Moves to Exclude China from Supply Chains Accelerate
ASEAN Identified as Key Front in Anti-China Strategy
China Responds by Strengthening Manufacturing Diversification

The U.S. has asked Vietnam to reduce its use of Chinese-made components, intensifying supply chain conflicts across Southeast Asia. The Trump administration sees Southeast Asia as critical to its technological and geopolitical rivalry with China and is accelerating efforts to reshape the ASEAN market. In response, even Chinese companies are beginning to pull out of Southeast Asia, with some opting for Egypt as a new manufacturing hub—signaling a visible trend of "de-Southeast Asia" in global supply chains.

U.S. Signals High Tariffs on China-Linked Products

On June 17 (local time), Reuters reported, citing inside sources, that the U.S. government is demanding Vietnam reduce its reliance on Chinese parts and technology in ongoing tariff negotiations. “The U.S. wants Vietnam to lessen its dependence on Chinese high-tech components,” said one source. “This is part of the broader U.S. strategy to restructure supply chains away from China.”

Vietnam, a key manufacturing base for global tech firms like Apple and Samsung, still heavily sources components from China. Last year alone, Vietnam imported USD 44 billion worth of tech goods—including electronics, computers, and smartphones—from China, accounting for about 30% of its total imports from the country.

While the Vietnamese government is negotiating with companies to expand local sourcing, securing the necessary technology and implementing actual change remains challenging. Supply chain expert Carlo Cianthone noted, “Vietnam trails China by about 15 to 20 years in terms of supply chain scale and sophistication,” warning that “while there’s consensus on the need for change, any drastic shift could threaten the survival of local industries.”

Previously, the Trump administration warned it could impose tariffs of up to 46% on Vietnamese products. Should those tariffs be enacted, they would deal a major blow to Vietnam, whose largest export market is the U.S. Although a 90-day tariff grace period is set to expire on July 8, the two countries have yet to reach a final agreement. General Secretary Nguyễn Phú Trọng is also reportedly planning to visit the U.S. later this month to meet with President Trump.

U.S. Aims to Reposition Strategic Influence

The U.S. pressure on Vietnam and other ASEAN countries stems from a deliberate strategic calculation. Southeast Asia is seen not just as a production base, but as a key front to contain China and exert technological influence. Given ASEAN’s significant role in global supply chains for advanced industries like semiconductors, batteries, and telecom equipment, the U.S. sees incorporating the region into its own industrial bloc as a prerequisite to checking China’s rise.

This is also why ASEAN has become a prime target for both U.S. and Chinese tech partnerships and investments. As part of its anti-China alliance-building, the U.S. has been rapidly expanding investment in advanced manufacturing in countries like Vietnam, Malaysia, and the Philippines, working to establish non-China production hubs. Meanwhile, China is strengthening economic ties with ASEAN through agreements like the Regional Comprehensive Economic Partnership (RCEP).

These competing strategies place great pressure on ASEAN nations, which have long maintained diplomatic flexibility. Historically, ASEAN countries have maximized economic benefits through a balanced approach between the U.S. and China. But with the U.S. now demanding clear exclusion of Chinese technologies from supply chains, their options are narrowing. Adopting the U.S. position would also incur short-term industry disruptions and cost burdens.

China Also Retreats—Companies Eye Third Countries

As U.S. pressure on Southeast Asia intensifies, Chinese companies are also beginning to pull back. Anticipating that U.S. tariffs and tech sanctions may soon extend to ASEAN, some are adjusting or relocating production bases to entirely different regions. One prominent example: Chinese manufacturers are increasingly eyeing Egypt as a new production hub.

According to Egypt’s General Authority for Investment and Free Zones (GAFI), as of late May, over 2,800 Chinese companies were operating in Egypt, with cumulative investments exceeding USD 8 billion—more than double the 1,200 firms recorded in 2018. Major brands like OPPO, ZTE, and GAC Motor are among the entrants, along with numerous small- and mid-sized parts, textile, and appliance companies.

Egypt is seen as geographically advantageous—safe from direct U.S.-China tensions and strategically positioned to access both European and Middle Eastern markets. It also benefits from relatively low tariffs under the African Union and multiple free trade agreements. Moreover, Egypt’s China-friendly policies, foreign investment incentives, and stable political and security environment add to its appeal.

These developments reflect the growing perception that Southeast Asia may no longer be a safe detour if U.S.-China tensions continue to expand. One trade expert noted, “Vietnam, Thailand, and Indonesia have benefited the most from the ‘China Plus One’ strategy over the past decade. But if U.S. pressure and China’s retreat continue in tandem, their attractiveness as production hubs may fade.” He added, “If these countries can’t take a clear side, companies may find it more rational to look for new, politically neutral manufacturing hubs with fewer regulatory burdens.”

Germany’s Proxima Fusion Secures €130 Million in Funding
Global Firms Compete for Commercialization by Early 2030s
Safer and More Eco-Friendly Than Coal and Nuclear Power

As global startups developing next-generation energy technologies continue to secure large-scale investments, the commercialization of fusion power is increasingly within reach. Most recently, Germany’s Proxima Fusion secured the largest-ever Series A funding round among European fusion startups, signaling growing investor confidence in the sector. In parallel, the UK government has committed USD 3.4 billion to a cutting-edge fusion power plant project, officially launching its drive toward commercialization.

