Redefining What Constitutes a ‘Reliable Asset’
China Reshaping the De-Dollarization Landscape
Active Moves to Increase Gold Reserves

The U.S. dollar’s status as the world’s reserve currency appears to be wavering. Amid growing political instability in the United States and interest rate risks, central banks around the world are overhauling their foreign exchange reserve strategies. As the share of the yuan and the euro gradually increases, plans to boost gold reserves are also becoming clearer. Recently, even emerging economies have begun actively moving to break free from dollar dependence, accelerating the shift toward a multipolar global currency system.

U.S. Political Instability + Interest Rate Volatility → Decline in Dollar Trust

According to Reuters on the 24th (local time), one in three global central banks plans to increase their gold reserves within the next one to two years. Reuters explained, “A survey by the Official Monetary and Financial Institutions Forum (OMFIF), which polled 75 central banks managing approximately USD 5 trillion in foreign exchange reserves, showed that the number of central banks planning to increase gold holdings far exceeded those intending to reduce them.”

Among currencies, the euro ranked first as the currency most central banks planned to increase in their reserves. About 16% of surveyed central banks said they would expand their euro holdings over the next two years. The Chinese yuan came in second, followed by the Japanese yen, the Australian dollar, the Canadian dollar, and the British pound. The U.S. dollar, which topped the list in the same survey last year as the currency most likely to see increased holdings, fell to seventh place this year.

Central bank officials cited the unstable political environment in the United States as the most significant reason for avoiding dollar investments. They pointed to President Donald Trump’s global tariff threats and the resulting chaos, as well as his attempts to undermine the independence of the Federal Reserve (Fed), as major factors that have severely damaged trust in the dollar, which has traditionally been classified as a safe asset.

Based on these survey results, OMFIF forecasts that by 2035, ten years from now, the dollar’s share of global foreign exchange reserves will average around 52%. While it will remain the number one reserve currency, this would mark a significant decline from its current 58% share. In contrast, the euro is projected to account for about 22% of global foreign exchange reserves in ten years.

Kenneth Rogoff, former Chief Economist at the IMF, commented, “The rise of the euro is driven less by confidence in the European economy and more by the weakening status of the dollar,” adding, “At present, the euro is the only alternative currency capable of bringing significant changes to foreign exchange reserves.” He noted that the Chinese yuan still suffers from limited flexibility due to government capital controls.

Yuan Taking Some of the Dollar’s Lost Ground

However, market sentiment appears far more favorable toward the yuan than many experts had predicted. Despite concerns over capital controls and international flexibility, the yuan has begun to secure a measurable share in the recent global trend of foreign reserve diversification. In particular, its share in trade settlements is rising among emerging economies in Southeast Asia, Africa, and Latin America, which are actively seeking to reduce their dependency on the dollar. The yuan’s growing presence is becoming increasingly evident not just in reserve portfolios but also as a preferred settlement currency for trade and investment contracts.

On May 4, the 10 ASEAN countries plus Korea, China, and Japan, the so-called “10+3” nations, officially approved a new rapid financing mechanism during a meeting in Milan, Italy. This mechanism will, for the first time, operate on a regional currency basis, including the yuan. Analysts say this step was prompted by the financial instability caused by President Trump’s global tariff policies, as well as the strengthening of Asian currencies and the recent sharp volatility in the U.S. Treasury market.

Meanwhile, China’s government continues to push forward with its strategy to internationalize the yuan. Through various initiatives, such as the Asian Infrastructure Investment Bank (AIIB), the Regional Comprehensive Economic Partnership (RCEP), and pilot programs for the digital yuan, China has steadily worked to build alternatives to the dollar-centric system. Recently, there have been active discussions among BRICS nations regarding the establishment of a joint payment network and the expansion of regional currency settlement systems. This trend reflects not just China’s pursuit of strategic interests but also a voluntary shift by countries fatigued by U.S. risks, marking a highly significant change.

The yuan’s growing influence is also visible in actual figures. According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), as of April, the yuan accounted for 5.2% of the global payments market—its highest-ever share. This surpasses both the Japanese yen and the British pound, making it the only non-European currency to maintain a steady upward trend. SWIFT explained, “The use of the yuan is rapidly increasing in transactions with major resource-exporting countries like Russia, Brazil, and Saudi Arabia.”

Preference for “Tangible Assets Over Cash” — The Return of Safe-Haven Assets in an Era of Uncertainty

As central banks around the world reduce their holdings of U.S. dollars, another prominent alternative that has emerged is gold. Unlike cash or bonds, gold is not exposed to the default risk of any specific issuer and enjoys absolute trust in terms of durability and liquidity as a tangible asset. The market volatility and geopolitical uncertainties of recent years have revived the formula: “Better physical assets than cash.” As a result, central banks are actively increasing their gold holdings as a means of portfolio diversification.

