How prepared is China for the tariff clash with the US?

Beijing (Prensa Latina) The trade war with the United States in 2018, Donald Trump's first term, took China by surprise, but now that tariffs have reached 145 percent, what is the outlook for the Asian giant?

April 11, 2025
By Isaura Diez
Chief China Correspondent
Prensa Latina


Premier Li Qiang stressed that Beijing is prepared to face uncertainties, while acknowledging that external shocks have put some pressure on the smooth functioning of the national economy.

The escalation in the tariff war unleashed by Trump has China in its sights, the Asian giant responded with similar tariffs to the United States and the phrase: "China does not want confrontations, but it is not afraid to fight".

Here's the current picture: Chinese goods imported from the U.S. are subject to up to 145 percent tariffs (125 percent added in recent days and 20 percent under the fentanyl excuse), while all goods from the U.S. face 125 percent upon arrival here.

The Asian giant's Customs has already notified that if the White House insists on the tariff game and raises these levies again, Beijing will not pay any more attention to it.

China's Commerce Ministry added 12 more U.S. companies to the export control list and filed a lawsuit under the World Trade Organization's (WTO) dispute settlement mechanism over the latest tariff measures.

"There are no winners in a trade war, protectionism has no future," the Chinese government said.

But he also stressed that if Washington insists on its hegemonic approach and wishes to wage a tariff war "or any kind of war," China "will accompany it to the end."

According to President Xi Jinping, it is normal for there to be differences between two different systems, however, he pointed out that there is a high complementarity between the two economies and that the successes of one should not be seen as a threat to the other.

The Ministry of Commerce of the Asian giant assured that the door is open to dialogue, but if the United States really wants to negotiate it must do so with respect and equal treatment.


WHILE THE NEGOTIATIONS ARE COMING IN...

In a meeting with business leaders and experts from the Asian giant, the prime minister stressed the importance of strengthening trust, working in unity and focusing on internal issues to turn crises into opportunities.

He said that this will promote constant and long-term economic development in the country.

In view of the changes in the environment, he stressed the need to implement more active and effective macroeconomic policies to address external uncertainties.

The head of government pointed out that it is essential to expand and strengthen the internal cycle and prioritize the expansion of domestic demand as a long-term strategy.

He proposed increasing efforts to stabilize employment, boost income growth and unlock the potential for services consumption.

In addition, he stressed the importance of promoting the integration of scientific and technological innovation with industrial innovation, with the aim of leading demand with a high-quality offer.

Li Qiang also stressed the need to boost the vitality of all business entities, implement supportive policies to solve problems such as payment delays, difficult access to financing and high costs.

"We must help companies overcome difficulties and provide them with a better development environment," he said.

Indeed, China is focused on expanding domestic demand, which is set to be the true locomotive of the national economy, but challenges such as the real estate crisis and a decline in consumer confidence remain.

On the other hand, while the United States is a leader in protectionism, Beijing underscored its commitment to comprehensive reform and the country's increasing opening-up.

The idea is to create a unified, fair and optimized business environment with international standards and tariff flexibilities to attract foreign investment.

According to Li, the country's economic operation during the first quarter continued its rebound and the national economy stands out for its many advantages, strong resilience and great potential.

Analysts point out among the advantages of the Asian giant that it has a complete industrial system and a large market made up of an expanding middle class.

CHINA LOOKS AROUND

The Foreign Ministry confirmed Xi's trip to Vietnam, Malaysia and Cambodia next week on state visits that will include meetings at the highest level.

The president's tour, scheduled to begin next Monday and conclude next Thursday, will be focused on strengthening Beijing's already excellent political, economic and social relations with its neighbors and occurs in the midst of the escalation of tariffs by the United States against those nations.

In fact, these three countries are part of the Association of Southeast Asian Nations (ASEAN), a bloc that has become the Asian giant's main trading partner.

What is remarkable is that just this week Xi Jinping called for strengthening and opening another chapter in regional relations: "We must focus on building a community of shared destiny with our neighbors," he emphasized at a high-level meeting.

The conference stressed that the countries around China are fundamental to China's development, national security and global diplomacy.

In addition, the meeting stressed that, although relations with neighboring countries are at their best since the modern era, they also face challenges arising from profound global changes.

