Beijing must know that the Chinese government will fight against the disadvantage when it comes to trade wars with the United States.
Explanation
If no one was surprised by the Trump administration’s tariffs, they still shocked everyone – Beijing and the world.
Even as the White House puts a burden on almost every foreign producer and raises the cost of living in the US, President Donald Trump implicitly invited other nations to collect these “mutual” by retracting the trade binding he imposed on the US.
Rather than taking advantage of that invitation, China’s communist regime chose to fight. It quickly announced new tariffs on all American goods that were in the country, imposing sanctions on US companies, and implementing export restrictions on rare earth elements. Trump is responding with even higher tariffs on Chinese goods, while suspending the application of tariffs on other countries for 90 days. The White House is clearly aiming for China.
At this point, it is a state of play between Washington and Beijing. Trump imposed an additional 34% collection in an announcement in early April after imposing a 20% tariff on Chinese goods that previously entered the US. Beijing wasted no time responding and raised the collection of American-made imports into China to 84%. Trump then eased pressure on other countries by delaying the implementation of his tariffs, while adding more to tariffs on Chinese goods, bringing total collection to about 125%.
Small gestures from both sides provided fragments of hope that the US and China would avoid an all-out trade war. Trump declared that tariffs were less permanent than the lever of negotiations. In Beijing, his Commerce Department spokesman, Yadong, declared that China was “trying to engage with the US on key issues of bilateral trade.”
Seriously, there appears to be limited room for piloting these statements as they can hear. Beijing will have a hard time making concessions to Washington. Of course, for decades, the Chinese administration has put a huge burden on US products entering China, and the US companies that otherwise operate there. Even a small bailout in this respect may encourage Washington to succumb to tariffs, at least in part. But what Beijing does means that the CCP will undermine the need for the Chinese Communist Party (CCP) to fully and centralize everything economic and political. For CCP reader Xi Jinping, this is simply not an option.
Still, Beijing must know that the Chinese administration will fight against the disadvantage when it comes to trade wars with the United States. This has nothing to do with the military. Rather, China’s problems still lies heavily on its economy’s exports. For example, China exported approximately $51 billion in goods to the United States in 2023. This is the most recent year when complete data is available. In contrast, in the same year, the US exported only $143 billion to China, making China nearly triple vulnerable to trade restrictions with the US as it became almost three times more vulnerable to trade restrictions with China.
The US economy is much larger than China’s, so the impact on each of these economies will still be large. China’s exports to the US amount to about 3% of China’s gross domestic product (GDP), while exports to the US to the US are slightly above 1% of US GDP, so the overall economic impact of trade suppression is six times greater than in the US than in China.
Certainly, tariffs will raise costs on American consumers, but it will be a one-off event rather than ongoing pressure. China also cannot see other places to sell its products. Europe is already beginning to resist Chinese trade, and other parts of Asia have already complained about China’s “dumping.”
That’s still early on. Perhaps in the coming weeks and months, smart diplomats will find ways to square the circle and avoid a trade war that will hurt both countries, even if it will harm China more than the US.
The views expressed in this article are the views of the authors and do not necessarily reflect those of the epoch era.
