February 4, 2025 - 4:00pm

While campaigning for the presidency last year, Donald Trump threatened to impose 60% tariffs on China. Yet just days after his second inauguration last month, he stated that he would “rather not” place any further taxes on one of the US’s largest trading partners. Around the same time, he also detailed a successful phone call with Chinese leader Xi Jinping, concluding that “it is my expectation that we will solve many problems together, and starting immediately!”

Just a couple of weeks later, however, the picture is different. After Trump introduced a 10% charge on Chinese imports this week, China has responded with tariffs of its own, targeting liquefied natural gas, coal and crude oil.

Everything we have seen so far suggests that the two powers are in the midst of a preliminary — albeit significant — skirmish, in which mutual bluster, subterfuge and posturing will become the new normal. Trump wants a new deal with China following a gradual US decoupling process, and Beijing knows it. Chinese markets in the Global South, from Latin America and Africa to the Middle East and the rest of Asia, have expanded in recent years, yet Xi still recognises the countries’ importance to one another.

Figures for bilateral trade between America and China have slowly inched down in the last couple of years, but they remain vast. In 2024, the total value of trade goods between the two amounted to around $532 billion, consisting of $131 billion in exports from the US to China and $401 billion imports the other way, amounting to a  $270 billion trade deficit. Annual bilateral trade has totalled more than $500 billion for well over a decade.

The Chinese position may be softened by its current economic turbulence. Local government debt, youth unemployment and the housing market have all been under stress. Growth last year came in at 5%, according to official figures, though some doubt it was anything near as high. China would prefer to strike a deal, and could open more of its sectors up to US investment, take increased numbers of American goods, and make concessions to placate Trump without damaging its own economy.

The big question in all of this is whether the US President really has a clear idea of what he is looking for, and whether he is sufficiently nimble to take any of the strategic opportunities presently available. As the chief trading partner to more than 120 countries, China is a significantly larger player than Mexico and Canada — and presents far more complexity. America is important to Beijing, but not all-important. And despite its current woes, China may well have more grit for a fight ahead than America does, simply because the stakes for the nationalist government — should it be seen to cave in to Washington — are so high.

What is certain is that if a US-China trade war really does kick off, the rest of the world will be impacted. Together, the two countries constitute about 43% of global GDP, so their bilateral argument is invariably everyone’s business. If Trump is thinking tactically (and we have to hope that he is), his current threats will be a prelude to outlining a Sino-American deal rather than a perpetual standoff. China’s government is full of adept negotiators, and can handle this. But if he is just playing games with no clear outcome in mind, it may prove a costly mistake — not just for the US, but for everyone else, too.


Kerry Brown is Director of the Lau China Institute and Professor of Chinese Studies at King’s College, London. His latest book is The Taiwan Story.

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