To address them, the meeting proposed to work under the principles of the community of shared destiny and the Asian values of peace, cooperation and openness.

He also stressed that the Belt and Road Initiative will continue to be a key platform for boosting regional economic integration and development.

The attendees emphasized the need to consolidate strategic mutual trust, manage differences and deepen economic and security cooperation.

Asia is the natural area of greatest influence of the world's second economy and many of its experts point out the importance that Beijing attaches to its environment.

China recently underscored the potential for economic development in the region, which is forecast to grow by 4.5 percent by 2025 and increase its weight in the world economy to 48.6 percent.

EUROPE AND LATIN AMERICA ARE WELCOME

It is not only about Asia, the rapprochement with Europe is also notable these days, despite the fact that both sides have their own trade differences.

In fact, the official visit of the head of the Spanish government, Pedro Sánchez, to the Asian giant and his meeting with Xi is another step in the expansion of these ties.

During a meeting at the Diaoyutai guesthouse in the capital, the Asian leader stressed that the friendship between the two countries is based on common interests and long-term benefits.

In this regard, he urged both sides to consolidate mutual support on sovereignty issues and key concerns, and seize the opportunities offered by sectors such as renewable energy, high-tech manufacturing and smart cities.

On relations with the European Union (EU), Xi said China regards the bloc as an important pillar in a multipolar world.

He proposed working together to celebrate the 50th anniversary of diplomatic relations between Beijing and the EU with the aim of promoting a partnership based on peace, growth, reform and civilization, which he said was more relevant in the current circumstances.

Xi Jinping stressed that there is no winner in the tariff war and that going against the world is isolating oneself.

"For more than 70 years, China's development has always been based on self-reliance and hard work, never relying on anyone's gifts, let alone fearing any unreasonable repression," he stressed.

According to the president, regardless of how the external environment changes, the Asian giant will strengthen its confidence, maintain its resolve and focus on managing its own affairs well.

On the other hand, the president sent a letter of congratulations to the IX Summit of the Community of Latin American and Caribbean States (CELAC), recently held in Honduras, in which he ponders the ties between Beijing and that region.

The president stressed that these relations have withstood changes in the international scenario and are now in a new stage characterized by equality, innovation, openness and shared benefits.

According to Xi, both sides deepened political trust, expanded practical cooperation and strengthened cultural ties, which benefited the two peoples and established a model of South-South cooperation.

In addition, he reiterated the invitation to the member countries of the bloc to participate in the next China-CELAC Ministerial Forum, scheduled to be held in Beijing in the first half of the year.

The president urged to take advantage of this event to discuss development plans, strengthen joint cooperation and thus contribute to facing global challenges, reforming world governance and maintaining international peace and stability.

ARC/IDM

Xi: No winner in a tariff war

By CAO DESHENG | chinadaily.com.cn | Updated: 2025-04-11 

President Xi Jinping meets with Spanish Prime Minister Pedro Sanchez at the Diaoyutai State Guesthouse in Beijing on Friday. Liu bin / Xinhua

There are no winners in a tariff war and China is not afraid of unreasonable suppression, President Xi Jinping said on Friday, calling on the European Union to work with China to jointly resist unilateral bullying.

Xi made the remarks during a meeting in Beijing with Spanish Prime Minister Pedro Sanchez, the first time the Chinese leader has spoken in public on the tariff war launched by the United States on April 2.

There is no winner in a tariff war and going against the world ultimately results in self-isolation, Xi said.

He emphasized that China's development over the past 70 years and more has been through self-reliance and hard work, never on others' mercies, and it certainly does not fear unreasonable suppression.

Whatever changes may take place in the external environment, China will remain confident, resolute and focused on running its own affairs effectively, Xi said.

The president noted that both China and the EU are major world economies and staunch supporters of economic globalization and free trade, with their combined economic output accounting for over one-third of the global total, forming a deep economic interdependence.

China and the EU should fulfill their international responsibilities, jointly uphold the trend of economic globalization and the international trading environment, and resist unilateral bullying in order to safeguard their legitimate rights and interests, while upholding international fairness and justice and maintaining international rules and order, Xi said.

Xi's remarks came as the US tariff war with China escalates. The White House clarified on Thursday the 125 percent tariffs on Chinese imports announced on Wednesday were on top of a previous 20 percent, adding up to a whopping levy of 145 percent against China.

