In a significant escalation of trade tensions, the United States has announced a new 10% tariff on all Chinese goods, set to take effect soon. This move has raised eyebrows in Beijing, where officials have maintained a surprisingly subdued response, opting for a diplomatic approach rather than immediate retaliation.
The backdrop to this development includes a series of tariffs imposed by former President Donald Trump during his first term, which Beijing previously labeled as a "trade war." However, the current situation appears to be different. While Canada and Mexico swiftly announced retaliatory measures, with Canadian Prime Minister Justin Trudeau declaring a 25% levy on over $100 billion of American goods, China has chosen to hold its fire for now.
Experts suggest that China’s muted response may be strategic, aimed at preventing panic among its population, which is already grappling with a sluggish economy. The Chinese government has called for dialogue, urging the U.S. to "meet China halfway," and reports indicate that a potential phone call between Trump and Chinese President Xi Jinping could occur soon.
China’s economy, while still impacted by U.S. tariffs, has diversified its trade relationships significantly. It has strengthened ties across Africa, South America, and Southeast Asia, becoming the largest trading partner for over 120 countries. This shift may provide Beijing with the resilience to endure the latest round of tariffs without immediate panic.
Analysts believe that the new tariffs may not yield the leverage Trump hopes for. Chong Ja Ian from Carnegie China noted that China may perceive the 10% levy as manageable, suggesting that Beijing is adopting a calm demeanor to avoid escalating tensions unnecessarily.
In the broader context, Xi Jinping may see an opportunity arising from the uncertainty sown by Trump’s policies. As Trump threatens tariffs on various allies, including the European Union, China is positioning itself as a stable and attractive alternative in global trade. Yun Sun, director of the China program at the Stimson Center, argues that a decline in U.S. leadership could benefit China strategically, allowing it to present itself as a reliable partner to nations wary of American unpredictability.
Since the end of the COVID-19 pandemic, Xi has actively sought to bolster China’s international standing, supporting key global institutions and agreements. As the U.S. retreats from its traditional role in global governance—evidenced by Trump’s freeze on foreign assistance—China is poised to fill the void, particularly in regions reliant on U.S. aid.
However, the geopolitical landscape remains fraught with tension, especially in the Asia-Pacific region. Countries like Japan, South Korea, and Australia are wary of China’s assertiveness, particularly regarding territorial disputes in the South China Sea and the contentious issue of Taiwan. These nations may seek to strengthen regional alliances, motivated by concerns over both Chinese aggression and uncertainty surrounding U.S. commitments.
As the Chinese New Year celebrations wind down, the Chinese government faces critical decisions regarding its trade strategy with the U.S. While officials have indicated a desire for stability and potential negotiations, the unpredictability of Trump’s administration poses significant challenges. Experts warn that the combination of tariffs and a withdrawal from international partnerships could lead to further disruptions in U.S.-China relations.
In this evolving scenario, China appears to be carefully weighing its options, aiming to maintain economic stability while also looking for opportunities to expand its influence on the global stage amidst shifting power dynamics.