Meanwhile, the United States and China are accelerating their efforts to complete the world’s first operational fusion power plants by 2027, pushing forward with rapid advancements in technology and infrastructure. As a result, the global race for leadership in the future of energy is heating up, with fusion power emerging as the ultimate prize.

U.S.-Based CFS Secures USD 1.8 Billion, Emerges as Industry Leader

According to the European energy sector on the 17th (local time), Germany’s Proxima Fusion has raised approximately USD 150 million in a Series A round from global venture capital firms including Cherry Ventures, Valderton Capital, UVC Partners, and DTCF. This marks the largest investment round to date for a fusion startup in Europe.

Proxima Fusion was spun off from Germany’s Max Planck Institute for Plasma Physics in 2023 and is working toward the commercialization of nuclear fusion, with the goal of building a power plant by 2031.

Global investors reportedly viewed the company’s ability to technically realize sustainable, clean energy as a key strength. In particular, Proxima Fusion is designing a Stellarator-based fusion power plant, which uses powerful external magnetic fields to contain plasma and maintain a stable fusion state. This structurally stable method of plasma control has drawn positive attention for enhancing the feasibility of commercial fusion. The company’s concrete timeline for commercialization by 2031 also helped ease investor concerns over the risk of delayed returns.

Beyond Proxima Fusion, several other fusion startups have also secured significant funding and are accelerating their technology development.

Commonwealth Fusion Systems (CFS), based in the U.S., raised USD 1.8 billion in 2021, positioning itself as a frontrunner in the sector. Working in collaboration with MIT, CFS is pushing to build a fusion power plant with commercialization targeted for the early 2030s.

General Fusion, known for its Magnetized Target Fusion (MTF) approach, has secured USD 405.3 million in funding and aims to operate a demonstration plant by 2026 to reach break-even energy production.

Helion Energy has set the most aggressive target, planning to begin generating fusion power by 2028 and supply electricity to Microsoft, making it a standout in the race toward real-world deployment.

The Key to Fusion Power: Controlling Ultra-High-Temperature Plasma

As more global fusion energy projects move toward commercialization, expectations for fusion technology continue to grow. Fusion—the same process that powers the sun—releases tremendous amounts of energy by fusing two light atomic nuclei into a heavier one. This reaction is considered significantly cleaner and safer than both fossil fuels and conventional nuclear fission. Unlike fission, fusion produces virtually no long-lived radioactive waste, and its primary fuels—deuterium and tritium—can be relatively easily extracted from seawater, reducing concerns about resource depletion.

For decades, fusion has been referred to as the “energy of the future,” believed to be decades away from real-world application. However, recent breakthroughs in high-temperature superconducting magnets, precision plasma simulations, and AI-based control systems have brought the commercialization of fusion power plants much closer to reality. The core challenge in fusion power lies in maintaining plasma at temperatures of hundreds of millions of degrees Celsius in a stable state while enabling atomic nuclei to fuse—technologically one of the most demanding tasks ever attempted. As a result, global institutions and companies are engaged in an intense race to develop the most efficient and stable control methods.

Despite this progress, experts point out that technical and economic hurdles remain. Sustaining ultra-high-temperature plasma over long durations is not yet fully resolved. For full commercialization, reactors must achieve at least 300 seconds of continuous operation, a benchmark that current systems have yet to meet. In addition, the high costs of building and maintaining fusion reactors, as well as safety concerns such as potential tritium leakage, continue to fuel debate over the economic viability and safety of fusion power.

South Korea Leads with Magnetic Control Technology Amid Global Race

Despite ongoing challenges, major countries are accelerating efforts to lead the future of fusion energy. The United States and China are locked in a high-stakes competition to complete the world’s first operational fusion power plants by 2027. In the U.S., startups are leading the charge—Commonwealth Fusion Systems (CFS) is developing its compact SPARC reactor, considered one of the closest to commercialization. China, backed by large-scale state funding, is constructing a new superconducting tokamak fusion reactor named BEST (Burning Plasma Experimental Superconducting Tokamak).

Europe is also ramping up public investment. On June 12, the UK government announced approximately USD 3.2 billion investment in STEP (Spherical Tokamak for Energy Production)—the world’s first proposed commercial fusion power plant. Scheduled for completion by 2040, STEP aims to produce a net output of at least 100 megawatts and is being developed on the site of the decommissioned West Burton A coal plant in Nottinghamshire, transforming the region into a clean energy hub.

France is home to the world’s largest international fusion research project, ITER, located in Cadarache, Provence-Alpes-Côte d'Azur. A multinational megaproject jointly funded by the U.S., China, Japan, South Korea, the EU, and others, ITER is targeting first plasma operation by 2025. Its central goal is to demonstrate net energy gain from fusion reactions, proving that a fusion reactor can generate more energy than it consumes.

Japan, meanwhile, is focusing on long-duration plasma operation and high-performance fusion through its JT-60SA superconducting tokamak in Naka, Ibaraki Prefecture. The country has achieved global recognition in core areas such as plasma control and magnetic field stabilization, and plays a central role in ITER’s development through advanced simulations and plasma control algorithm research. Alongside international collaboration, Japan is also pursuing independent research and demonstration projects to support its long-term vision for fusion-based energy security.

Although South Korea entered the fusion race later than some of its peers, it is now regarded as a serious contender. Korean fusion researchers have earned a strong international reputation, especially in the stable control of high-temperature, high-density plasma, so much so that over half of the current experimental proposals at KSTAR involve collaboration with international research teams.