In response to a question about the US tariff hike, Foreign Ministry spokesman Lin Jian said on Friday that China's countermeasures are not only aimed at safeguarding its legitimate rights and interests, but also at upholding international rules and order. "In the face of US bullying and arrogance, there is no way forward through compromise and concession," Lin said at a regular news conference.

Sanchez was the first European leader to visit China following the US announcement of sweeping tariffs. The two-day official visit, starting on Thursday, marks his third trip to China within three years.

He told Xi that China is an important partner for the EU, and Spain consistently supports the stable development of EU-China relations.

The EU remains committed to open and free trade, is dedicated to upholding multilateralism and opposes unilateral tariff increases, Sanchez said, adding there are no winners in a trade war.

Faced with a complex and challenging international situation, Spain and the EU are willing to strengthen communication and cooperation with China, uphold the international trade order, and jointly cope with the challenges of climate change and poverty to safeguard the common interests of the international community, he said.

On Friday, Premier Li Qiang held talks with Sanchez. They witnessed the signing of an array of cooperation agreements in the economy, trade, and science and technology.

Both sides issued an action plan (2025-28) on strengthening their comprehensive strategic partnership. They agreed to enhance cooperation on the economy, trade, investment and technological innovation, and jointly support free trade and open cooperation and uphold multilateralism.

China and the EU have been closely coordinating on trade issues over the past few days.

Premier Li held a phone call with European Commission President Ursula von der Leyen on Tuesday, with both sides pledging to promote bilateral ties and uphold the multilateral trading system.

Commerce Minister Wang Wentao held a video meeting with European Commissioner for Trade and Economic Security Maros Sefcovic on Tuesday, during which the two sides agreed to promptly initiate consultations to thoroughly discuss market access-related issues.

Observers said that the US tariff war may provide an opportunity to bring Brussels and Beijing closer together and has given China the opportunity to position itself as a potentially more reliable partner for the EU.

Cui Hongjian, professor of the Academy of Regional and Global Governance at Beijing Foreign Studies University, said that it is imperative for China and the EU to jointly confront this challenge, as US unilateral policies would severely damage globalization and the multilateral trading system that underpins China-EU cooperation.

Trade wars to cost US dearly, warns Peterson Institute researcher

chinadaily.com.cn | Updated: 2025-04-11
 

Luo Jie/China Daily

The US economy will suffer significantly — more than China's— and in the event of a large-scale trade war between the two countries, the damage would only intensify if the United States continues to escalate tensions, warns Adam S. Posen, President of the Peterson Institute for International Economics, in an article published on Foreign Affairs on April 9.

According to Posen, the Trump administration believes it holds "what game theorists call escalation dominance over China and any other economy," with which it maintains a bilateral trade deficit.

However, he argues that this logic is fundamentally flawed: it is China, not the US, which holds escalation dominance in this trade war.

Posen explains that, to the extent that bilateral trade balances matter in determining the outcome of a trade war, the advantage lies with the surplus country, not the deficit one. China, the surplus country, is sacrificing sales, which amounts to lost revenue; the United States, the deficit country, is giving up access to goods and services it does not produce competitively—or in some cases, at all—domestically.

Given the US dependence on Chinese imports for vital goods (pharmaceutical stocks, cheap electronic chips, critical minerals), Posen cautions that it is "wildly reckless" to cut off trade before securing reliable alternatives. Doing so, he warns will result in the very kind of damage the administration claims to want to avoid. A severe supply shock from slashing or eliminating imports from China would trigger stagflation, Posen said.

Posen further criticizes the administration for making erratic policy decisions that effectively amount to massive tax increases and heightened uncertainty for manufacturers' supply chains. The likely result, he contends, will be reduced investment into the US and increased interest rates on national debt.

US should reflect on its flawed tariff policies

By Colin Speakman | chinadaily.com.cn | Updated: 2025-04-11 

Luo Jie/China Daily

Faced with an onslaught of tariffs from the US, nations are deliberating on their responses. The situation is complex because Trump's accusation of unfair treatment of the US by trading partners evidenced by other nations' trade surpluses is false.

