In Trump’s Trade War, It’s Advantage China
Doug Nealy.
Without Rhyme or Reason
“We welcomed the Chinese Communist Party into this global order. And they took advantage of all its benefits. But they ignored all its obligations and responsibilities. Instead, they have lied, cheated, hacked and stolen their way to global superpower status, at our expense.”
So said Senator Marco Rubio during confirmation hearings to become secretary of state in the second Trump administration. In those few lines were indicators of the core beliefs that underlie current US policy toward China: that only China has “ignored all its obligations and responsibilities” and is untrustworthy; that China cheated its way to becom 5/112/25ng rich; and, most disturbing, that US trade and technology policy must fully disconnect from China lest it continue to develop “at our expense.”
Rubio took a page from Ronald Reagan’s accusation that the Russians “lie, cheat, and steal.” Except that Reagan found common ground with Moscow on arms control and rejected a tariff war to correct US trade deficits. Now, Donald Trump, in his second time around as President, has rejected finding common ground as the basis for relations with China and is again conducting a tariff war.
Following the Project 2025 script on China—specifically, Peter Navarro’s section on trade relations—Trump has made a significant economic decoupling the essence of his China policy. In direct contrast, Beijing, along with the European Union, has become the leading exponent of economic globalization: multilateralism, negotiations to lower trade barriers, and assured supply chains. To China’s not-so-quiet satisfaction, Trump has put the US on the outside of the system, looking in and finding few allies.
Trump’s Tariff Barrage
For many years, Donald Trump has based his obsession with trade deficits on the belief that Japan and China have “ripped off” America. His current tariff war with China is an extension of the tariffs he imposed in his first term. Except that now, he has gone far beyond past tariff hikes—first, by imposing two 10-percent tariffs, then by hitting China with a further 34-percent tariff in March. When China matched Trump’s tariffs, he piled on, raising the tariff rate to 145 percent in April. China again responded, this time with a 125-percent tariff on US goods plus restrictions on rare earth minerals exports to the US and on 11 US companies that will no longer be able to do business in China.
Trump’s public argument for the tariffs is two-fold: US trade partners with the highest trade surpluses must lower their tariffs on US imports, and US and other multinational firms must move their manufacturing back to the US if they want to avoid tariffs. China, with a trade surplus with the US of around $295 billion, is the leading target.
The Trump strategy comes down to this: If China does not lower its tariffs, the US will not lower its tariff on Chinese goods, forcing China and US companies based in China to seek alternative markets in neighboring countries. But they will supposedly be blocked there, since Trump has imposed very high tariffs on their exports to the US: 46 percent on Vietnam, 49 percent on Cambodia, 24 percent on Malaysia, and 36 percent on Thailand. As an unnamed White House official said: “Once you see a lot of countries—not just in southeast Asia or Asia, but all over—you’ll see that they’re willing to make deals with America, and that exerts pressure on China to hopefully come to the table.” But will it?
Misreading China
When China refused to buckle under last month, Trump wrote on his Truth Social: “China played it wrong, they panicked—the one thing they cannot afford to do.” Actually, China was prepared for the moment. With about $900 billion in trade with the 10-nation Association of Southeast Asian Nations (ASEAN) in 2024, Beijing was not about to step back. Soon after Trump announced his high tariff rates, Xi Jinping visited Vietnam, Cambodia, and Malaysia, emphasizing solidarity against US “unilateralism and hegemonism” at each stop.
He received lavish welcomes, and signed multiple deals that covered cultural and scientific exchanges as well as trade. Malaysia’s Prime Minister Anwar Ibrahim told Xi: “In the face of [US] unilateralism, Malaysia wishes to strengthen cooperation with China and together deal with risks and challenges. The ASEAN cannot approve of any unilateral method of imposing tariffs.”
Brian Harding, former country director for Asian and Pacific security affairs in the Office of the Secretary of Defense, said: “It’s clear that China is portraying itself as the reliable economic partner for Southeast Asian countries. The countries in the region are going to fundamentally not trust the United States moving forward.”
China may play Trump’s tariffs to their advantage in other ways. Contrary to the White House official’s statement quoted above, some international companies, jolted by the unpredictability of US trade policy, are not rushing home. Some have decidedto stay in China.
Apple has announced that it will move its iPhone production to India, not home. Moreover, China might use Trump’s tariff war as an opportunity to make needed domestic policy changes, such as increasing self-reliance in goods it typically imports and investing more in household consumption.
