UPON assuming office as the 47th President of the United States, Donald Trump swiftly announced massive tariffs on US trading partners, triggering global trade turmoil, with China as the main target.
While most countries received a 90-day reprieve beyond a new 10% tariff, China faced harsher terms.
Trump later raised tariffs on some Chinese products to 145%, citing China’s “lack of respect for global markets.
” However, this may have stemmed from Beijing’s readiness to confront US measures head-on.
While others pursued negotiation over retaliation, China responded forcefully.
On April 11, it dismissed Trump’s tariffs as a “joke” and raised its own tariffs against the US to 125%.
The world’s two largest economies are now entrenched in a high-stakes trade standoff, with no signs of either side backing down.
The conflict has heightened uncertainty in global markets, threatening economic stability and reshaping international trade dynamics in an increasingly polarized landscape.
Indeed, Beijing believes it can inflict at least as much damage on the US as vice versa, while at the same time expanding its global position.
Though tariffs may affect China’s export-oriented manufacturers – especially those in the coastal regions producing furniture, clothing, toys and home appliances for American consumers but since Trump first launched a tariff increase on China in 2018, a number of underlying economic factors have significantly shifted Beijing’s calculus.
Crucially, the importance of the US market to China’s export-driven economy has declined significantly.
In 2018, at the start of the first trade war, US-bound exports accounted for 19.8% of China’s total exports.
In 2023, that figure had fallen to 12.8%.
China entered the 2018 trade war in a phase of strong economic growth.
The current situation is, however, different due to sluggish global economy dominated by persistent universal inflation which has pushed businesses and policymakers to come to “factor-in” the existing harsh economic realities, even before the impact of tariffs.
Trump’s tariff policy against China may also allow Beijing a useful external scapegoat, allowing it to rally public sentiment and shift blame for the economic slowdown to US aggression.
China also understands that the US cannot easily replace its dependency on Chinese goods, particularly through its supply chains.
While direct US imports from China have decreased, many goods now imported from third countries still rely on Chinese-made components or raw materials.
By 2022, the US relied on China for 532 key product categories—nearly four times more than in 2000—while China halved its dependence on US goods.
Rising tariffs risk raising prices, potentially angering American consumers, especially blue-collar voters.
Beijing views this as a threat that could push the US economy toward recession.
China holds powerful tools of retaliation, dominating the global rare earth supply chain—essential for military and tech industries—and supplying about 72% of US imports.
On March 4, it added 15 US entities to its export control list, followed by 12 more on April 9.
It also targeted key US agricultural exports like poultry and soybeans—heavily reliant on Chinese demand and concentrated in Republican states.
That same day, China revoked import approvals for three major US soybean exporters.
And on the tech side, many US companies – such as Apple and Tesla – remain deeply tied to Chinese manufacturing.
Tariffs threaten to shrink their profit margins significantly, something Beijing believes can be used as a source of leverage against the Trump administration.
Already, Beijing is reportedly planning to strike back through regulatory pressure on US companies operating in China.
While Beijing thinks it can weather Trump’s sweeping tariffs on a bilateral basis, it also believes the US broadside against its own trading partners has created a generational strategic opportunity to displace American hegemony.
Close to home, this shift could significantly reshape the geopolitical landscape of East Asia.
Already on March 30 – after Trump had first raised tariffs on Beijing – China, Japan and South Korea hosted their first economic dialogue in five years and pledged to advance a trilateral free trade agreement.
The move was particularly remarkable given how carefully the US had worked to cultivate its Japanese and South Korean allies during the Biden administration as part of its strategy to counter Chinese regional influence.
From Beijing’s perspective, Trump’s actions offer an opportunity to directly erode US sway in the Indo-Pacific.
Similarly, Trump’s steep tariffs on Southeast Asian countries, which were also a major strategic regional priority during the Biden administration, may push those nations closer to China.
Chinese state media announced on April 11 that President Xi Jinping will pay state visits to Vietnam, Malaysia and Cambodia from April 14-18, aiming to deepen “all-round cooperation” with neighboring countries.
Notably, all three Southeast Asian nations were targeted with now-paused reciprocal tariffs by the Trump administration – 49% on Cambodian goods, 46% on Vietnamese exports and 24% on products from Malaysia.
Farther away from China lies an even more promising strategic opportunity.
Trump’s tariff strategy has created a promising strategic opportunity for China in Europe and has prompted China and officials from the European Union to contemplate strengthening their own previously strained trade ties, something that could weaken the transatlantic alliance.
The president of the European Commission and China’s premier, held talks in April during which both sides jointly condemned US trade protectionism and advocated for free and open trade.
Coincidentally, on April 9, the day China raised tariffs on US goods to 84%, the EU also announced its first wave of retaliatory measures – imposing a 25% tariff on selected US imports worth over €20 billion – but delayed implementation following Trump’s 90-day pause.
—The writer is Former Civil Servant and Consultant (ILO) & International Organisation for Migration and author of seven books. (mughal_rashid@hotmail.com)