According to a survey by the World Gold Council (WGC), 95% of 73 central banks worldwide expect global central bank gold reserves to increase over the next 12 months. Additionally, 43% of the surveyed central banks said they plan to increase their own gold reserves within the same period. This is a significant jump from 29% in 2024 and marks the highest level since the WGC began conducting this survey.

The WGC explained, “Emerging economies, in particular, are showing a clear trend of increasing their gold holdings as part of a strategy to reduce dollar dependency while enhancing the stability of their internal reserves.” Countries cited by the WGC include Russia, India, Turkey, and Kazakhstan, all of which have been aggressively boosting their gold reserves for several years. A common thread among them is their aim to curb the influence of the U.S. financial system and prepare for potential sanctions.

Thus, the expansion of gold holdings is now being re-evaluated not just as a safety buffer but also as a tool for maintaining monetary policy independence and financial stability. Growing internal pressure within central banks is driving the push to hold more assets that are not directly exposed to U.S. interest rate policies or political risks. As a non-interest-bearing asset untied to any particular currency bloc, gold becomes increasingly attractive as foreign reserve strategies lean more toward uncertainty avoidance. Predictions of a prolonged period of dollar weakness are further fueling this trend.

Iran’s “Friends” Diplomacy Strategy Loses Impact
Self-Preservation and Cracks Emerging in the Anti-U.S. Alliance
China’s Calculated Silence Aimed at the Taiwan Strait?

Following the U.S. strike on Iran’s nuclear facilities, China’s consistent silence has raised questions within the international community about the true nature of the so-called "anti-U.S. alliance." Even as a key ally faced a direct threat, China refrained from taking any meaningful action, prompting assessments that its influence in the Middle East will rapidly diminish. In contrast, the United States appears to be strengthening its military and diplomatic presence in the region, gaining a clear strategic advantage. While some suggest that China’s silence is a calculated decision, it is expected to inevitably deal a diplomatic blow to Beijing by shaking the trust of allies like Iran.

Only Generic Messages Amid an Ally’s Crisis

According to Reuters and other foreign media on the 24th (local time), Iranian President Masoud Pezeshkian delivered a national address the previous day, saying, “The 12-day war (with Israel) has come to an end,” and declared, “This decision to end the war was made on our own terms.” On the same day, Israeli Prime Minister Benjamin Netanyahu also effectively acknowledged a ceasefire during a cabinet meeting attended by the country’s defense minister, the chief of staff of the Israel Defense Forces, and the head of Mossad, stating that “all operational goals, including halting Iran’s nuclear development, have been achieved.”

The armed conflict between Iran and Israel began on the 12th when Israel launched airstrikes on Iran’s nuclear facilities and military bases. Citing the need to preempt Iran’s nuclear weapons development and military threats, Israel struck key sites in Natanz, Isfahan, and Tehran. The attacks killed several top Iranian figures, including the chief of staff of Iran’s armed forces, the commander of the Revolutionary Guard, and nuclear scientists. Iran responded immediately with retaliatory attacks, leading to intense fighting between the two countries.

Amid this escalation, the U.S. deployed B-2 stealth bombers to conduct precision strikes on three Iranian nuclear facilities (Natanz, Isfahan, and Fordow). Two days later, Iran fired 14 ballistic missiles at a U.S. military base in Qatar. However, as the attack had been pre-announced, the damage was minimal. President Donald Trump commented, “Iran acted just as we expected,” adding, “Now we can move towards peace.” The ceasefire news between Iran and Israel was also announced a day earlier via President Trump’s social media.

Immediately after the U.S. carried out its precision strikes on Iran’s nuclear facilities, the international community’s attention turned to China’s reaction, given its alliance with Iran. The situation at the time was so tense that some were speculating about extreme scenarios, like the closure of the Strait of Hormuz. Tensions across the Middle East were at their peak. Yet China neither issued a clear statement nor took any visible action. Even though Iran, a key strategic partner and ally, had come under direct military attack, China merely issued a generalized statement saying that “maintaining the security and stability of the Strait of Hormuz aligns with the international community’s common interests.” This stands in stark contrast to the U.S., which showcased its presence by leading with military deterrence and maintaining real control over regional order.

This also highlights a sharp deviation from China’s traditional strategy of balanced diplomacy in the Middle East. In recent years, China has cultivated parallel economic and diplomatic ties with both Saudi Arabia and Iran, positioning itself as a mediator. It has also worked intensively to strengthen a non-Western bloc through the BRICS framework. Especially with Iran, China has flaunted a "brotherly" level relationship, marked by oil imports and military cooperation. However, in this latest crisis, China failed to deliver any meaningful response, drawing criticism for turning its back on Iran’s isolation.