South Korea’s KSTAR (Korea Superconducting Tokamak Advanced Research) facility, completed in 2007 with domestic technology, incorporates world-leading magnetic field precision control. Operated by the Korea Institute of Fusion Energy (KFE), KSTAR aims to achieve key milestones such as sustaining plasma at 100 million degrees for 300 seconds, which is essential for future reactor operation. Through this, South Korea seeks to secure core technologies for fusion reactor construction and strengthen its leadership in next-generation energy.

"China Accelerates Quantum Computing Self-Reliance
Aiming to Develop 10,000-Qubit Error-Corrected System
Focused on Securing Future Quantum Advantage"

In the escalating race to define the future of technology, quantum computing has emerged as a transformative force with the potential to upend everything from cybersecurity to artificial intelligence. Amid this global pursuit, China has just taken a monumental step forward. By unveiling a self-developed quantum measurement and control system that supports over 1,000 qubits, Chinese researchers are not only narrowing the technological gap with their global competitors but are now being seen as setting the pace. This breakthrough, described by experts as the “central nervous system” of a quantum computer, signals that China’s quantum ambitions are no longer theoretical. Instead, they are fast materializing into a full-fledged industrial surge, one poised to redefine the future of global computing power.

QuantumCTek’s ez-Q Engine 2.0 Powers a New Era

The announcement came from the heart of Anhui Province, where the Quantum Computing Engineering Research Center confirmed that the Hefei-based startup QuantumCTek Co. had officially launched its ez-Q Engine 2.0. Building on the foundation laid by its predecessor, this upgraded system is now capable of operating the Zuchongzhi 3.0—a 105-qubit superconducting quantum processor that performs computations trillions of times faster than the most advanced supercomputers currently in use.

At the forefront of this development is Tang Shibiao, director of the research center and head of the QuantumCTek team. Tang revealed that the ez-Q Engine 2.0 achieves a tenfold increase in integration density over previous models, made possible by overcoming several technical challenges that have long hindered progress in this space. Among them were the complexities of direct RF-sampling and the need for large-scale clock synchronization. These hurdles were not only cleared, but cleared using domestically designed components, making the new system a milestone in China’s drive for technological self-sufficiency.

The results are impressive. The system has achieved significant noise reduction while boosting control precision and consistency—essential attributes for managing quantum processes at scale. Tang also stressed that ez-Q Engine 2.0 achieves this level of performance at less than half the cost of similar foreign systems, without compromising international technical standards. This cost efficiency, he argued, could fundamentally reshape the quantum technology market, where price and performance are often at odds.

The reliability of the system was put to the test on China’s record-setting 504-qubit superconducting quantum computer, where it demonstrated both exceptional precision and operational stability. According to Wang Zhehui, deputy director of the research center, this successful trial validates the system’s readiness for integration into even more complex platforms. The research team is now advancing toward the development of a control system for future machines equipped with up to 10,000 qubits and integrated quantum error correction.

Already, the ez-Q Engine 2.0 is being deployed at leading institutions such as the University of Science and Technology of China and China Telecom Quantum Group. The team envisions expanding its availability across more research and industrial facilities, ultimately supporting systems that can manage over 5,000 qubits. This strategic push marks a turning point in China’s quest to build scalable, fault-tolerant superconducting quantum computers that can rival or surpass anything being developed in the West.

Photonic Quantum Chips Break the Cryogenic Barrier

China’s dominance in quantum technology is not limited to superconducting systems. In a groundbreaking development from Peking University, researchers recently published findings in the journal Nature that unveiled a room-temperature photonic quantum chip capable of achieving large-scale quantum entanglement using light. This accomplishment, long considered a formidable challenge in the field, represents a profound shift in the quantum landscape—one that could bring the vision of a quantum internet within striking distance.

Unlike traditional quantum systems that rely on electronic circuits and cryogenic cooling, photonic quantum chips use photons to process information. These particles of light travel faster and produce less heat, making them naturally suited for high-speed, low-energy computation. What makes Peking University’s achievement particularly significant is its ability to operate at room temperature. This dramatically reduces the logistical and energy costs associated with maintaining extreme cold environments, thereby removing one of the biggest barriers to commercial quantum deployment.

The implications for telecommunications are immense. Conventional internet architecture, even as it evolves toward 6G and beyond, is based on sequential packet transmission—a method akin to reading a book one page at a time. In contrast, quantum internet based on entangled qubits would enable instantaneous, simultaneous communication, where all parts of a message are processed together like actors performing in perfect harmony on a stage. This not only enhances speed but also revolutionizes security, as entangled particles can detect interference, making hacking nearly impossible.

Experts believe the successful demonstration of large-scale quantum entanglement using photonic chips positions China far ahead of its global competitors. Western countries have struggled to achieve similar feats, especially outside of ultra-cold lab conditions. The fact that China has done so using light, and in a room-temperature setting, signals a potential inflection point for the global quantum industry.

The military and geopolitical ramifications of this are equally significant. Huawei, China’s leading telecommunications firm, is reportedly working in close partnership with top universities, including Peking University, to commercialize quantum internet capabilities. Under the leadership of Ren Zhengfei, a former member of the People’s Liberation Army, Huawei’s efforts underscore the strategic importance of quantum infrastructure in future warfare scenarios involving AI, drones, and autonomous technologies. Quantum internet is expected to serve as the backbone of these applications, further reinforcing China's motivation to lead the charge.

