Following Donald Trump’s imposition of punitive tariffs on America’s largest trading partners, Mexico and Canada, which caused a downturn in the stock market and instilled fear among allies about becoming targets themselves, he redirected his focus to his longstanding rival: China.
However, in contrast to the hefty 25% tariffs on goods from his North American neighbors – currently paused for a month – the 10% tariffs on Chinese imports seemed almost moderate by comparison.
Analysts speculated that there might have been an influence from Elon Musk. The world’s wealthiest individual and self-proclaimed “first friend” to Donald Trump has significant business interests in China.
Alternatively, this could merely be the initial move in a larger strategy.
If history serves as a guide—albeit in the complex context of the current administration—Trump’s first term provides some insights.
Containers in Nanjing Port, China
During Trump’s first presidency, while I was reporting from Beijing, the trade war between the US and China intensified, inflicting economic hardship on consumers and businesses in both nations.
This week, China expressed its desire to avoid another trade war, but it was evident that Beijing was ready for conflict, promptly implementing a range of countermeasures aimed at American companies.
While it’s unwise to assert a full understanding of the thoughts of China’s secretive leaders regarding Mr. Trump, there are grounds to believe they might interpret his aggressive foreign policy as an opportunity.
The United States has led the so-called “rules-based international order” since the conclusion of World War II—a system wherein nations adhere to established norms and treaties pertaining to trade and territorial integrity.
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However, Donald Trump has dedicated much of the last fortnight to dismantling the established framework, potentially giving Beijing an opportunity to revise it to suit its interests. For instance, China has long sought to shift focus away from liberal universal values centered on individual freedoms to alternative rights centered on development and economic growth.
This may well be a moment for Beijing to present itself as a stabilizing force amidst chaos, a sentiment echoed by one diplomat who characterized it as “the adult in the room”.
When China assumed the presidency of the UN Security Council this week, its envoy portrayed the nation as a steady presence amid turbulent times.
China’s Ambassador to the United Nations Fu Cong
“The world is entering a very turbulent period,” China’s UN envoy, Fu Cong, stated as he took on the gavel on Monday, advocating for collaboration between the two largest nations on critical global issues such as climate change and AI.
“There’s no winner in a trade war,” he remarked.
But could China genuinely emerge victorious?
Beyond trade, the US government’s abrupt closure of USAID (United States Agency for International Development) offers China the opportunity to enhance its own global development image.
Ambassador Fu mentioned that China would persist in its efforts through the Belt and Road Initiative—China’s global infrastructure investment strategy—to foster “better development” in the Global South. This announcement came shortly after Panama revealed it was stepping back from the Belt and Road agreement under pressure from Washington.
“We have scored an own goal,” stated Prof Chris Barrett, an economist at Cornell University, in an interview with RTÉ News.
He noted that tariffs are just one facet of the issue—other concerns include the cutting of aid, withdrawal from the World Health Organization, and the Paris Climate Agreement.
“It’s difficult to underestimate how these actions have adversely affected goodwill toward the United States,” he explained. “We find ourselves in an intense competition with China, and somewhat with Russia, across much of the Global South.”
Barrett expressed that he expected governments, particularly in sub-Saharan Africa, where vital minerals necessary for the tech industry are found, to prefer agreements with China rather than the United States.
Protest against closure of USAID in Washington DC
“Our advantage as a trusted partner has diminished,” he stated. “Consequently, we are now competing on similar transactional grounds as China.”
Furthermore, the US President’s flirtation with territorial expansion—consider Greenland, Panama, Canada, and now even Gaza—could inadvertently benefit China.
This situation provides Beijing with useful cover as it discreetly establishes settlements within the borders of Bhutan, solidifies its presence in contested areas of the South China Sea, and considers the annexation of self-governing Taiwan.
“Mr. Trump’s trade behavior and territorial rhetoric will expedite China’s efforts to reshape and bifurcate the global order,” Velina Tchakarova of FACE geopolitical risk consultancy in Vienna told RTÉ News.
This could lead to the expansion of alternative trade agreements, like BRICS+, which lie outside US influence, she asserted.
