With retaliatory tariffs intensifying between Washington and Beijing, the divisions within the globe’s leading economic powers are becoming increasingly pronounced.
The US-China trade war
has reached new heights as Beijing raised its retaliatory tariffs on US goods to 125%, hitting back against US President Donald Trump’s decision to hike duties on Chinese goods to 145%.
On Friday, Chinese President Xi Jinping offered his initial remarks regarding the intensifying trade dispute during discussions with Spain’s Prime Minister Pedro Sanchez in Beijing. He stated, “A trade war benefits nobody, and defying global trends can result only in one’s own isolation.”
Xi also emphasized that Beijing is “unafraid” and showed faith in the country’s capability to tackle the difficulties presented by U.S. President Donald Trump’s policies.
“No matter how the outside world evolves, China will maintain confidence, keep its focus, and dedicate itself to handling its domestic matters effectively,” according to remarks attributed to Xi by China’s state television network CCTV.
Trump takes aim at China
On April 2, Trump announced extensive tariffs affecting all U.S. trading partners, launching a full-scale attack on international commerce.
causing ripples across the global economic landscape.
The taxes were scheduled to begin on April 9.
However, just hours later, the U.S. president declared a 90-day suspension of tariffs for more than 75 nations that were engaged in trade talks with Washington.
Trump, however,
left China out of the pause
And instead increased tariffs on Chinese imports as retaliation for China’s initial countermeasures.
Criticizing China for demonstrating “disrespect,” the U.S. president increased the tariffs to 125%. This adjustment pushed the overall taxes on goods coming from China up to 145%, which includes an earlier duty of 20% levied due to allegations that Beijing did not control the export of fentanyl to America.
Beijing denounced Trump’s moves as “bullied behavior” and pledged to respond with countermeasures “until the very end.”
If Washington continues to impose additional tariffs on Chinese goods, “China will ignore it,” the nation’s Commerce Ministry stated on Friday, pointing out that US goods would then no longer make economic sense for importers.
Is the relationship between the US and China heading towards decoupling?
The escalating tit-for-tat tariffs
And the reluctance from both parties to start negotiations might result in a collapse of trade relations between the United States, the biggest global economy, and China, which has the second-biggest economy.
“At present, both the United States and the People’s Republic of China are attempting to inflict greater suffering on each other,” Professor Chong Ja Ian from the National University of Singapore stated to GaptekZone. He serves as an associate professor of political science.
Even though China’s dependence on the U.S. market for trade has decreased over time, it still plays a significant role, with the eastern powerhouse exporting around $440 billion worth of products to the United States in 2024.
Conversely, China plays an essential role as an export destination for U.S. products, notably including agricultural items such as soybeans and pork, along with advanced technology goods.
Considering the closely knitted trade relationship between these nations, the continuing tariff dispute has evolved into a test of “which side can endure longer,” according to Chong.
Even though some people still believe that both parties might ultimately retreat, Chong considers this idea as “naive optimism,” particularly considering the leadership approaches of Trump and Xi.
He stated that neither party wishes to appear weak. Each side aims to present a stern demeanor both verbally and action-wise. This dynamic can lead to reduced negotiations, decreased openness to concessions, and an increased risk of heightened tensions.
The extent to which these two economic systems become completely detached from each other hinges on the duration of the reciprocal actions and whether both parties maintain the intensification as an issue between just the two of them, Chong explained. He pointed out that certain products also find their way to the U.S. or China via intermediary nations.
Wang Guo-Chen, an economist specializing in China at the Chung-Hua Institution for Economic Research in Taipei, argues that the US and China have “already economically decoupled in practice as Chinese goods have been unable to enter the US market since Trump raised tariffs to 104%.”
What’s in China’s toolkit?
Since the onset of the newest phase of the trade conflict, China has responded with counter-tariffs, limitations on exports to the U.S., and halting purchases of American agriculture products. Most recently, Beijing has introduced further measures for retaliation.
On April 11, China’s National Film Administration declared their intention to “somewhat decrease” the number of Hollywood movies released in the Chinese market. This decision was influenced by the expected decline in appeal of US films due to the imposition of a 145% tariff on Chinese exports to the United States.
In the meantime, China’s Commerce Ministry has committed to helping “businesses engaged in foreign trade that are encountering difficulties with exports” by utilizing the extensive domestic market via trade-in schemes and governmental programs.
However, this shift towards domestic focus might lead to unforeseen outcomes, particularly for international companies doing business in China, as they could encounter heightened rivalry from Chinese enterprises, according to Dali Yang, a political scientist and specialist on China at the University of Chicago.
In recent years, Beijing has made efforts to broaden its trading avenues, effectively relocating part of its manufacturing to countries like Vietnam, various Southeast Asian nations, and Mexico. However, this approach is currently encountering fresh challenges.
“A portion of the Trump administration’s strategy aims to hinder or reduce such initiatives,” Yang explained to GaptekZone, noting that these alternate marketplaces possess only a finite capability to accommodate all the Chinese products previously intended for the U.S. marketplace.
“The straightforward truth is that China functions at such a magnitude that if permitted, it could essentially supply the whole global market,” Yang pointed out, emphasizing the excess capacity problem that persists and affects China’s trading dynamics.
In the meantime, the United States continues to be a more appealing trading partner for most nations. “When most countries engage in trade with the U.S., they usually generate surpluses. Conversely, numerous trade partners of China, despite gaining advantages from Chinese products, often face deficits.”
“Trading with China, therefore, may not always result in significant job creation in those countries, as the imbalance often favors China,” Yang said.
Is Beijing going to stand alone in this battle?
Even though Trump’s extensive tariffs have had worldwide effects, China stands isolated in this “counterattack,” as various Asian leaders—including those from Vietnam, Cambodia, and India—swiftly indicated their readiness to de-escalate tensions with the U.S. Meanwhile, Japan and South Korea dispatched representatives for talks.
“Wang believes much of this can be attributed to Beijing’s miscalculation of the circumstances,” he stated, noting that China assumed others would align with their approach after asserting themselves forcefully. “However, rather than adhering to Beijing’s lead, nations hastened to contact Trump and set up discussions,” the analyst highlighted.
Experts argue that Beijing’s strategy is designed to both capitalize on and address the increasing wave of nationalism within China.
Under President Xi Jinping’s guidance, China has adopted an assertive and combative “wolf warrior” diplomatic approach. This strategy has become more pronounced due to increasing tensions between the two nations, leading to heightened anti-American sentiments.
However, there’s a danger that the hostility created might be hard to reverse and manage,” Chong pointed out. “This leads to a scenario where China is probably less inclined to make concessions, particularly if those compromises become apparent.
Edited by: Srinivas Mazumdaru
Author: Yuchen Li (based in Taipei)
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