Zuchongzhi 3.0 and the Road to Quantum Advantage

The unveiling of Zuchongzhi 3.0 in March 2025 marked another milestone in China’s ascension as a quantum powerhouse. As the upgraded successor to Zuchongzhi 2.1, the new system introduced sweeping improvements across core performance metrics and is now integrated with QuantumCTek’s ez-Q Engine 2.0. Its debut in the pages of Physical Review Letters drew praise from peer reviewers, who lauded it as a benchmark-setting achievement in superconducting quantum computing and a clear advancement from earlier 66-qubit systems.

This development came at a time of heightened rivalry between China and the United States, both of which have taken turns unveiling major breakthroughs. In previous years, Google introduced Sycamore while China launched Jiuzhang, each signaling a temporary lead in quantum capabilities. But when China successfully developed Zuchongzhi 2.1, it became the first country to achieve quantum supremacy across both mainstream technological paths—optical and superconducting.

The international scientific community has long viewed quantum computing progress through a three-phase lens: achieving quantum advantage, building simulation systems with controllable qubits for solving real-world problems, and ultimately creating universal, programmable quantum computers capable of large-scale error correction and integration. China, according to many experts, is now firmly advancing into the second and third phases.

The Zuchongzhi 3.0 team is composed of some of China’s most distinguished physicists, including Pan Jianwei, Zhu Xiaobo, and Peng Chengzhi. Together, they are pushing boundaries in quantum error correction, entanglement, simulation, and quantum chemistry. Professor Zhu has revealed that the team is conducting surface code research with a current code distance of seven, with aspirations to extend it to nine and eleven. These enhancements will allow for even greater qubit integration and more refined control—key ingredients for building truly universal quantum machines.

The direction is clear. With continuous support from academia, industry, and the state, China is weaving together the components of a self-sustaining quantum ecosystem. It is an ecosystem designed not just to compete on the global stage but to lead it—technically, economically, and strategically. As breakthroughs like ez-Q Engine 2.0, photonic quantum chips, and Zuchongzhi 3.0 continue to emerge, the world may well be witnessing the consolidation of China’s position as a quantum superpower.

Vietnam and Other Southeast Asian Nations See Rise in Chinese Imports and U.S.-Bound Exports
After the U.S. Announced Reciprocal Tariffs in April, China Expands Rerouted Exports
Trump Ramps Up Pressure on Key Southeast Asian Countries in Trade Negotiations

The United States’ reintroduction of ultra-high tariffs on Chinese goods under the Trump administration has triggered a sweeping recalibration of China’s export strategy. Faced with trade barriers designed to restrict direct access to the American market, Chinese manufacturers have devised increasingly elaborate ways to circumvent these economic roadblocks. Initially, much of this rerouting unfolded through Southeast Asia, with countries like Vietnam, Malaysia, Thailand, and Indonesia emerging as strategic conduits for transshipment. However, as U.S. pressure mounts and the policy landscape in the region shifts, Chinese firms are now looking beyond Asia for alternatives. Egypt, with its advantageous trade conditions and welcoming investment climate, is quickly rising as the next global staging ground for Chinese exports headed to the West. This new phase of tariff avoidance underscores not only China’s adaptability in the face of economic pressure but also the geopolitical complexities faced by U.S. trade partners navigating between Washington and Beijing.

Southeast Asia’s Transshipment Boom—and Looming Deadline

The initial response to the U.S. tariffs saw Chinese firms dramatically increase exports to the ten member countries of the Association of Southeast Asian Nations (ASEAN). In April, as Chinese exports to the United States fell by 21 percent compared to the same month in the previous year, exports to ASEAN surged by the same margin. This reversal marked a sharp contrast from March, when Chinese exports to the U.S. had still been growing by over 9 percent. The expansion of trade with ASEAN was not merely circumstantial; it was a deliberate maneuver by Chinese companies leveraging a temporary reprieve. On April 9, the Trump administration announced a 90-day suspension of reciprocal tariffs for countries other than China. Sensing opportunity, Chinese manufacturers began assembling components in countries such as Vietnam and Malaysia before routing the finished goods to the U.S.

The strategy was successful, and its impact was measurable. Vietnam, for instance, saw a dramatic increase in its imports of Chinese electronic parts and machinery, rising by 54 and 44 percent, respectively. Simultaneously, Vietnam’s exports to the U.S. rose by more than 30 percent. These figures, highlighted in a report by the Nihon Keizai Shimbun, signaled the effectiveness of transshipment as Chinese laptops, smartphones, and home appliances were rerouted in bulk through Southeast Asian channels. Malaysia and Indonesia also saw parallel gains in Chinese trade, further demonstrating how Southeast Asia became an essential intermediary in China’s efforts to maintain access to the American market.

Yet this workaround may soon be curtailed. The tariff deferral period is set to expire on July 7. Unless agreements are reached in ongoing negotiations between the U.S. and Southeast Asian countries, reciprocal tariffs will automatically be reinstated on July 8. The expected rates are steep: 46 percent for Vietnam, 36 percent for Thailand, 32 percent for Indonesia, and 24 percent for Malaysia. As the deadline approaches, the U.S. is demanding tighter enforcement of origin rules and more stringent efforts to block transshipment of Chinese-made goods. Trump has made it clear that he does not intend to extend the grace period without compelling justification, and has warned that tariff rates will be finalized immediately after the deadline if no resolution is reached.

