For a decade the US has attempted to decouple from China, using tariffs as the latest tool to accomplish the goal. Is decoupling working? Is it even possible? And is this approach helping or hurting US businesses?
Tariff Barriers.
“Tariffs have effectively become the primary mechanism through which decoupling policies are implemented,” explains Jackson Wood, Director of Industry Strategy, Global Trade Intelligence for Descartes. “There have certainly been other policy measures such as the CHIPS Act and various industrial incentives but in terms of what shows up most clearly in trade data, tariff changes and tariff uncertainty tend to be the most immediate and measurable drivers of volatility. From our perspective, overall tariff policy and the uncertainty surrounding it have been front and center in influencing trade patterns.”
“This has clearly had a detrimental impact on US-China trade flows,” says Davin Chor, Michael G. Fisch 1983 Professor and Globalization Chair at the Tuck School of Business, Dartmouth College. “Since the Liberation Day announcements on April 2, 2025, sparked off a bout of tariff rate uncertainty, we have seen US direct imports from China drop back to around 9% of total US imports. This is essentially where China’s share in US imports stood in 2001 when China joined the WTO. The latest rounds of tariffs and tariff uncertainty have essentially undone two and a half decades of US-China trade integration.”
US Businesses Hurt
Gold continues, “Last year when China tariffs jumped up to 145% that had a significant impact on companies. We saw companies front loading last year to try and avoid the tariffs, but smaller businesses are the ones being hurt the most because they don’t have the ability to mitigate the impact of the tariffs – they have to pay them and then they are potentially forced to pass them along to their customers.”
Without China, US retailers and manufacturers must find new suppliers, and this is not so simple. “Retailers have long been looking for alternate sourcing,” Gold explains. “The challenge for many retailers is that it takes time to diversify your supply chain. It’s not something that can be done overnight. And while many companies have been looking to diversify from China – with a China +1 or China +2 strategy – the challenge is that sometimes tariffs are higher on those other countries than they are on China.”
Gold elaborates on how difficult it is to find new suppliers in other countries, saying it’s not like opening up a phone book. It takes time to make sure the company is who they say they are. Can they manufacture the product to your specifications? Can they pass all the different safety regulations, especially for children’s products? Do they have the skilled workforce to make the products? Do they have the infrastructure? All those factors go into the decision-making.
“One of the reasons for the tariffs is bringing back US manufacturing,” Gold stresses. “But we can’t make everything here. We’ve seen declines in US manufacturing. There are industries that haven’t been manufacturing products in the US in decades.”
He adds, “I don’t think China’s ever going to be fully out of the picture. It’s just not feasible. US companies are looking elsewhere, at Southeast Asia, India, and the Western Hemisphere. But we need to realize that there’s no new China. There’s nobody who can take up the capacity that China currently has.”
What the Numbers Say
China imports to the US have declined, but it is probably too early to tell if this will be a long-term result driven by decoupling and tariffs.
“Over the past year, China-origin container import volumes have generally followed recognizable seasonal patterns, strengthening in late spring and early summer and softening into the fall and winter, which is consistent with historical shipping cycles,” explains Wood from Descartes. “However, compared to the same months a year earlier, several months in late 2025 showed year-over-year declines, suggesting some underlying softness beyond normal seasonality. That said, the overall pattern still reflects typical seasonal fluctuations rather than a continuous downward trend.”
Wood adds that China-origin container import volumes into the US have fluctuated year to year rather than following a straight-line decline. After peaking in 2021, volumes moderated in 2022 and 2023, rebounded in 2024, and softened again in 2025. While levels remain below the 2021 high, they are still above the annual averages seen in 2023, indicating variability in sourcing patterns rather than a consistent downward trend.
While recent container import figures reflect variability and some year-over-year softness, trade volumes are influenced by a wide range of factors, including tariffs, sourcing strategies, consumer demand, and geopolitical developments. Because of that, it’s difficult to determine from the data alone whether the current pattern represents a sustained long-term shift or a cycle that could reverse, Wood warns.
Another question is whether US policies are pushing China to trade with other countries. The stats may support this. Wood says although there was a significant decline in total exports (by value) from China to the US from 2024 to 2025, total China exports (by value) have grown over the last three years, from $3.42T in 2023 to $3.77T in 2025. This growth includes China exports to Vietnam, Thailand, Malaysia, India and Germany.
“We’re seeing many of our traditional allies looking to strengthen ties with China,” Gold of NRF suggests. “With the ongoing threats, and changing terms of trade agreements, many of our trading partners are looking for alternate markets. They’re looking to China, India and elsewhere. If we want to remain the global leader, we’ve got to have better relationships with our trading partners.”
Calling a Truce?
The US stance on decoupling may be softening, as the current US administration is starting to use the term “de-risking” instead. In addition, the US and China established a one-year trade truce late last year through November 10, 2026, including reduced US tariffs, suspended Chinese retaliatory tariffs, and China’s commitment to purchase US agricultural products. Maybe these actions signal a change to the decoupling policy?
Davin Chor does not agree, “I do not foresee any imminent reversal for U.S.-China trade decoupling, certainly not under the current US administration. Nor do I think it is likely that this might rebound even after the current US presidential term. This is simply because the conversation regarding US economic relations with China is now heavily colored by concerns about economic and geopolitical competition.”