BRICS+ is a coalition of non-western nations, including Brazil, Russia, India, China, South Africa, and five others, established primarily as a counterbalance to what the members perceive as excessive American and European dominance over global institutions, like the World Bank and the UN Security Council.
It also seeks to lessen dependence on the US dollar in global markets—an aim likely to gain traction in light of a US-led trade war.
“[Mr. Trump’s] aggressive economic confrontations with the Global South will drive more nations toward ‘dedollarisation’,” Ms. Tchakarova remarked.
Although the US dollar maintains its status as the world’s leading currency, it has ceded some market share to other national currencies—including the Chinese yuan—over recent years.
Nonetheless, countries observing Trump’s more confrontational foreign policy should be cautious about assuming that China presents a more stable alternative, cautioned Isaac Stone Fish, CEO and founder of Strategy Risks, a business intelligence firm.
“There’s a prevalent misconception among governments and investors about taking Beijing’s statements at face value,” he noted.
“There’s a significant gap between Chinese propaganda and Beijing’s actual strategy,” he continued.
“Beijing welcomes other nations advancing its interests,” he explained, but the Chinese leadership evaluates foreign policy through the lens of what serves “Beijing’s best interests”.
Donald Trump said he wasn’t worried about Chinese countermeasures on tariffs
Like the US under Trump, Beijing is not unfamiliar with aggressive economic coercion, especially when trading partners deviate from the Communist Party’s expectations.
In 2020, when Australian Prime Minister Scott Morrison called for an independent inquiry into the origins of the Covid-19 pandemic, which commenced in Wuhan, China, leading to approximately seven million global deaths, the Chinese government reacted furiously.
Chinese state media lashed out, branding Australia as “gum stuck to the bottom of China’s shoe”.
Rapidly imposed steep tariffs on Australian exports to China—including timber, barley, beef, cotton, wine, and lobster—prompted Australia to file a complaint with the World Trade Organization, a move mirrored by China this week concerning Trump’s tariffs.
In a prior incident, when the Norwegian committee awarded the Nobel Peace Prize to Chinese democracy advocate Liu Xiaobo, China froze economic and diplomatic relations with Norway. Shipments of Norwegian salmon rotted in Chinese warehouses as contracts were unceremoniously terminated.
Restoring those trading relationships required years of diplomatic reconciliation with Beijing.
Yet, as Trump’s America seemed to turn its back on the “rules-based international order” credited with maintaining stability for the last eighty years, traditional allies in Europe were left in a state of uncertainty, questioning what Washington’s future intentions might be.
“Europe faces a stark choice – to either align more closely with the US through deeper economic integration and defense commitments,” Ms. Tchakarova noted, or “to seek limited geoeconomic gains with China, such as reviving the CAI.”
CAI refers to the “comprehensive EU-China investment agreement” crafted in 2020 but shelved after China imposed sanctions on Members of the European Parliament in response to their criticisms of China’s human rights violations in Xinjiang and Hong Kong.
EU Commission President Ursula von der Leyen softened her tone on China
Beijing has actively sought to create a diplomatic rift between Brussels and Washington, particularly concerning criticisms of China, including human rights abuses.
With Trump’s return to power across the Atlantic, could this be a chance for China to mend its relationship with Europe following a period of frostiness?
“If I were in Brussels, I would bear in mind that there’s a way to work with the Trump administration and that this will last only four years,” advised Mr. Stone Fish.
“The ‘muscular authoritarianism’ under the Chinese Communist Party is likely to endure far longer,” he remarked.
China’s ongoing support for Russia amidst its invasion of Ukraine will also not be forgotten by Europeans any time soon.
Nonetheless, it was evident this week that some EU leaders were already moderating their stance.
“I believe we can identify agreements that could even enhance our trade and investment relationships,” European Commission President Ursula von der Leyen said during a meeting with EU ambassadors.
“It’s a delicate balance we need to maintain, but it could lead to a more fair and balanced relationship with one of the world’s economic powerhouses,” she added, “and that could be beneficial for Europe.”
This sentiment would surely resonate with Beijing—and is undeniably another win for China, just weeks into Trump’s presidency.
