Senior North America correspondent
Donald Trump’s trade conflict with China has escalated significantly.
No longer is it a broad confrontation with multiple countries; it has shifted back to a familiar battleground: the U.S. versus China.
The recent 90-day delay on increased “retaliatory” tariffs on numerous nations still preserves a uniform 10% tariff across the board.
However, China, responsible for a significant portion of U.S. imports, has been targeted with a staggering 125% tariff rate.
Trump attributed this hike to China’s potential response, which includes an 84% tariff on American goods—an action he described as a blatant “disrespect”.
For the politician who initially secured his presidency with an anti-China platform, this issue is more complex than mere retaliation.
This represents unfinished business from his initial presidential term.
As he explained to the press: “We didn’t have the opportunity to do the right thing before, which we are addressing now.”
The ultimate goal appears to be dismantling the established global trading system that has positioned China as the world’s manufacturing hub, along with the longstanding belief that increasing trade is inherently beneficial.
Reuters
To grasp the significance of this decision in the U.S. presidency, we must revisit a time before Trump even entered the political arena.
In 2012, during my reporting in Shanghai, increased trading with China was widely considered advantageous by global business figures, Chinese officials, international delegations, and economists.
It was seen as a driver for global economic growth, providing an endless supply of affordable goods, enriching China’s workforce, and offering lucrative avenues for multinational corporations targeting China’s emerging middle class.
Within just a few years of my arrival, China overtook the U.S. as the largest market for Rolls Royce, General Motors, and Volkswagen.
There was also a deeper rationale behind this optimism.
The belief was that as China prospered, its citizens would demand political reform.
This change in consumer behavior was expected to facilitate China’s transition to a consumer-based economy.
However, the anticipated political reforms never materialized, and the ruling Communist Party has maintained a tighter grip on authority.
Additionally, the expected transition to a consumer-led economy has not progressed swiftly enough, as China remains reliant on exports and has actively sought to enhance its dominance.
The notorious policy document, “Made in China 2025,” published in 2015, outlined an ambitious state-sponsored vision to become a global leader in several critical manufacturing industries, including aerospace, shipbuilding, and electric vehicles.
Then, just a year later, an unknown political outsider launched a campaign for the U.S. presidency, repeatedly asserting that China’s ascent had deleteriously affected the American economy, contributed to the decline of the Rust Belt, and deprived working-class Americans of their jobs and dignity.
Trump’s trade war revolutionized the conventional approach, fundamentally dismantling the existing consensus. His successor, President Joe Biden, has retained many of the tariffs on China.
Nevertheless, while these tariffs have undoubtedly induced some economic strain on China, they have not significantly altered its economic paradigm.
Currently, China produces 60% of the world’s electric vehicles, with a substantial share built by its domestic brands, and manufactures 80% of their batteries.
Now, with Trump reinstating these tariff escalations, this might be seen as one of the most seismic shifts to the established global trading framework, pending all the fluctuating tariff strategies he has recently announced.
Moving forward, there are two pivotal questions that will dictate the developments.
First, will China accept the proposal to negotiate?
Secondly, if it eventually joins negotiations, is China prepared to make the substantial concessions that the U.S. demands, including a complete revamp of its export-dominated economic approach?
Addressing these questions is tricky, as we are treading on unprecedented ground, and any assumptions about Beijing’s potential reactions should be approached with caution.
However, there are certainly grounds for concern.
China’s economic strategy—focused on robust exports and a safeguarded domestic market—is tightly interwoven with its vision for national rejuvenation and the dominance of its one-party system.
Moreover, its stringent control of information suggests that it is unlikely to lower barriers to American technological firms, for instance.
There is a third question, however, that America must contemplate.
Does the United States maintain its belief in free trade? Notably, Trump often portrays tariffs as advantageous, not just as tools to achieve an end, but as goals in themselves.
He advocates for the benefits of protective trade measures in the U.S. to stimulate domestic investments, motivate American companies to relocate supply chains back home, and increase tax revenue.
If Beijing concludes that the primary goal of the tariffs is indeed such protectionism, it may decide there is no basis for negotiation.
Instead of promoting economic cooperation, these two global powers may find themselves entrenched in a struggle for economic superiority.
If that occurs, it would signify a definitive break from the former consensus and usher in a potentially perilous future.
