As reciprocal tariffs on U.S trading partners are set to take effect on Wednesday, President Donald Trump has focused much of his attention on the Chinese regime.
Several experts say that while many world leaders will eventually meet U.S. demands after the initial kicking and screaming, Chinese Communist Party (CCP) leader Xi Jinping will not—even with the added ultimatum.
“Xi has sold himself domestically and internationally as the guy standing up to America, and people that want to stand up to America should get in line behind chairman Xi,” Christopher Balding, a senior fellow at the Henry Jackson Society, a UK-based think tank, told The Epoch Times.
“It would be catastrophic for Xi to be seen as caving in to Trump in any way,” he said.
Experts also said the CCP cannot and does not want to give the United States what it wants: for China to control its fentanyl precursor exports and open up its market.
The current U.S.–China tariff standoff is more than a trade conflict, according to Yeh Yao-Yuan, a professor of international studies at the University of St. Thomas in Houston.
“It’s a more aggressive decoupling because escalated tariffs will cause the bilateral trade to drop further,” Yeh told The Epoch Times. “When the decoupling persists, it will lead to a cold war.”
China expert Alexander Liao thinks the current situation will eventually become a contest between Trump and Xi. Trump depends on the might of the U.S. economy, while Xi relies on support from the communist regime’s tight control system.
Given this, Liao said Xi is disadvantaged because he has little policy room to maneuver.
“Washington has many cards. Beijing has few,” he told The Epoch Times.
All Roads Lead to China
When announcing the reciprocal tariffs at the Rose Garden in Washington on April 2, Trump held up a list of countries.While China was at the top of the list, it didn’t receive the highest rate. Other Southeast Asian countries that Chinese companies use for transshipping, including Vietnam and Cambodia, received nearly 50 percent levies.
However, Balding said that the administration’s real target was China.
“I think they want to be much more aggressive with China, but they want to do it very quietly,” he said.
“They did it almost, in a way, to shield China,” he added, referring to the administration’s approach of announcing sweeping global tariffs so the levy on Chinese goods didn’t stand out as much.
Balding noted that Trump applies tariffs differently to other countries than he does to China. In the case of the U.S. tariffs on other nations, the rates are set to encourage negotiations. However, Balding remarked that the tariffs imposed on China are so high that negotiations are very hard for Beijing.
Three countries were on the receiving end of the earlier 25-percent fentanyl tariffs: Canada, Mexico, and China.
The two North American countries were exempted from last week’s reciprocal tariffs. The White House said Canada and Mexico will remain on the fentanyl tariff regime and move to the reciprocal tariff regime after they reach a bilateral agreement with the United States.
By comparison, China received a reciprocal levy in addition to the fentanyl tariffs. Most Chinese imports are now subjected to a more than 60 percent levy; the amount Trump talked about on the campaign trail.
According to Balding, such a steep tariff at the start of the negotiation makes it very difficult for Xi to reach any deal. The Chinese leader, he said, would have to make a lot of concessions to the United States—compromises that Xi isn’t willing to give—for Washington to cut the rate by half. Even if that were to happen, the remaining half would still be too high for China to bear, Balding added.
“What does Trump want? It seems to me he is basically saying, ‘Let’s just decouple everything as much as we can from China,’” the expert said.
Since Trump returned to the White House, many of his foreign policies have been directly and indirectly driven by China.
“Basically [Trump] said, ‘I can’t let any part of the world be a place where China or other countries can ship through them,'” Lutnick said.
Secretary of State Marco Rubio visited Panama as part of his first official foreign trip. Shortly after, Panama said it would not renew its agreement with China’s Belt and Road Initiative, a geopolitical platform for the CCP to expand its global influence.
Lessons Learned
The Trump administration has learned from its first term and is now dealing with China differently, experts said.During the first administration, Trump took two years to negotiate and sign a “phase one” trade deal with China. Eventually, Beijing did not fulfill its pledge to buy an additional $200 billion in U.S. products over two years.
Liao said the CCP’s strategy is to draw things out. For example, it may take two years to reach an agreement and another year for Washington to discover that Beijing hasn’t made good on its promises.
Under this cycle, the United States bears the cost of such delays.
This time around, by imposing the tariffs upfront, Trump has immediately put the cost on Xi, Liao said.
Balding agrees.
“If you want to draw this out for years and years—go ahead,” Balding said, describing Trump’s approach. “We’re going to impose enormous amounts of pain very early on so that if you want to draw it out, you’re drawing out your pain.”
The U.S. trade deficit with China was about $300 billion last year. That means the negative impact of a 34 percent tariff will be felt much more sharply in China than in the United States.
Trump–Xi Stare Down
Much of China’s exports to the United States are replaceable goods, which means American consumers can find alternatives easily. Therefore, they are less likely to pay for the price increase on the Chinese goods due to tariffs. Instead, they will buy goods imported from other countries.That’s partly why Trump has been pursuing critical minerals in Ukraine, Liao said. Eventually, when the prices of these raw materials for weapons and electronics are no longer kept artificially low due to China’s monopoly, he added, more companies will join the processing businesses.
According to U.S.-based economist Davy J. Wong, the United States and China are not in a trade war, but a battle for resetting the international trade protocol and even the world order.
US Has More Cards
What pain does each country’s leader expect to endure while engaged in the tariff standoff?For Xi, the resilience of the communist political system is the key, according to Liao. Chinese people will become poorer and more dissatisfied. However, if the communist apparatus keeps a lid on the people, Xi could hold out.
Trump’s pain would come from the U.S. economy, Liao said. If the economy can survive the initial shock and voters don’t lose patience with Trump, he can remain focused on standing firm against the CCP.
The U.S. stock market experienced large drops last week, driven mainly by the uncertainty of the global reciprocal tariffs. With the biggest three-day decline since the summer of 2020 during the COVID-19 pandemic, more than $6 trillion in value evaporated in the equity market.
The stock market upheaval has added pressure on the White House and Trump, who has often credited the administration’s work for the rise of the stock market.
Balding said Trump will most likely hold out while the stock market adjusts because the U.S. government is prioritizing national security, which is different to Wall Street’s focus on business profits.
The president has also tied the U.S.–China trade imbalance to national security, saying that Beijing uses its massive surplus with the United States to fund the military.
“We don’t want that. I don’t want them to take $500 [billion], $600 billion a year and spend it on their military,” Trump said in the Oval Office on April 7.
Both Balding and Yeh believe that if Trump can negotiate agreements with key countries—such as Vietnam, South Korea, and Japan—to significantly reduce tariffs within the next month, businesses will gain more certainty. This would contribute to stabilizing the stock market.
Washington holds more cards, Liao said.
In addition to further hiking tariffs, Liao said the United States could apply more pressure to the CCP by uniting with China’s neighbors who don’t like the regime, such as Vietnam and India. The United States could also take a human rights approach and release a report about the origins of COVID-19 or publicize evidence of the forced organ harvesting of prisoners of conscience and ethnic minorities in China.