Among the Southeast Asian nations, Vietnam finds itself in the most precarious position. It has the third-largest trade surplus with the U.S., after China and Mexico, and was one of the principal beneficiaries of production shifts during Trump’s first term. The Vietnamese government has taken a notably cooperative approach to U.S. demands, introducing a “Made in Vietnam” certification system and tightening inspections of imported goods. Prime Minister Pham Minh Chinh has publicly stated that Vietnam is intensifying efforts to crack down on illegal transshipment and is committed to aligning with U.S. expectations. Indonesia, Malaysia, and Thailand have also promised to monitor and restrict Chinese rerouted exports more closely. These countries have offered additional trade incentives, such as increasing purchases of American goods and easing non-tariff barriers, in hopes of preserving access to the U.S. market.

Nevertheless, direct sanctions on Chinese firms remain a sensitive issue. All four countries are deeply integrated with China through trade and investment networks. China is the leading trade partner for each, and their economies have been heavily shaped by Chinese capital and supply chains. Policymakers in the region are struggling to balance strategic alignment with Washington against their long-standing economic reliance on Beijing. Analysts believe that these countries are facing an increasingly unavoidable dilemma: whether to preserve sovereignty and economic ties with China or to comply with U.S. demands for trade decoupling, especially in politically sensitive sectors such as electronics, semiconductors, and artificial intelligence.

The Egyptian Alternative: Cost-Efficient, Strategic, and Politically Viable

As the Southeast Asian route becomes more politically fraught and economically uncertain, Chinese manufacturers have begun shifting their focus toward Egypt. Once considered peripheral to global manufacturing, Egypt is now emerging as a key alternative—an unexpected yet strategically sound destination for Chinese firms seeking to avoid punitive tariffs. The South China Morning Post reported that Chinese businesses are relocating their production bases to Egypt in growing numbers, hoping to capitalize on its low tariffs, competitive labor market, and strategic geographic position.

Unlike the Southeast Asian nations entangled in complex negotiations with the U.S., Egypt remains largely outside the fray. The country imposes only a 10 percent base tariff on goods and, as a nation that runs a trade deficit with the U.S., faces minimal risk of retaliatory American sanctions. Labor costs in Egypt are a major advantage as well, averaging between USD 100 and USD 150 per month, roughly half the labor costs in countries like Vietnam or Indonesia. Furthermore, Egypt’s proximity to major consumer markets in Europe, Africa, and the Middle East via the Suez Canal enhances its value as a transcontinental logistics hub.

Trade policy also works in Egypt’s favor. Through free trade agreements with both the United States and the European Union, Egypt enjoys preferential tariff treatment for goods exported to the West. This allows Chinese companies operating in Egypt to indirectly access U.S. and EU markets under more favorable terms, further reducing the financial impact of Trump-era tariffs. The Egyptian government has also embraced a pro-China orientation, offering generous foreign investment incentives and promoting a stable political and security environment to attract Chinese firms.

These policies are already bearing fruit. According to Egypt’s General Authority for Investment and Free Zones (GAFI), the number of Chinese companies operating in Egypt has more than doubled in recent years, from 1,200 in 2018 to over 2,800 today. The total value of Chinese investment in the country has surpassed USD 8 billion. Major Chinese brands, including Oppo, Haier, Huawei, Midea, ZTE, and GAC Motor, have established a presence in Egypt, alongside numerous small and medium-sized manufacturers in the electronics, textile, and home appliance sectors.

The Suez Canal Economic Zone, in particular, has become a focal point of Chinese investment. More than USD 3 billion has been invested in this zone alone, with large-scale projects spanning nine key sectors, including clothing, consumer electronics, steel, and automobile manufacturing. This focused investment reflects a broader strategy: to transform Egypt into a manufacturing and export hub not only for Africa and the Middle East, but also as a new front in China’s global supply chain strategy, free from the increasing constraints in Asia.

A New Chapter in Global Trade Realignment

China’s shifting export routes—from Southeast Asia to Egypt—signal a significant and ongoing realignment in global trade. The Trump administration’s tariff escalation has not simply blocked Chinese goods from the U.S. market; it has prompted a re-engineering of global production and export chains that is still unfolding. While Southeast Asia offered an early workaround, the U.S. is now actively pressing those governments to clamp down on rerouted Chinese goods. The upcoming expiration of the tariff deferral period in July could become a flashpoint that forces nations like Vietnam, Malaysia, Indonesia, and Thailand to make definitive strategic choices.

In contrast, Egypt offers a fresh alternative—one that is not currently caught in the U.S.–China rivalry but remains deeply integrated into the global economy. With low production costs, strong infrastructure, and favorable trade agreements, Egypt is positioning itself as the next vital node in China’s export network. For now, it appears to be a politically viable and economically sound route for Chinese firms determined to sidestep mounting tariffs and continue serving Western markets.

Whether this new model proves sustainable in the long term will depend on how U.S. trade policy evolves and how China continues to adapt. But one thing is clear: in the global chess game of tariffs and trade, China is already several moves ahead—shifting pieces across continents in search of safe passage through a fragmented and politically charged economic landscape.

Trump Risk: A Spark for a Dollar Crisis?
Unpredictable Tariff Policies Stir Global Financial Market Turmoil
"Dollar Crisis May Arrive Sooner" – Professor Rogoff Warns

For nearly eight decades, the U.S. dollar has been the backbone of the global financial system. As the primary medium for trade settlement, pricing, and reserve holdings, its supremacy has rarely been questioned. But today, that foundation is showing signs of stress. Around the world, exporters are increasingly requesting payments in currencies other than the dollar. What once seemed unthinkable—conducting international trade without the greenback—is now becoming a reality.