As a result, with the stark contrast between the U.S. and China’s approaches, analysts believe that the diplomatic landscape in the Middle East has reached a turning point. The U.S. has secured the upper hand not just militarily but also in setting the diplomatic agenda, reaffirming solidarity with its partner nations in the region through the Iran strikes. On the other hand, China’s retreat into the background has damaged its self-styled image as a "Middle East mediator." This situation is seen as a symbolic moment underscoring that China can no longer claim to offer an "alternative leadership" role in the Middle East.

Despite Shared Rhetoric, Military and Diplomatic Unity is Absent

This calculated silence is not unique to China. The responses from countries that had formed an anti-U.S. front following the strike on Iran’s nuclear facilities were uniformly lukewarm. The coalition, often referred to as a China-Russia-North Korea-Iran axis, failed to deliver any clear or unified message in the face of the crisis. China and Russia limited their reactions to formal expressions of regret, while North Korea offered only symbolic support through diplomatic channels without taking any meaningful action. Despite their anti-U.S. rhetoric, each country ultimately prioritized its own safety when faced with the risk of actual war, exposing the reality of fragmented self-preservation.

Cracks within the anti-U.S. coalition have appeared repeatedly. Russia’s invasion of Ukraine is a prime example. China only went as far as opposing Western sanctions against Russia, and Iran, too, merely voiced concern over NATO expansion without offering any tangible military support or action. All these countries have long used anti-U.S. sentiment as diplomatic leverage, but the latest developments clearly reveal the absence of real military or diplomatic solidarity.

Ultimately, this incident is likely to expose the true nature of the anti-U.S. bloc, nothing more than loose coordination based on strategic self-interest. While China and Russia refrained from taking decisive action, Iran likely faced extreme helplessness and isolation. Meanwhile, the United States reaffirmed its level of cooperation with traditional allies and strengthened its diplomatic standing. This shift suggests that the U.S.'s strategic diplomatic framework, spanning the Middle East and Northeast Asia, will continue to marginalize anti-U.S. countries even further.

Was the U.S. Military Distraction China’s Real Target?

Amid these developments, some analysts argue that China’s inaction was a “calculated silence.” From China’s perspective, it is far more beneficial to consolidate influence in nearby waters like the Taiwan Strait and the South China Sea while the U.S. focuses on military deployment in the Middle East. In fact, shortly after the Iran crisis, China’s navy expanded its scheduled training exercises near Taiwan and conducted several unmanned reconnaissance drone operations, demonstrating its military presence.

Another reason for this calculated silence may be China’s desire to expose the structural weakness of the U.S. through the strategic dispersal of American forces. As the U.S. redeploys troops to the Middle East, its capacity to defend East Asia becomes relatively strained. This creates a structural vulnerability that allows China to recalibrate its position in the Taiwan Strait. The Iran crisis, by diverting U.S. resources to the Middle East, could lead to a temporary easing of military pressure around Taiwan, giving China greater strategic flexibility.

However, the problem is that this strategic silence has eroded trust in China’s Middle East strategy. As mentioned earlier, China had been carefully expanding its influence in the Middle East by mediating between Iran and Saudi Arabia. However, when an actual crisis arose, China failed to take any meaningful action. This may not only alienate Iran but also other Middle Eastern countries that had placed their hopes in China’s leadership. As a result, while China’s dual strategy may have yielded some tactical benefits in areas close to home, such as Taiwan, it has clearly caused significant diplomatic losses in the Middle East.

NATO Reaches Agreement with All 32 Member States on Expanding Defense Spending
A Result of Growing Global Instability Triggered by the Iran–Israel Conflict
Asian Allies, Including South Korea and Japan, Also Face Mounting Pressure from the U.S.

U.S. President Donald Trump strongly demanded that NATO member countries increase their defense spending at the NATO summit, but notably refrained from making direct references to Russia, which is the underlying reason for the push.

According to the New York Times on the 24th (local time), President Trump, at the NATO summit that opened that day in The Hague, Netherlands, pressured member countries to spend 5% of their Gross Domestic Product (GDP) on defense and related infrastructure. This is more than double the previous target of 2%. However, despite Russia being the direct reason behind this demand for increased spending, Trump made little to no mention of the Russian threat.

NATO Defense Spending to Rise from 2% to 5% of GDP

According to The New York Times and other foreign media on the 24th (local time), President Trump officially kicked off the NATO Summit in The Hague, Netherlands. Upon landing at Amsterdam Schiphol Airport aboard Air Force One, he headed to Huis ten Bosch Palace for a welcome dinner hosted by King Willem-Alexander of the Netherlands. The leaders of all 32 NATO member states are scheduled to begin with the dinner, followed by the main North Atlantic Council (NAC) plenary session on the morning of the 25th.

