The US-China tariff war is reshaping global trade — and Australian importers are feeling the ripple effects. Here's what's actually happening and what to do about it.
In February 2025, the Trump administration imposed a blanket 10% tariff on all Chinese imports into the United States. By early April 2025, the US had imposed a 145% tariff on all Chinese goods entering America.
China retaliated by raising tariffs on US goods from 84% to 125%. Within months, the world's two largest economies were locked in a trade war that made the 2018-19 version look like a warm-up act.
By 24 February 2026, the US moved to a new system — replacing the old tariff structure with a "Temporary Import Surcharge" under Section 122 of the Trade Act of 1974. As of today, Chinese exporters face tariffs exceeding 145% when entering the US market. The US market, for Chinese manufacturers, has effectively been cut off.
Here's the critical point: Australia is not importing Chinese goods for the US market. When you source from China through our OutSource service or independently, you're bringing goods into Australia — which is governed by ChAFTA, not US trade policy.
Under ChAFTA, Australian importers pay zero or minimal duty on the vast majority of goods imported from China. That hasn't changed. But there are three indirect effects you genuinely need to be aware of.
With the US market largely closed off, Chinese manufacturers are sitting on enormous production capacity. Export volumes originally destined for American consumers now need to go somewhere — and "somewhere" includes Australia.
According to IBISWorld's analysis, "there's a real risk that Australia becomes the next stop for excess inventory — particularly in import-sensitive sectors like textiles, electronics, and household goods."
The upside: Increased competition among Chinese suppliers can drive prices down. You may find suppliers more eager to negotiate, more willing to offer competitive pricing, and more flexible on MOQs.
The downside: If you produce Australian-made goods that compete with Chinese imports, the flood of cheaper Chinese products into the market could squeeze your margins severely.
Commonwealth Treasury modelling suggests the US-China trade war will reduce Australian GDP by 0.1% in 2025 and 0.2% in 2026. A survey of Australian industrials conducted in August 2025 found that 47% reported active disruptions to their supply chains — despite Australia not being a direct target of the US tariff regime.
The tariff war is accelerating a trend already underway: companies reducing dependence on any single country. "China-plus-one" and "friend-shoring" strategies are now mainstream boardroom conversations. Factories in Vietnam are now competing hard for Australian business — and Vietnam sourcing has never been more accessible.
Your ChAFTA status is intact. But audit your exposure: How dependent are you on a single factory? What's your contingency if your main supplier redirects capacity? Are your lead times blowing out?
Vietnam is ranked among the top three manufacturing hubs in Asia by the Asia Manufacturing Index 2026. Vietnam's GDP grew 8.02% in 2025 — and the country has 17 free trade agreements in place, including AANZFTA, which gives Australian importers preferential access to Vietnamese-made goods.
A sourcing agent with team members physically in China or Vietnam — like Epic Sourcing's teams in both countries — can see what's happening in real time. That means quicker responses to supplier disruptions, better negotiation outcomes, and far better quality oversight.
Our supply chain management service is built specifically to help Australian businesses map their risk exposures and backup options.
Chinese suppliers offering more competitive pricing to maintain capacity utilisation creates a strong moment to lock in better supplier relationships or negotiate improved terms on existing contracts.
The US-China tariff war is the biggest shift in global trade since 2018-19. Australia — thanks to ChAFTA — is not on the frontline. But we're dealing with the downstream effects: pricing volatility, supply chain disruption, and a global trade environment rewarding businesses with flexibility and supply chain intelligence.
Ready to review your sourcing strategy? Give us a bell at gday@epicsourcing.com.au or book a free discovery call. We've got teams in Sydney, China, and Vietnam — so wherever your supply chain runs, we've got you covered.
Sources: IBISWorld (April 2025); Commonwealth Treasury modelling; US Trade Act of 1974 Section 122; Australia-China Free Trade Agreement (ChAFTA).
