President Donald Trump has intensified trade tensions with China by announcing a 10% tariff on all Chinese goods entering the United States. This measure forms part of a broader strategy that also includes imposing a 10% tariff on Mexican products and a steeper 25% tariff on most Canadian goods. The announcement has prompted a swift response from China, which has vowed to challenge these tariffs through a complaint to the World Trade Organization (WTO). China's Ministry of Commerce declared that the new tariffs "seriously violate the WTO rules," and Beijing has committed to "resolutely defend its rights," though specific countermeasures remain unspecified.
This development marks another chapter in the long-standing trade tensions between the US and China. In 2018, President Trump imposed tariffs on hundreds of billions of dollars in Chinese imports, prompting China to retaliate with its own tariffs on American goods, estimated by analysts to be worth approximately $185 billion. The current tariffs, however, fall short of the 60% tariffs Trump suggested during his campaign.
The Trump administration is currently reviewing the US-China economic and trade relations, with a report expected by April 1. This review is anticipated to influence future decisions on whether the White House will impose additional duties on Chinese imports.
China has been actively preparing for reduced exposure to the US market by diversifying its trade partners, investments, and even its currency and payment systems.
“China has long been preparing less exposure to the US, diversifying in all ways, not just in terms of trading partners, investment, but also currencies and payment system.” – Keyu Jin, associate professor of economics at the London School of Economics
The economic impact of these tariffs is likely to be felt on both sides. Keyu Jin notes that the tariffs will potentially harm both countries but highlights a trend of Chinese companies gradually redirecting trade to other nations.
“The tariffs will hurt both countries. But you’ve seen already a gradual kind of redirection of trade to other countries (from Chinese companies).” – Keyu Jin, associate professor of economics at the London School of Economics
Despite the mounting tensions, China's state media reports that exports to the US constitute only 3% of China's GDP and less than 15% of its total exports. This suggests a relatively limited impact on China's broader economic landscape. Moreover, China has experienced an unexpectedly warm beginning to Trump's second term, as Chinese leaders aim to prevent further escalation in trade and technological disputes. Chinese Vice-Premier Ding Xuexiang has expressed Beijing's desire to "promote balanced trade" with global partners.
Amidst these developments, President Xi Jinping has called for a "new starting point" in US-China relations. Meanwhile, President Trump has shown indications of being open to negotiations with Beijing. His recent remarks about working with Xi Jinping on resolving Russia's war in Ukraine suggest a willingness to engage in deal-making with China.
“China has seen Trump as somebody who they can negotiate with, that there’s room for negotiation.” – Keyu Jin, associate professor of economics at the London School of Economics