The main focus of this summit is expected to be the expansion of defense spending. President Trump has been urging NATO members to increase their defense budgets to 5% of GDP, more than double the previous target of 2%. In response, NATO Secretary-General Mark Rutte proposed meeting this target by allocating 3.5% to direct military spending and 1.5% to defense and security infrastructure by 2035. He has since held a series of negotiations with the 32 member countries and has reportedly secured agreements from most of them. As a result, the consensus is that the agreement on defense spending increases will pass with little resistance at this summit.

Reinforcing this outlook, President Trump released a text exchange with Secretary-General Rutte on his social media platform, Truth Social. In the messages, Rutte told Trump, “It wasn’t easy, but we got everyone to sign on to 5%. You will accomplish what no U.S. president has managed in decades.” He added, “Europe will finally pay its fair share; this is your victory.”

Middle East Turmoil Upends the Situation

What’s particularly notable is that just a few months ago, NATO countries were resistant primarily to the U.S. demand for higher defense spending. During the NATO Foreign Ministers’ Meeting held in Brussels last April, the U.S. pushed for raising the defense spending guideline to 5%. At the time, most member states dismissed it as an unrealistic goal. Norway and Germany’s foreign ministers each remarked, “We are not prepared to meet that,” and “Our target is 3%, not 5%, respectively.

Many allies expressed frustration, pointing out that even under the current 2% guideline, 9 out of the 32 NATO members still failed to meet the target, and even the U.S.’s defense spending was only at 3.38% of GDP. The foreign ministers’ meeting ultimately ended with little progress amid widespread pushback from member states.

What changed this dynamic was the sudden deterioration of the international situation, particularly in the Middle East. On the 22nd, the U.S. launched a large-scale airstrike on key Iranian nuclear facilities, prompting Iran to vow retaliation. With military conflict between Iran and Israel showing no signs of de-escalation, and the U.S. now directly involved, the geopolitical instability in the Middle East has spiraled into a highly unpredictable situation. Foreign media reports that, amid this volatile climate, NATO member states are now engaging in an arms race-like “domino effect” to secure military superiority over one another.

However, some countries, such as Spain, remain skeptical about the defense spending increase. While Spain diplomatically agreed to the joint statement on increasing defense spending, it declared that it would not adhere to the 5% guideline.

In a televised speech following the agreement, Spanish Prime Minister Pedro Sánchez said, “For Spain, spending 2.1% of GDP on defense is sufficient. We don’t need to meet the 5% target. We fully respect the desire of other countries to raise their military spending, but we won’t be doing the same.”

According to NATO estimates, Spain spent USD 20 billion, equivalent to 1.24% of its GDP in 2024, the lowest proportion among NATO members.

U.S. Now Squarely Targets Its Asian Allies

The U.S. pressure to increase defense spending is expected to extend, both directly and indirectly, to its Asian allies, including South Korea, Japan, and Australia, which are NATO partner countries. At a press conference on the 23rd, NATO Secretary-General Mark Rutte stated, “European and Asian security can no longer be discussed separately,” emphasizing that because China and North Korea are supporting Russia in Ukraine, cooperation with the Indo-Pacific Four (IP4), South Korea, Japan, Australia, and New Zealand, must also be strengthened. His remarks underscored the need to align defense industries and security policies more closely with South Korea and Japan, countries facing direct threats from China, Russia, and North Korea.

The U.S. government has also begun directly demanding that its Asian allies increase defense spending. U.S. Secretary of Defense Pete Hegseth, in a speech at the Shangri-La Dialogue, an Asia security summit held on May 31, said, “Our allies and partners in Asia must now look to Europe as a model. NATO members are committing to spend 5% of their GDP on defense.” He then questioned, “With much more dangerous adversaries like China and North Korea, is it reasonable for Asian allies to spend less than Europe?” Hegseth explicitly proposed “5% of GDP” as the new guideline for defense spending. For reference, South Korea’s current defense spending is approximately 2.5% of its GDP.

Hegseth reiterated a similar stance during a U.S. Senate Armed Services Committee hearing on the 2026 Department of Defense budget held on the 18th. He stated, “I expect NATO allies to commit to spending 5% of their GDP on defense and related investments. This was a goal President Trump pursued in his first term, and achieving it would have been unimaginable back then.” He continued, “Now that NATO has taken action, a new global standard for allied defense spending has been set, and that standard should apply equally to all U.S. allies around the world, including those in Asia.”

Evidence Suggests Direct Russian Support for North Korea's Nuclear Development
Possibility of Indirect Support for Weapons Manufacturing
North Korea Accelerates Nuclear and Submarine Development

As concerns grow that the funds Russia provided in exchange for purchasing North Korean weapons may have been directly funneled into North Korea’s nuclear development, alarm is rising that North Korea–Russia relations have entered a new phase of strengthened military-technical cooperation. In particular, suspicions are mounting that Russia, constrained by a lack of cash reserves, may have indirectly transferred military technology to North Korea. This has drawn further attention to the rapid progress in Pyongyang’s nuclear missile and submarine development. Consequently, criticism is intensifying that the international sanctions regime against North Korea could be rendered ineffective.