The growing trend of dollar avoidance is not just a reaction to economic factors but also a political reckoning. As the Trump administration pushes forward with aggressive tariffs, unilateral trade policies, and erratic economic signals, confidence in the dollar’s role as a stable and neutral reserve currency is eroding. Economists and central banks are sounding alarms, and some scholars are now warning that a full-blown crisis threatening the dollar’s global hegemony could materialize within the next four years.

Global Traders Turn Away from the Dollar

The move away from the dollar is gaining momentum across continents. Exporters from Asia, Europe, and Latin America are increasingly urging U.S. buyers to settle invoices in their own currencies—such as the euro, Chinese yuan, Mexican peso, or Canadian dollar—rather than the U.S. dollar. The shift is especially noticeable in supply chains where pricing flexibility and volatility management are crucial.

Paula Cummings, Head of Currency Sales at U.S. Bancorp, captured the shifting sentiment. “In the past, the dollar was considered ‘untouchable’ from the perspective of suppliers,” she explained. “Customers were hesitant to change the settlement currency. But now, foreign suppliers are increasingly saying, ‘Please pay us in our own currency.’”

This isn’t merely a symbolic gesture—it’s a calculated business move. U.S. companies are embracing this change to shield themselves from the mounting risks of currency fluctuation. In return, they often enjoy price discounts or more stable payment conditions. As Cummings noted, the dollar is no longer taken for granted in trade settlements; companies are actively diversifying their transactional exposure.

Supporting this shift is long-term data that illustrates the dollar’s historical dominance. Between 1999 and 2019, virtually all export invoices in the Americas were denominated in dollars. In the Asia-Pacific region, the figure hovered around 75%. But in recent years, this “dollar-centric trade order” has started to crack, with exporters and importers alike seeking alternatives that better reflect shifting geopolitical and economic realities.

Asia Accelerates De-Dollarization Amid Market Shifts

One of the driving forces behind this movement is the increasing volatility of the U.S. dollar itself. According to the Bloomberg Dollar Spot Index, the greenback has declined by about 8% this year against a basket of major global currencies. This marks a sharp reversal from its 7% gain in the final quarter of the previous year. While geopolitical tensions in the Middle East temporarily buoyed the dollar in early June, its erratic swings continue to unsettle companies that rely on predictable pricing for cross-border transactions.

When exchange rates swing wildly, businesses struggle to forecast profits, manage costs, and make long-term investment decisions. As such, many firms are now treating the dollar as a financial liability rather than an anchor of stability.

In this context, Asia—particularly the ASEAN bloc—is at the forefront of accelerating de-dollarization. According to Bank of America, ASEAN countries are systematically converting accumulated dollar deposits into local currencies. This transformation is driven not only by central banks but also by large institutional investors who are aggressively hedging their foreign exchange risks.

This financial realignment has institutional backing. Through its 2026–2030 Economic Community Strategic Plan, ASEAN has formally adopted the goal of expanding the use of local currencies in trade and investment. The plan includes initiatives to promote Local Currency Settlement (LCS) and strengthen regional payment connectivity, thereby reducing exposure to dollar-based shocks. The aim is to shield regional economies from the turbulent waves of U.S. monetary and trade policy.

According to Francesco Pesole, a currency strategist at ING, the policy trajectory of the Trump administration is directly accelerating this shift. “President Trump’s erratic trade policies and the sharp depreciation of the dollar may be accelerating the shift to other currencies,” he observed.

Global reserve data reflect this shift in sentiment. In 2000, the dollar accounted for more than 70% of the world’s foreign exchange reserves. That figure has since plunged to 57.8% in 2024, a historic low. Particularly telling was the selloff in April 2024, when a wave of dollar dumping swept through global markets—spurred not by macroeconomic weakness but by intensifying policy uncertainty in the United States.

A Looming Currency Crisis? Harvard’s Rogoff Issues Dire Warning

Amid these tectonic shifts, a growing chorus of economists warns that the dollar’s grip on the global economy is weakening at a pace faster than previously thought. Leading the charge is Professor Kenneth Rogoff of Harvard University, who issued a chilling forecast in a recent interview with the South China Morning Post. Citing the erratic policy behavior of the Trump administration, Rogoff warned that the world could witness a full-scale dollar crisis within four years.

Rogoff’s warning is grounded in deep historical analysis. In his recently published book, Our Dollar, Your Problem, he argues that the dollar is now confronting its greatest systemic challenge since the 1971 Nixon Shock, when the U.S. abruptly ended the dollar’s gold convertibility. In that moment, global trust in U.S. monetary leadership was tested—and now, more than fifty years later, it may be breaking.

Originally, Rogoff forecasted a structural transformation of the dollar’s role over 5 to 7 years. But new developments—especially Trump’s policy shocks—have accelerated the timeline. “Trump is a catalyst accelerating the dollar crisis, not the root cause,” he explained. “The problem was already on its way.”

Rogoff compared the U.S. predicament to the internal decay of empires past: “The fall of the Roman Empire stemmed not just from external enemies but also from internal issues.” He pointed to the United States’ most glaring vulnerability—its unsustainable debt burden.

