The Trump administration’s tariffs have opened new doors for U.S. commercial rivals in China, a study shows, adding to trade-induced headaches for American businesses.

As Beijing has raised duties on American exports in response to U.S. tariffs, it has lowered trade barriers for other countries, according to an analysis by the Peterson Institute for International Economics. Since the start of 2018, the average Chinese tariff rate on U.S. products has jumped to 20.7%. Over that same time frame, China has reduced tariffs on competing products from other WTO countries to an average of only 6.7%.

All countries, including the U.S., faced an average 8% tariff in China last year, according to the study.

“Trump’s provocations and China’s two-pronged response mean American companies and workers now are at a considerable disadvantage relative to both Chinese firms and firms in [other] countries,” Chad Bown, a senior fellow at the Peterson Institute, said in the report. “China has begun rolling out the red carpet for the rest of the world. Everyone else is enjoying much improved access to [the country’s] 1.4 billion consumers.”

Put another way, American products have become pricier for Chinese buyers while goods from other countries are less expensive. On average, in China, it is now 14% cheaper to buy something from Canada, Japan, Brazil or Europe than it is to buy from the U.S. While recent reports document how Indonesia, Bangladesh and Vietnam have stepped in to fill the void in American supply chains, the Peterson study highlights how Beijing’s own policy shifts have benefited traditional U.S. economic allies.

The president and other administration officials have fiercely defended the tariff strategy, claiming that the trade war’s economic burden will ultimately fall on China’s shoulders. Commerce Secretary Wilbur Ross doubled down on Monday, telling CNBC that Trump is “perfectly happy” to impose tariffs on the remaining $300 billion of Chinese imports if the two countries fail to strike a deal.

But U.S. companies have painted a different picture. Walmart, Target and more than 600 other companies wrote a letter last week urging the administration to resolve the dispute, warning the tariffs could cost the average family $2,000 each year and destroy 2 million U.S. jobs. The same day, retailers RH and Tommy Bahama-parent Oxford Industries said they plan to raise prices to soften the tariff impact. Ralph Lauren and Forever 21, meanwhile, cautioned that additional tariffs would dent apparel sales and lead to job cuts across the U.S.

China’s calibrated strategy

But China’s calculus, at least so far, isn’t just about retaliating against the U.S. and inflicting industry-specific pain, according to the Peterson report.

Despite a slew of support measures and policy easing in recent months, data show China’s economy has struggled to get back on solid footing. China is importing specific goods at lower prices from other countries to help stem a further slowdown.

Marika Heller, director of Albright Stonebridge Group’s China practice, sees this as a smart strategy to meet China’s growing demand domestically while not turning its back on key trading partners.

“If Japan, Germany, Canada, and other countries start to rely on China, see their tariffs go down, and view China as a good actor, they’re going to have decreased incentives to work with the U.S.,” Heller said. “Especially as the U.S. has proven to not be as reliable in keeping up their trade relationships with key allies.”

The scope of China’s tariffs on U.S. exports to date also signals a carefully calibrated response, Bown said. The duties currently do not target aircraft, oil products, automobiles and auto parts.

Beijing officials have exercised restraint in part to ensure they have targets to retaliate in case the Trump administration broadens the fight. China has also foreshadowed it will establish a list of so-called unreliable foreign entities that present a threat to Chinese companies. State news agency Xinhua reported that Memphis, Tennessee-based FedEx could be one of the first targets.

“That could open up a ‘Pandora’s Box’ of retaliatory measures,” Heller said. “China has a lot of tools in its toolbox.”

But the choice of products and tariff levels to date also reveals China is wary of potential self-harm. Indeed, recent data show U.S. exports to China have supported nearly 2 million jobs in sectors like services, agriculture and capital goods.

Moreover, the majority of China’s manufacturing imports from the U.S. fall into sectors where there isn’t yet a domestic Chinese alternative, including wide-body aircraft. China could target the U.S. by pushing state-owned airlines to buy from Airbus instead of Boeing, but, as Bown notes, the companies would face challenges acquiring the parts needed to operate existing fleets.

China has moved to boost domestic production of higher-value goods (in industries like aviation and semiconductors) as part of its ‘Made in China 2025’ plan, but progress reports have been mixed. Heller thinks the ongoing trade tensions could push China further toward a policy of self-reliance and propel additional research to fill those gaps.

For now, Beijing has given incentives to businesses and consumers to forge new commercial ties. Even if a trade deal is reached in the next few weeks, the Chinese may not revert back to old supply chains.