Beijing must know that if it comes to a trade war with the United States, the Chinese regime would fight at a disadvantage.
Commentary
If the Trump administration’s tariffs surprised no one, they nonetheless shocked all—in Beijing and across the world.
Even as the White House imposed burdens on just about all foreign producers—and raised American living costs—President Donald Trump implicitly invited other nations to rid themselves of these “
reciprocal” levies by rescinding the trade restraints that he contends they have imposed on the United States.
Rather than take advantage of that invitation, China’s communist regime has chosen to fight. It quickly announced new tariffs on all American goods entering the country, imposed sanctions against U.S. companies, and implemented export restraints on rare earth elements. Trump has responded with still higher tariffs on Chinese goods while pausing the application of tariffs to other nations for 90 days. The White House clearly aims at China.
Here is the state of play between Washington and Beijing at the moment. Trump, after earlier imposing 20 percent tariffs on Chinese goods entering the United States, has, with his early
April announcement, imposed an additional 34 percent levy. Beijing wasted no time responding, raising the levy on American-made imports entering China to 84 percent.
Trump then eased the pressure on other countries by delaying the implementation of his tariffs, while adding still more to the tariffs on Chinese goods, and bringing the total levy to some 125 percent.
Small gestures from both sides have offered a shred of hope that the United States and China will avoid an all-out trade war. Trump has declared that the tariffs are less permanent than they are a lever for negotiations. In Beijing, Ministry of Commerce spokesman He Yadong
declared that China is “willing to engage with the United States on important issues of bilateral trade.”
Earnest as these statements sound, there seems to be limited room for maneuvering. Beijing would have a hard time making concessions to Washington. The Chinese regime, of course, has for decades imposed significant burdens on U.S. products entering China and on U.S. firms otherwise doing business there. Even a small relief on this front might prompt Washington to yield on tariffs at least in part. But for Beijing to do that would mean weakening the Chinese Communist Party’s (CCP’s) need for complete and centralized control over all things economic and political. For CCP leader Xi Jinping, this simply is not an option.
Still, Beijing must know that if it comes to a trade war with the United States, the Chinese regime would fight at a disadvantage. This has nothing to do with the military. Rather, China’s problem hinges on its economy’s still-great reliance on exports. China, for instance, exported some
$501 billion of goods to the United States in 2023, the most recent year for which complete data are available. In contrast, in the same year, the United States exported only some
$143 billion to China, making China almost three and a half times more vulnerable to trade restrictions with the United States than the United States is to trade restrictions with China.
Because the U.S. economy is considerably larger than China’s, the impact on these respective economies would be greater still. Chinese exports to the United States equal some
3 percent of China’s gross domestic product (GDP), whereas U.S. exports to China equal barely more than
one-half of 1 percent of U.S. GDP, making the overall economic impact of trade restraints six times greater on China than in the United States.
To be sure, the tariffs would raise costs to the American consumer, but it would be a one-time event, not an ongoing pressure. Nor can China look elsewhere to sell its products. Europe has already begun to
resist China trade, and the
rest of Asia has already complained about Chinese “dumping.”
It is still early days. Perhaps in the coming weeks and months, clever diplomats will find a way to square the circle and avoid the trade war that would hurt both countries, even if it would do more harm to China than the United States.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