Currently, the U.S. is the largest debtor nation in the world, holding nearly half of all sovereign debt among developed countries. The same is true for corporate bonds, where American firms account for roughly 50% of all developed-country corporate debt. Rogoff warned, “This becomes especially dangerous when interest rates rise. The U.S. has gambled on interest rates.”

For years, ultra-low real interest rates masked the country’s debt fragility. But with rates now normalizing, the cost of servicing that debt is soaring. “When interest rates rise,” he warned, “the world’s largest debtor becomes the most vulnerable.”

He further cautioned that the Trump administration’s push for the largest tax cuts in U.S. history will only exacerbate the problem. “Given America’s current debt levels, markets are unlikely to respond favorably.” Rising Treasury yields and widening fiscal deficits could trigger a vicious cycle of declining investor confidence and financial instability.

Perhaps most alarmingly, Rogoff identified a political threat to the dollar’s future: the erosion of Federal Reserve independence. “One more reason I think the dollar crisis is very serious is the growing pressure from both the left and the right that could erode the Federal Reserve’s independence,” he stated. “If that happens, the dollar will weaken dramatically.”

If these trends continue, the implications for global finance could be profound. A world where the dollar is no longer the uncontested king of currencies would redraw the geopolitical map, reshuffle trade balances, and shift power toward rising monetary blocs. The current winds of change may be the beginning of that transformation.

Signs of Returning to ‘Maximum Pressure, Then Negotiation’ Pattern
Anti-U.S. Sentiment Grows in Iran: “The Real Enemy Is America”
Consensus on Need for Talks, But Timing Remains Uncertain

Following Israel’s airstrikes on Iran, U.S. President Donald Trump has stepped to the forefront, confidently asserting that a nuclear agreement with Iran is imminent. While the U.S. has not engaged directly, it appears to be using Israeli military pressure as indirect leverage in negotiations. Within Iran, the dominant perception is that the real adversary is not Israel but the U.S., and resistance to Trump’s coercive negotiation tactics is growing. Though there is strong recognition of the need for diplomacy, lingering distrust from past betrayals continues to act as a major barrier.

Israel Acts, But the U.S. Gains

On June 16 (local time), after attending the G7 summit in Alberta, Canada, Trump told reporters: “As I’ve said repeatedly, Iran will soon sign a nuclear agreement with the United States. If they don’t, it just means they’re stupid.” Under his second administration, the U.S. has resumed nuclear talks with Iran five times. The sixth round, scheduled for June 15, was canceled after Israel launched a preemptive strike on Iran on June 13.

Trump’s optimistic remarks align with some diplomatic forecasts suggesting that both Iran and the U.S. want a nuclear deal, and that the U.S. is likely to broker a deal on favorable terms by mediating the conflict. Robert Malley, former U.S. envoy to Iran under the Biden administration, commented, “At some point, not too far off, the U.S. will likely restrain Israel. Trump still seems to prefer a negotiated deal over war.”

There is precedent for Trump using other nations' military actions as strategic leverage. During his first term, he repeatedly employed sanctions and heightened tensions to drag adversaries to the negotiating table. Analysts believe this current situation reflects a similar approach—only now, Israel is the tool. This leaves Iran in a position where it is being pressured without a direct confrontation with the U.S.. At the same time, Trump seeks to reap political gains through indirect military pressure from Israel.

Netanyahu Strengthens the Narrative: “Iran Tried to Assassinate Trump”

Israeli Prime Minister Benjamin Netanyahu added weight to this interpretation by claiming that Iran had attempted to assassinate President Trump. In an interview with Israeli media on June 15, he said, “Trump refused to follow the fake diplomatic route with Iran that others took—one that enabled uranium enrichment and handed out billions of dollars. He made it clear by eliminating Iran’s Revolutionary Guard commander that Iran cannot have nuclear weapons or enrichment.”

Netanyahu also described himself as Trump’s “junior partner” and justified the airstrike as a necessary move to prevent Iran from developing nuclear weapons. “Our preemptive strike has significantly delayed Iran’s nuclear program,” he said. “This protects not only Israel, but the entire world.”

Meanwhile, Iranian hostility is increasingly directed toward the U.S. Though military clashes continue with Israel, Iran’s political and diplomatic messaging is clearly focused on Washington. The Iranian government has been stoking anti-American sentiment to unite the public against external pressure. State-run and conservative media continue to attack the U.S.-led international order.

The situation worsened after Trump’s statement urging Tehran to “evacuate immediately,” accompanied by a deployment of additional U.S. forces to the region. CNN reported that the aircraft carrier USS Nimitz (CVN-68) canceled its planned port call and is heading to the Middle East. U.S. Defense Secretary Pete Hegseth stated, “Protecting U.S. forces is our top priority. This deployment strengthens our defense posture in the region.” Iran perceives this as a clear signal that the U.S. may be on the verge of a full-scale conflict.

Gap Between U.S. Optimism and Iran’s Cautious Calculations

Whether Trump can achieve the deal he envisions remains uncertain. During his first term, he famously invalidated a signed agreement with North Korea after the Singapore summit, abruptly collapsing the negotiations. Iran remembers this clearly—and also notes that the international community failed to stop it. Even if Iran returns to the negotiation table, deep fears of betrayal persist.

These concerns span the Iranian political spectrum. Both hardliners and reformists view Trump’s administration as untrustworthy. Trump's recent comment—“If Iran doesn’t sign, it’s stupid”—has further inflamed tensions, with many now viewing the situation as a battle for national pride rather than a diplomatic issue. The desire to avoid “humiliation” is now a major obstacle to compromise with the U.S.