Then there’s Japan, which has begun talks with the US that, according to Trump, involve “Tariffs, the cost of military support, and ‘TRADE FAIRNESS.’” Such pressure tactics may backfire, though Japan also has to contend with Beijing’s warning to Japan and all other trade partners not to use trade talks with Trump as leverage against China.
Who Will Blink First?
Some observers have speculated that Trump’s heavy tariffs on China were designed to force Xi Jinping to the bargaining table at a summit meeting, where a new trade deal favorable to the US would be worked out. Trump agreed with his treasury secretary that the current situation with China was “not sustainable,” but he pretendedthat the US is the aggrieved party:
“Oh, there’s a [tariff] number at which [the Chinese] will feel comfortable. But you can’t let them make a trillion dollars from us. You can’t let them make $750 billion. See, that’s really what’s not sustainable when China makes a trillion dollars, or a trillion one, when we have almost $2 trillion worth of, I call it loss. Some people don’t, but a lot of it’s loss. I say, when you have a trade deficit of $2 trillion I consider that loss.”
That’s a sadly mistaken way to approach China. The Chinese regard the current trade arrangement as mutually beneficial, hence no reason to come begging. Their agreement to an opening round of talks with US trade representatives is nothing more than that: talking, which could go on for a long time.
Beijing believes time is on its side and that Trump, beset by growing anxiety at home over consumer prices and a recession, needs a speedy deal. Dismissive and belittling remarks by Trump—that ending trade with China involves little more sacrifice than Americans buying fewer dolls at Christmas—and JD Vance—“we borrow money from Chinese peasants to buy the things those Chinese peasants manufacture”—won’t win favors from China. As the Chinese might be thinking, “taking advantage of another’s misfortunes” (乘人之危) makes sense right now.
An Avoidable Calamity
US-China relations increasingly resembles a new Cold War, with profound mistrust the central problem. As Foreign Minister Wang Yi said in March 2025 with reference to Trump’s tariffs on Chinese exports: “No country should fantasize that it can suppress China and maintain good relations with China at the same time. Such two-faced acts are not good for the stability of bilateral relations, or for building mutual trust.”
But the Chinese surely understand by now that Trump doesn’t conduct foreign relations with the aim of building trust or finding win-win solutions. His end game is winning—a game that China isn’t interested in playing. The Chinese believe in competing, they are invoking patriotism to justify sacrifices some businesses will make, and they seem to have plenty of alternatives in trade and investments even if Trump completely decouples the US economy from China’s.
Perhaps Trump is banking on a new strategic triangle in international relations, in which closer US relations with Russia will be at China’s expense. So far, however, Xi and Putin continue to affirm their unbreakable friendship and mutual support, most recently the other day when Xi visited Moscow. They are talking about ways to combat Trump’s “dual containment” strategy. It thus seems highly unlikely that Trump will succeed either in mellowing Putin’s ambitions in Europe or making China more compliant with his trade strategy.
Would a different US strategy work, one that uses incentives to engage China in search of common ground? The former US ambassador to China, Nicholas Burns, observed in an interview just days before ending his tenure in January 2025 that the “central question is: how do you compete vigorously and at the same time keep the peace with China? That is what is at stake here for the United States and China.”
Though he strongly endorsed the importance of direct contact with the Chinese, he said that engaging China only occupied about 20 percent of his time. Eighty percent was devoted to competition with China.
And that was in the Biden era. Trump’s China policy is even farther from engagement—that is, a serious dialogue with China for mutual benefit and trust building.
China’s advantage in this war stems not only from its greater maneuvering room than in Trump 1.0. Its economy and its global economic influence are far stronger now. In addition, China benefits from two serious weaknesses in Trump 2.0.
The first is the outdated America First trade policy. It would take us back to a bygone era, one in which supply chains, economic globalization, and presumed national security threats across both oceans did not exist. Instead, we have Trump’s insistence on a beggar-thy-neighbor trade policy, akin to one that helped bring about the Great Depression.
Second is the divisiveness at home that America First is causing. Trump’s autocracy builds on a politics of retribution, mistrust of foreign policy and national security professionals, disregard for social justice and humanitarian assistance, and low valuation of alliances, commitments, pledges, and common values.
Most disturbing of all, Trump and his oligarchy deeply believe that authoritarian government is necessary for America to stay on top. Xi Jinping’s party-state system can get away with that, but a Trump regime will be in constant battle with the forces of democracy and the rule of law at home and abroad.
Advantage China.