Economists have asserted that trade imbalances often result from structural differences between countries and not from trade barriers. Consider two large economies of similar GDP with free trade - there should be no trade imbalances. Completely wrong. Say, in one, households have a high propensity to consume out of income and low savings - this is a fair description of the US where many homeowners use equity from rising property prices to refinance, making their home into an ATM. According to the US Federal Reserve, the personal savings rate was under 4 percent of income in 2024.

Assume on the other, citizens choose to save much more out of caution and are less happy to take on debt - they would consume much less of all goods including imports and run a trade surplus with the consumption-hungry country. No malicious treatment is involved. China is a good example of such a country with official household savings rates estimated at around 45 percent - hence highly likely to be a net exporter.

Trump has used the medical analogy of a sick patient enduring nasty medicine in order to be healthy in the future. The problem is that if the doctor has made an incorrect diagnosis, the wrong medicine will be given and the patient won't do well. This is the difficulty of responding to "reciprocal" tariffs which bear no relationship to real situations.

Trump has vigorously attacked the EU as "set up to harm the US", but in fact that large grouping of European nations may well have reduced the desire of individual members to seek export growth to America because there is a barrier-free large market locally that they can export to. It is true that the EU is a Customs Union that has a Common External Tariff but how often do we hear the true data on this, listening to Trump one would imagine it runs at 20 percent - official recent European Commission data shows that the true figure on average was just 1 percent tariff rates by both sides. Trump has made a huge distortion and fair-trading nations need to join together to support the true value of free trade.

Regional trading groups will need to enhance cooperation both within members and between them in order to reduce the importance of US exports to their economies - this will take time and will be constrained if a global recession results in the short term. Hence nations need to decide now how to de-rail Trump's tariff train.

China and the EU can lead the way and Chinese Premier Li Qiang earlier this week reached out to the European Commission President, Ursula von der Leyden, to urge both sides to maintain free and open trade. There is clearly an opportunity for more collaboration between these large trading entities.

There seem to be two main options, one of which Trump will likely present as a victory - the many smaller nations he claims are calling him to do a deal. It may make sense for a nation like Malaysia or Vietnam to offer to eliminate their limited tariffs that probably won't lead to large increases in US imports, reflecting the size of their economies, but equally, this won't reduce the balance of trade issue. Governments cannot make their citizens buy more from America, especially when its own citizens may now have a negative view of that country.

Governments can of course redirect their own spending, so possibly a country might re-equip its national airline with new Boeing jet orders - although these would be unfair to Airbus without competitive tendering. It would be a risky step as it is likely to alienate other, more reliable trading partners.

Trump's latest development is an offer to such nations that have not retaliated to pause and lower tariffs against them as a reward, but it remains to be seen what deals can be done.

For large economies and trading blocs, standing up to and the US with counter-measures sends a message that they will not be bullied by the US for baseless reasons. China has already done this and stated they will not hesitate to go further if needed. The US has not paused tariffs on China, nor on Canada and Mexico who have been retaliating.

On Wednesday the EU announced its members have agreed to impose retaliatory tariffs of Euro 21 billion on US imports with 25 percent tariffs on many selected goods. The European Commission stated that US tariffs are unjustified and damaging, causing economic harm to both sides as well as the global economy. This is entirely correct.

More needs to be done and it may be a forlorn hope, but we need to see other actors in the US, including opposition politicians, business leaders, respected academics and even some of Trump's own supporters, stand up and communicate to the American people that his policy is flawed, a false diagnosis and harmful to the US. It is too early to tell if Trump's sudden, temporary rollback of some tariffs is a sign of greater understanding.

Colin Speakman is an economist from the UK and an international educator specializing in China. The opinions expressed here are those of the writer and do not necessarily represent the views of China Daily and China Daily website.

Washington's trade policy fails basic math

By MASSOUD AMIN | China Daily | Updated: 2025-04-12 09

LI MIN/CHINA DAILY

US President Donald Trump has increased additional tariffs on Chinese goods up to 125 percent, with the total rate to 145 percent, while China has taken countermeasures including additional 125 percent duties on American imports.

The US' policy shift reflects a deeper abandonment of strategic tradecraft. The new tariff regime is not based on credible economic modeling, enforcement of fair trade rules, or reciprocity. Instead, it is built on a formula that converts bilateral trade deficits into tariff percentages. The logic is: the bigger the deficit, the bigger the punishment.