However, Iran cannot afford to reject negotiations entirely. More than a decade of U.S.-led sanctions has left the Iranian economy in a severe crisis. Currency collapse, shortages of essentials, and high youth unemployment have pushed public frustration to its limit. Diplomacy may be the only viable way out. Analysts believe Iran’s recent signals of willingness to restore the nuclear deal reflect growing public pressure and economic realities.

Profitability Gap Widens Compared to Competitors
Concerns Raised Over Promotional and Fixed Costs
Can the Star Actress Strategy Work Amid Chinese Onslaught?

Samsung Electronics, once confident in its leadership in specific home appliance categories, is now facing grim forecasts from the financial sector, suggesting its home appliance business will post losses in the second quarter of 2024. Despite a broader industry slump, rival LG Electronics continues to post solid profits—with an operating margin of around 10%—fueling growing doubts about Samsung’s fundamental competitiveness in this sector.

Financial Analysts Predict Q2 Losses for Samsung’s Home Appliances

According to industry sources on June 17, multiple domestic securities firms are issuing pessimistic outlooks on Samsung’s Digital Appliances (DA) division. A recent report by IBK Investment & Securities projects a Q2 operating margin of -0.2% for Samsung’s home appliance business. Following Q4 2023’s -2.0% and Q1 2024’s -0.5%, this would mark the third consecutive quarterly loss.

Eugene Investment & Securities also estimates an operating margin of 0%, effectively projecting no profit for Q2. It forecasts Samsung's full-year operating margin to hover around zero. Since Samsung does not disclose individual performance figures for its home appliance and TV divisions, investors rely heavily on these estimates. Given that the first half of the year is typically a high season for the appliance industry, remaining in the red or barely breaking even during this period indicates a concerning trend of “low-high-low” performance.

Meanwhile, Chinese competitors are rapidly expanding their presence. Haier, a leading Chinese appliance maker, reported Q1 revenue of USD 11 billion and a net profit of USD 766 million, reflecting year-on-year growth of 10.1% and 15.1%, respectively. Analysts attribute this to its aggressive M&A strategy, including the acquisition of GE Appliances, supported by strong capital and production capabilities. With Chinese brands like TCL and Hisense already dominating the TV market, industry watchers warn it's only a matter of time before Chinese firms extend that dominance to the premium appliance sector.

LG’s Profitability Backed by B2B Expansion

Industry insiders believe Samsung’s push for market share has come at the cost of profitability due to heavy spending on marketing and promotions. One source noted, “With global demand for appliances waning and competition from Chinese brands intensifying, Samsung is under immense pressure. Despite Samsung and LG having similar market shares in domestic and North American markets, the profitability gap suggests Samsung is relying heavily on price discounts and promotions.”

Samsung’s vast global manufacturing and sales operations also carry high fixed costs, meaning the company must maintain strong sales volumes to remain viable. But expanding market share without profit guarantees can be counterproductive.

In stark contrast, LG’s strength in the appliance sector is more pronounced. Its Home Appliance & Air Solution (H&A) division posted a 9.6% operating margin in Q1 2024. Analysts expect LG’s margin to remain above 7% in Q2, with IBK forecasting 8.0% and Eugene Investment projecting 7.5%. For the full year, LG’s margin is expected to stay around 6%.

LG’s success owes much to its growing focus on B2B (business-to-business) segments. The company has expanded beyond home appliances into commercial displays, automotive components, and HVAC (heating, ventilation, and air conditioning) systems—areas less affected by seasonality and with more stable, order-based revenue. LG even launched a dedicated B2B website to support this strategy.

These efforts are paying off. In Q1 2024, LG posted consolidated revenue of USD 16.54 billion and operating profit of USD 916 million, largely driven by B2B growth. Key contributors included its Vehicle Component Solutions (VS) and Energy Solutions (ES) divisions, both of which recorded their highest-ever quarterly revenue and profits. Their combined operating profit surged by 37.2% year-on-year. One industry insider noted, “B2C business is volatile, seasonal, and highly competitive. Without a solid B2B foundation, LG’s overall performance could have suffered.”

Samsung Brings Back Former Star Actresses Amid Appliance Slump

In contrast, Samsung continues to rely on a B2C (business-to-consumer) model. Facing a sharp drop in appliance sales, the company has turned to nostalgic advertising campaigns featuring former star actresses Jun Ji-hyun and Han Ga-in—an apparent attempt to reignite brand sentiment and consumer trust.

This move appears aimed at middle-aged buyers in their 30s to 50s, who are seen as valuing reliability and familiarity over innovation. However, industry voices question whether such emotional campaigns can significantly boost sales amid current challenges, including a global economic slowdown, shrinking consumer spending, and a rising preference for cost-effective products.

Samsung had focused on premium models such as Bespoke refrigerators and Grande washers, but in a downturn, consumers prioritize value over luxury. The brand’s high-end strategy has thus diverged from actual market demand. Chinese competitors, such as Haier and Midea, have also gained ground, leveraging technological advancements and aggressive pricing to erode Samsung’s market share in North America and Europe.

Experts caution that while emotional marketing may offer short-term attention, sustainable recovery requires a blend of price competitiveness, product diversification, and technological innovation. One industry figure summed it up: “We’re past the era where technology alone wins the white goods race. Without simultaneously delivering on price, quality, and emotional appeal, customers will simply walk away.”