Russia’s Direct Support for North Korea’s Nuclear Program Overturns Previous Assumptions

According to diplomatic sources on the 25th, the Multinational Sanctions Monitoring Team (MSMT) recently released a report stating that “Russia has been extensively violating international sanctions against North Korea since early this year.” Specific violations include:

- The maritime, air, and rail transport of North Korean weapons

- Joint military drills to support the war in Ukraine

- Exceeding the annual cap on petroleum product supplies to North Korea

- Maintaining correspondent banking relationships with North Korean financial institutions

The MSMT, launched in October last year, is the successor to the UN Security Council’s Panel of Experts on North Korea Sanctions. It currently includes 11 countries, among them South Korea, the United States, and Japan.

The Financial Action Task Force (FATF) also raised concerns in a recent report about Russia’s financial support for North Korea. Although North Korea has been cut off from the international financial messaging service SWIFT for years, severely restricting its cross-border financial activities, the report notes that Russian assistance has enabled Pyongyang to circumvent this blockade. MSMT emphasized, “Illicit financial activities by nations like North Korea rely on networks of professional money launderers, criminal organizations, smugglers, and cybercriminals — and Russia now plays a central role in this ecosystem.”

Experts believe that this deepening relationship stems from the “Comprehensive Strategic Partnership Treaty” signed by the two countries at the end of last year. Analysts explain that Russia, needing manpower and supplies to sustain its war in Ukraine, has turned to North Korea. At the same time, Pyongyang seeks technology, goods, and cash necessary to maintain its status as a nuclear-armed state.

This marks a stark reversal from previous expectations. As recently as March, the Asan Institute for Policy Studies published a report titled “Prospects for North Korea–Russia Relations and South Korea’s Response”, predicting that Russia would avoid supporting North Korea’s nuclear weapons development. The report argued that involvement in North Korea’s nuclear program could complicate Russia’s relations not only with the United States but also with China. At the time, U.S. President Donald Trump was leading discussions on “global nuclear disarmament,” with Russian President Vladimir Putin expressing support for the effort.

Undermining the UN Sanctions Framework

Amid mounting evidence that Russia is indeed supporting North Korea’s nuclear ambitions, there are growing suspicions that Moscow may be providing indirect assistance not in cash, but in technology. With the prolonged war in Ukraine severely depleting Russia’s cash reserves, the transfer of military technology or know-how has become a more realistic form of support for its allies.

This hypothesis draws on precedents from the early 2000s when North Korea collaborated with countries like Syria and Pakistan, receiving uranium enrichment technology and missile blueprints. These transfers were often carried out not through direct financial transactions, but via exchanges of personnel, equipment transfers, and joint experiments, methods designed to bypass sanctions.

Observers believe Russia is likely minimizing direct assistance in order to avoid international scrutiny. However, the fundamental problem is that this method effectively neutralizes the existing UN sanctions framework. While financial transactions can be traced, technology transfers are far more difficult to monitor and nearly impossible to verify without satellite imagery or human intelligence.

Russia has already undermined the sanctions regime by exercising its veto power as a permanent member of the UN Security Council, blocking resolutions related to North Korea. Experts warn that this behavior could also embolden other sanctioned countries, apart from North Korea, to seek ways to bypass international sanctions under the guise of precedent.

North Korea’s Defense Industry Becomes More Self-Reliant Amid Heavy External Dependence

Amid these developments, the noticeable acceleration in North Korea’s strategic weapons development strongly suggests that significant technology transfers from Russia have already taken place. North Korea has been conducting successive tests related to nuclear-powered submarines and hypersonic missiles, with their performance advancing rapidly. Kirill Budanov, Director of Ukraine’s Defense Intelligence, remarked, “The first KN-23 missiles North Korea sent to Russia had major problems — half veered off course or exploded midair. Now, they hit targets with precision, which is the result of North Korean and Russian experts working together.”

Some analysts suggest that North Korea may be pursuing the development of a Submarine-Launched Ballistic Missile (SLBM) system combined with a nuclear-powered submarine. The propulsion and control systems critical to nuclear-powered submarines require a far more sophisticated level of design compared to conventional cruise missiles. Consequently, the prevailing view is that such progress would have been virtually impossible without active and substantial support from Russia. This is being interpreted as a clear sign that North Korea–Russia cooperation has now expanded into submarine development.

The problem is that this influx of technology not only accelerates North Korea’s technological sophistication but also enhances its strategic autonomy. With self-reliance in key military technologies, North Korea is establishing the foundation to continue its nuclear weapons development regardless of external sanctions. This poses serious implications not only for the Korean Peninsula but for the broader security environment in Northeast Asia.

