Moments after Donald Trump launched tariffs of 10% on Chinese language items, Beijing retaliated with countermeasures.
China’s finance ministry put tariffs of 10-15% on imports of a spread of US items and its anti-trust regulator introduced an investigation into Google. A number of US firms had been additionally added to China’s “unreliable entity” listing, doubtlessly limiting their skill to conduct enterprise within the nation.
China’s response stands in stark distinction to the response from the opposite international locations hit by Trump’s commerce conflict 2.0, Mexico and Canada. After last-ditch negotiations on Monday involving the Canadian prime minister, Justin Trudeau, and the Mexican president, Claudia Sheinbaum, Trump agreed to pause plans to impose tariffs of 25% on each international locations. In trade for the reprieve, Trudeau promised to nominate a fentanyl czar and strengthen border safety, whereas Sheinbaum supplied to ship 10,000 troops to the border with the US.
A cope with China should still be on the playing cards. Trump is predicted to talk to his Chinese language counterpart, Xi Jinping, within the coming days and China’s tariffs don’t come into impact till 10 February. However Beijing has repeatedly mentioned it has already completed loads to deal with Trump’s official justification for the tariffs: the circulation of fentanyl from China to the US.
Additionally it is extensively acknowledged that Trump’s tariffs have one other goal in sight: the US’s giant commerce deficit with China, which reached $25bn (£20bn) in November 2024. In a memo revealed on his first day in workplace, Trump promised to “examine the causes of our nation’s giant and chronic annual commerce deficits”.
The pace at which China introduced countermeasures to his tariffs suggests the nation was well-prepared.
“China just isn’t afraid of the US within the tariff conflict, and prior to now seven years we now have recognized that Trump will push additional,” mentioned Wang Wen, the dean of the Chongyang institute for monetary research at Renmin College in Beijing. “China believes that this is not going to be the final tariff improve.”
Since Trump final instigated a commerce conflict with Beijing throughout his first time period, Wang mentioned China had discovered to “dare to battle … to defend its core pursuits”.
Different analysts famous that Beijing’s response this time appeared extra cautious than in 2018.
The tariffs it imposed in 2018 seemed to be designed to trigger Trump most political hurt. It put a 25% levy on US agricultural merchandise, inflicting financial ache to farmers in Republican-supporting states and damaging Trump’s base. This time it has imposed levies on US exports which have restricted publicity to China similar to liquified pure fuel and crude oil.
“When the US tariffs took impact, China launched one other tariff. I believe it’s fairly regular,” Steven Leung of UOB Kay Hian, a Singaporean brokerage agency, informed Reuters. “China is making an attempt to get some bargaining energy earlier than getting near the negotiating desk. It doesn’t imply that they won’t go for negotiation talks.”
“My impression is that that is principally about face, and in addition additionally its home viewers,” mentioned Alicia Garcia-Herrero, the chief economist for the Asia Pacific at Natixis, a financial institution. “It isn’t actually a full escalation however a posture.”
China’s economic system is much less well-equipped to face up to an escalating commerce conflict than it was in 2018. Trump has additionally change into extra of a recognized amount, and is seen in Beijing as being a dealmaker who might be negotiated with.
The economic system has change into extra reliant on exports since 2018. The pandemic battered home demand and a regulatory crackdown on the actual property sector torpedoed funding within the business that was once a key driver of GDP development.
In seemingly anticipation of Trump tariffs, Chinese language exports to the US surged in December, growing by 16% in contrast with December 2023. They grew by 5% over 2024 as an entire. China’s annual international commerce surplus reached almost $1trn, a file excessive.
Economists at Ing famous earlier this month: “Whereas we’re not as pessimistic as many in markets on the influence of tariffs on China’s development trajectory, it’s seemingly that for China to have the ability to see steady development in 2025, we might want to see the home demand facet choosing up the slack.”
The opposite possibility obtainable to Beijing to cease the commerce conflict in its tracks is to emulate Mexico and Canada and strike a deal. The Wall Avenue Journal reported on Monday that China was contemplating resurrecting the “section one” commerce deal signed in 2020. Underneath that deal, it agreed to extend purchases of sure US items by no less than $200bn in 2020 and 2021, however it fell round 60% wanting its commitments.
The WSJ reported that policymakers in Beijing had been contemplating if there have been different areas the place China might purchase extra from the US, particularly in sectors very important to its personal financial improvement, similar to semiconductors. The US has banned the export of probably the most superior chips to China, one thing that Beijing sees as containment.
The destiny of TikTok, the video-sharing app owned by the Chinese language firm Bytedance that’s going through a ban within the US, might also be on the negotiating desk. Trump signed an government order delaying the ban by 75 days on his first day in workplace.
The primary high-level face-to-face assembly between the US and China appears prone to occur at a UN safety council assembly on 18 February. China’s UN envoy, Fu Cong, mentioned on Monday that it will be an excellent alternative for the Chinese language international minister, Wang Yi, and the US secretary of state, Marco Rubio, to fulfill. “A lot is at stake,” he mentioned.
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