But this framework ignores the real causes of trade imbalance — currency flows, global sourcing, labor specialization, and consumer demand. Trade deficits are not acts of aggression. They are the consequence of structural choices and market dynamics.

The US has had trade deficits for decades. But trade deficits have not weakened the US economy — deficits have coexisted with strong job growth, innovation and investment. The US dollar's global reserve currency status and high domestic consumption ensure persistent imbalances in goods trade. Tariffs cannot rewrite these fundamentals. They can only distort prices, disrupt supply chains, and strain diplomatic relations.

The latest wave of tariffs is also incoherent in its application. Vietnam, which levies on average less than 10 percent tariffs on US goods, has been hit with a 46 percent US tariff. The European Union, whose trade barriers are comparable to or lower than the US', received a flat 20 percent tariff penalty. Even the remote, uninhabited Australian external territory of Heard and McDonald Islands — home only to penguins, seals and seabirds, with no permanent human settlement or meaningful exports — was slapped with a 10 percent tariff. These actions are not strategic; they are algorithmic and devoid of context or logic.

Markets have responded accordingly. Bond yields have surged as investors brace for inflation, instability and retaliation. Multinational companies are freezing investment, delaying orders, and seeking ways to circumvent US customs. Far from reinvigorating domestic manufacturing, this policy has increased uncertainty and capital flight.

The impact of the tariffs on American consumers will be swift and severe. Analysts estimate the tariffs will raise average household costs by $3,800 a year. The products affected include daily necessities: smartphones, laptops, HVAC systems, clothing, medical equipment, and baby formula. Some small businesses are already shutting down. A solar panel enterprise in Arizona and a clothing start-up in Pennsylvania have warned they cannot absorb the price shocks. These are not isolated cases but early signs of a broad contraction.

Diplomatically, the consequences are equally severe. China's retaliatory tariffs will apply to all US exports, including aircraft parts, energy products, semiconductors and agricultural products. Canada and Mexico have imposed 25 percent tariffs on US goods in response. The European Commission is weighing slapping digital taxes on US tech companies.

Thanks to the tariffs, key allies now view Washington as unpredictable and vindictive. The tariffs have not isolated Beijing. They are isolating the US.

The 2018 trade war showed the limits of broad tariffs. While US steel enjoyed temporary protection, the wider US economy suffered. Many jobs were lost in the US due to the tariffs and retaliatory barriers. Most companies that left China did not return to the US; instead, they shifted to Vietnam, Mexico or other lower-labor cost countries. Prices rose. Supply chains broke. The promised manufacturing revival never materialized.

History has another warning. The Smoot-Hawley Tariff Act of 1930 raised duties on more than 20,000 goods, and many countries responded by imposing tariffs on US goods. Between 1929 and 1934, global trade declined by 66 percent, deepening the Great Depression. While Smoot-Hawley did not directly cause World War II, it weakened the global economy and fueled the rise of authoritarian regimes. Trade wars do not stabilize, rather they destabilize, the economy. They do not solve, but create more, problems.

There is a better path. A true industrial strategy means investing in automation, skilled labor, resilient infrastructure and regional supply chains. It means targeting critical sectors — semiconductors, clean energy and biotechnology — through coordinated public-private partnerships. It means working with allies to enforce rules and raise standards, not acting alone in ways that provoke retaliation and undermine trust.

The economic frustrations behind tariff populism are legitimate. But the tools now being used are blunt, ineffective and destructive. Tariffs of this scale are not precision instruments. They are political theatrics imposed without strategic clarity.

If the US wishes to remain a global leader, it must act like one. For that, it needs consistency, coordination, and credibility. None of these can be achieved through news conference ultimatums or spreadsheet-driven punishment. The US needs a policy grounded in facts, not fury.

It's time to abandon the politics of pain. The world is too interconnected, and the stakes too high, to make improvization to masquerade as strategy. The US must stop turning trade deficits into targets and turn shared challenges into solutions.

The world does not need more math. It needs leadership. Let's get the mission right.

The author is an IEEE and ASME fellow, chairman and president of Energy Policy and Security Associates, and a professor emeritus at the University of Minnesota. The views don't necessarily reflect those of China Daily. 

US barbarism on international trade rules

China Daily | Updated: 2025-04-09