In particular, maritime launch systems like SLBMs, which are inherently difficult to detect, are highly likely to serve as effective deterrents. This has raised growing concerns that the longstanding “preemptive detection and preemptive strike” strategy pursued by South Korea and the United States may now be fundamentally undermined.

China’s Imports of U.S. Agricultural Products Plunge 43% Last Month
“Nightmare of the First Trade War Returns” — U.S. Farmers in Distress
Brazil, Argentina Step In to Fill America’s Void

The U.S.-China trade war is not just a clash of economic titans; it’s a battle with profound ripple effects that extend far beyond tariff rates and trade deficits. Nowhere is this impact more visible than in the global agricultural sector, where farmers are often the first casualties of geopolitical strife. As the tariff war between Washington and Beijing continues to escalate, it has paralyzed the flow of agricultural goods between the two countries. Once one of the most lucrative markets for American farmers, China is now rapidly pivoting toward alternative suppliers—chiefly in South America.

This seismic shift in trade dynamics is leaving U.S. farmers grappling with mounting losses while providing an unprecedented boon to agricultural exporters in Brazil, Argentina, and other nations. What began years ago as a temporary trade dispute is now evolving into a structural realignment of global agricultural supply chains—one that may outlast the politics that sparked it.

A Steep Decline in U.S. Agricultural Exports

The latest data underscores just how swiftly the trade relationship between the U.S. and China has deteriorated. According to a report from the South China Morning Post (SCMP), citing figures from China’s General Administration of Customs, China’s imports of U.S. agricultural products in May dropped by over 43% year-on-year, measured in value. This dramatic plunge reflects the heavy toll exacted by the tariff war, which has disrupted longstanding trade patterns almost overnight.

The numbers are staggering. Imports of boneless fresh U.S. beef and grain sorghum, once staples of U.S. agricultural exports to China, have plummeted by more than 97% compared to the same month last year. Imports of corn and uncombed cotton yarn also saw catastrophic declines, falling by 93% and 94%, respectively. Meanwhile, frozen beef imports from the U.S. were halved, and shipments of frozen and preserved chicken products contracted by more than 60%.

These declines are a direct consequence of the retaliatory tariff measures exchanged by the two governments. In March, China levied 10–15% tariffs on a wide range of U.S. agricultural goods in retaliation for the U.S. imposing a blanket 10% tariff on all Chinese products. But this was only the beginning. By April, the tariff escalation had spiraled, with both sides raising duties to well over 100% on various categories of goods, effectively making U.S. products prohibitively expensive for Chinese buyers. It was not until mid-May that the two sides paused hostilities to negotiate a temporary “truce” focused on tariff adjustments, but by then, the damage was deeply entrenched.

The sudden halt in shipments isn't limited to one or two commodities but cuts across a broad spectrum of U.S. agricultural exports, threatening the livelihoods of countless American farmers who had long relied on the Chinese market as their most significant overseas customer.

The 'Soybean War' and the Heavy Toll on U.S. Farmers

For many American farmers, particularly soybean producers, this is not their first experience navigating the treacherous waters of U.S.-China trade tensions. The seeds of the current crisis were planted during the first U.S.-China trade war in 2018, when then-President Donald Trump imposed 25% tariffs on USD 34 billion worth of Chinese imports, initiating what would become a prolonged economic standoff.

China responded swiftly with reciprocal tariffs targeting key U.S. exports, including agricultural products and automobiles. The escalation continued into September 2018, when the U.S. further imposed a 10% tariff on an additional USD 200 billion worth of Chinese goods. Despite a brief truce negotiated during the December 2018 G20 Summit in Argentina, talks collapsed in May 2019, leading the U.S. to raise tariffs on USD 200 billion in goods from 10% to 25%. China countered with tariffs on USD 60 billion of U.S. products.

A resolution only arrived in January 2020, when the two nations signed the Phase One Trade Agreement. Under the terms, China pledged to purchase an additional USD 200 billion worth of U.S. goods and services by the end of 2021, and the U.S. agreed to roll back certain tariffs. But the scars of the prolonged conflict remained, particularly for American farmers.

The hardest-hit sector was soybeans. China is the world’s largest consumer of soybeans, importing approximately 80% of its total soybean demand. Historically, the U.S. supplied about 57% of China's soybean imports over the past 18 years, making the Chinese market indispensable to American growers.

When China slapped high tariffs on U.S. soybeans, the fallout was catastrophic. The so-called “Soybean War” resulted in a staggering 79% drop in U.S. soybean exports to China during the height of the trade war. The financial cost was brutal: American farmers endured an estimated USD 12 billion in losses over just two years. The loss of access to the Chinese market devastated farming communities, triggering bankruptcies, foreclosures, and widespread uncertainty across America’s agricultural heartland.

South America Steps in as the New Agricultural Powerhouse

While U.S. farmers struggled, their counterparts in South America found themselves in an enviable position. The trade war created a golden opportunity for nations like Brazil and Argentina to step in and fill the void left by U.S. suppliers. During the first trade war, China began diversifying its agricultural supply chains to reduce dependence on the United States, a strategy that is now paying enormous dividends.

Brazil has emerged as the most prominent beneficiary. Since the onset of the U.S.-China trade conflict, Brazil has solidified its role as China’s primary agricultural supplier, enjoying exponential growth in exports. Between 2016 and 2023, the U.S. share of China’s agricultural imports plunged from 20.7% to 13.5%, while Brazil’s share rose sharply from 17.2% to 25.2%.

The soybean trade illustrates the magnitude of this shift. In 2023, Brazil shipped an astonishing 72.52 million tons of soybeans to China, a 280% increase compared to 2010. This accounts for a staggering 73% of Brazil’s total soybean exports, highlighting how integral Chinese demand has become to the Brazilian agricultural economy. The relationship is so strong that Brazilian farmers have tailored their production cycles to meet China’s growing appetite.

Argentina, another agricultural heavyweight, is also cashing in. A leading producer of both soybeans and corn, Argentina has secured major deals with China. According to Bloomberg, Chinese buyers recently signed letters of intent worth approximately USD 900 million to purchase soybeans, corn, and vegetable oils from Argentine exporters. China is now not only the largest importer of Argentine soybeans but is also ramping up purchases of soybean oil, further strengthening ties.

What’s clear is that the current U.S.-China trade conflict isn’t merely a temporary disruption. It is fostering a lasting realignment in global agricultural trade. With China having already built strong supply chains across South America, the prospect of U.S. farmers reclaiming their former dominance in the Chinese market grows dimmer by the day.

The winners and losers of this trade war are becoming increasingly evident. While American farmers continue to grapple with market losses, debt, and uncertainty, their South American counterparts are riding a wave of prosperity, driven by a Chinese demand that shows no signs of slowing.

“Direct Hit from China’s ‘Value-for-Money Shock’”
“Rapid Infiltration of North American and European Markets”
“Samsung and LG Take the Opposite Approach with Premium Strategies”

For years, Samsung Electronics and LG Electronics have reigned as unchallenged leaders in the global TV market, celebrated for their cutting-edge technology, sophisticated designs, and strong brand reputation. Their dominance seemed untouchable. But the ground beneath them is now shaking as Chinese powerhouses like TCL and Hisense mount an aggressive offensive, rapidly gaining market share by offering large-screen TVs at unbeatable prices. The shift is dramatic. Samsung has plummeted to fourth place in the global Mini LED TV market, while LG has seen its presence eroded significantly in key markets like the United States and Europe. Both Korean giants are now doubling down on premium strategies to protect their market positions, but there is growing unease about whether this approach is enough to withstand the unrelenting advance of their Chinese rivals.

A Changing Market: When “Good Enough” Is Enough

What’s happening in the TV market today is not just a typical price war; it represents a fundamental shift in consumer behavior and market dynamics. Data from Counterpoint Research reveals that in the first quarter of 2025, Samsung’s share of the global premium TV market nosedived from 39 percent to 28 percent within just one year, while LG’s share also shrank significantly from 23 percent to 16 percent. During the same period, Hisense's market share surged from 14 percent to 20 percent, and TCL's jumped from 13 percent to 19 percent, signaling an undeniable shift in the competitive landscape. Nowhere is this shift more visible than in the Mini LED TV segment. Once the undisputed leader in this category, Samsung has now slipped to fourth place in terms of sales volume and third in terms of revenue. After relinquishing the top spot to TCL last year, Samsung’s decline continued as Xiaomi overtook it this year, a stunning fall from dominance in a category it once pioneered.

The secret behind the rapid rise of Chinese brands lies not only in lower prices but in their ability to control critical parts of the supply chain. Mini LED TVs rely on large LCD panels as a key component, and Chinese companies now dominate this sector. This control enables them to produce larger screens at lower costs, giving them a significant edge in pricing. TCL secures its supply through its affiliate CSOT, while Hisense has established a nearly vertically integrated production system built on a robust domestic supply chain. This structural advantage has allowed them to claim pricing power that even global giants like Samsung and LG are struggling to match.

As this advantage widens, consumers are reevaluating what matters most. Increasingly, they are concluding that the difference in quality between Chinese and Korean TVs is no longer as significant as it once was. If a television offers a large, bright screen with decent picture quality at a much lower price, many are asking themselves why they should pay more. Where once brand reputation and cutting-edge technology justified premium prices, the gap has narrowed to the point where many buyers feel that the performance of Chinese TVs is more than adequate for their needs. This marks a profound change in consumer psychology, one that is upending the industry.

The rising price sensitivity among global consumers, combined with the steady technological improvements from Chinese manufacturers, has fundamentally altered the competitive landscape. This shift is no accident but the outcome of years of investment by Chinese brands in improving manufacturing efficiency, expanding their supply chains, and mastering the production of high-quality display panels. Now, the traditional advantages that companies like Samsung and LG once held, superior technology, design, and brand loyalty, are being challenged by a new equation where value for money takes precedence.

The Premium Gamble: Samsung and LG’s High-Stakes Strategy

Faced with this growing onslaught, Samsung and LG have pivoted toward a high-risk, high-reward strategy focused almost exclusively on premium products. It is a deliberate decision not to fight the Chinese brands on their turf, the mid-to-low-end market, but instead to secure profitability and preserve brand value through high-margin, high-end TVs, such as OLED, QD-OLED, and Micro LED models. This is not just a strategic choice but an existential one. The mass-market segment, once a battleground for all manufacturers, has largely been ceded to Chinese players who now dominate through a potent combination of affordability and scale.

Samsung has placed its bets on flagship models like its ‘Neo QLED’ and ‘Micro LED’ TVs, aiming to lead the next generation of displays by emphasizing cutting-edge picture quality, high brightness, and rich contrast enabled by thousands of miniature LED backlights paired with sophisticated AI-driven image processing. LG, in parallel, has doubled down on OLED and QD-OLED technologies, expanding its lineup of premium displays designed to deliver superior color accuracy, ultra-thin profiles, and immersive viewing experiences.

Both companies are heavily leaning into technological differentiation by offering televisions equipped with AI-powered picture enhancement, advanced sound technologies, and support for high refresh rates that appeal particularly to gamers and cinephiles. This focus reflects their belief that the premium market can still sustain their dominance, if not in volume, then at least in profitability.

Executives at LG remain confident in their technological edge. As one of the company’s AI service development leads, Baek Seung-hyun, argues, Chinese manufacturers may have seized control over panel production, but they still lack the system-on-chip (SoC) capabilities and software platforms like LG’s webOS that are integral to the modern TV experience. From his perspective, the technological gap remains meaningful, offering LG and Samsung a critical defensive line against the rising tide of Chinese competitors.

Yet as this battle unfolds, the Chinese brands are proving they are no longer content with just the entry-level market. In the U.S., TCL has risen to second place in shipments, right behind Samsung, while Hisense has already overtaken LG. Their success is not limited to price; both companies are rapidly refining their design language, improving panel quality, and introducing premium features. They understand regional preferences well, particularly in the U.S., where demand for TVs 55 inches and larger continues to grow, and they have responded with an aggressive rollout of large-screen models that meet these consumer desires.

This strategy is equally apparent in Europe. Markets like the United Kingdom, Germany, and France are witnessing a swift rise in the popularity of TCL and Hisense, while LG’s presence has shrunk dramatically in some Western European regions. In fact, during major sporting events such as the World Cup and the Euro Cup, sales of Chinese TVs spike significantly as these companies align their marketing and distribution strategies with local consumption patterns, effectively capitalizing on moments of peak demand.

Chinese companies have not merely expanded their market share; they have also established robust logistics networks and retail partnerships with major distributors, including Walmart, Amazon, and regional European retailers. This comprehensive infrastructure now enables them to compete head-on not just on price, but also on availability, service, and a rapidly improving perception of quality among global consumers.

Is the Premium Bet Enough to Save Korea’s TV Kings?

Despite the fierce push to solidify their positions in the premium segment, doubts are growing over whether Samsung and LG’s strategy will be enough. The reality is that demand for ultra-premium televisions is naturally limited. Not every household is willing or able to spend top dollar on features like OLED, Micro LED, or AI-powered processors, especially at a time when global economic uncertainty is making consumers more cautious about big-ticket purchases.

Industry experts like Lee Choong-hoon, CEO of UBI Research, are increasingly vocal in expressing their concerns. While he acknowledges that the premium strategy may serve as an effective buffer to protect short-term profitability, he questions whether it can serve as a long-term bulwark against the relentless momentum of Chinese manufacturers. If the technological gap continues to close and Chinese companies further refine their design and feature sets, even the premium segment may not remain immune to disruption.

Lee suggests that broader measures may be necessary if Korean TV makers are to survive this evolving landscape. These could include government-level interventions such as subsidies for domestic manufacturers or protective tariffs against Chinese imports, policies designed to buy time and breathing room for Samsung and LG to further innovate and restructure. Without such measures, he warns, the current strategy risks becoming a slow retreat rather than a sustainable defense.

What is clear is that the global TV market has entered a new era. The formula that once guaranteed success, combining superior technology with premium branding, is no longer sufficient on its own. Consumers are increasingly drawn to the compelling mix of large screens, decent picture quality, and unbeatable prices offered by Chinese brands. The throne that Samsung and LG have occupied for decades is undeniably under siege, and whether their premium-first gamble proves to be a masterstroke of strategic foresight or a desperate holding pattern remains an open, and increasingly urgent, question.