11:43 pm - February 23, 2025
A new chapter in the trade tensions between China and the United States unfolded on Monday, September 25, as Beijing implemented tariffs on approximately $13.86 billion worth of U.S. imports. This move marked the first direct response to President Donald Trump’s decision to impose a 10% tariff on hundreds of billions of dollars in Chinese goods. The escalate in trade hostilities has raised concerns about the potential for a broader trade war between the world’s two largest economies. While there was optimism that a phone call between Trump and Chinese President Xi Jinping could have eased tensions, the conversation did not take place, leaving both sides at a critical juncture. The question now is how far each country is willing to strain their deeply intertwined trade and commercial ties—and whether they can find a pathway to a resolution.
The tariffs imposed by China include a 15% tax on certain types of coal and liquefied natural gas, as well as a 10% tariff on crude oil, agricultural machinery, and some vehicles. These measures, based on 2024 customs data, impact less than 9% of China’s total imports from the U.S., which amounted to over $163 billion last year. while the scale of China’s response appears measured, the move signals Beijing’s willingness to defend its interests amid rising trade frictions. Analysts suggest that China’s restrained approach reflects both the limited impact of the U.S. tariffs on its economy and Xi Jinping’s desire to keep the door open for negotiations with Trump. Andy Rothman, CEO of advisory group Sinology, noted that Beijing is choosing to leave room for a potential deal, even as the opening salvos of a new trade clash have been exchanged.
The U.S. tariffs, while significant, are relatively mild compared to the 60% duties Trump threatened during his presidential campaign. They build on existing tariffs that already apply to hundreds of billions of dollars in Chinese imports. Trump has long framed his trade policies as an effort to level the economic playing field with China, and he has expressed a willingness to negotiate. In recent remarks at the World Economic Forum in Davos, Switzerland, Trump struck a conciliatory tone, stating that he has “always liked” Xi and looks forward to improving relations with China. However, Rothman observes that it remains unclear what specific outcomes Trump is seeking from Xi—or what concessions he might be willing to offer in return. This uncertainty adds a layer of complexity to the delicate diplomatic dance between the two leaders.
As the situation unfolds, observers of U.S.-China relations note that Beijing appears relieved by the relatively limited nature of Trump’s actions so far. Chinese officials had reportedly braced for more severe measures, including the 60% tariffs Trump once threatened and a complete decoupling of the two economies. Suisheng Zhao, director of the Center for China-U.S. Cooperation at the University of Denver, pointed out that “nothing has happened that’s even close to the worst-case scenario.” However, a looming deadline adds to the pressure: April 1 marks the date by which Trump has ordered an investigation into U.S.-China economic ties, which could pave the way for further trade actions. In the meantime, Beijing is carefully managing its messaging and diplomatic outreach, seeking to avoid escalation while exploring opportunities to leverage the personal rapport between Trump and Xi.
Chinese leaders are also weighing their options for responding to potential further escalation by the U.S. While Beijing has been cautious in its approach so far, officials are believed to be preparing contingencies, including targeted penalties and concessions. According to Nick Marro, principal economist for Asia at the Economist Intelligence Unit, China’s responses are likely to be more measured this time around, avoiding the sweeping tit-for-tat actions seen during the earlier phases of the trade war in 2018 and 2019. Beijing has already strengthened its export control regulations, particularly for dual-use goods, raw materials, and critical minerals—areas where China holds significant influence, controlling an estimated 60% of global production and 85% of processing capacity. Analysts suggest that China may consider further restrictions on these goods as part of its strategy to counter U.S. pressure.
Despite these preparations, questions remain about what concessions China might be willing to make in substantive negotiations with the U.S. Past trade talks, including the phase one deal reached during Trump’s first term, have faced challenges in implementation, and lingering U.S. concerns extend to broader issues like China’s industrial policy and economic model. Marro notes that the failure of previous negotiations has dampened the U.S. appetite for a sweeping deal, limiting the potential for a resolution that goes beyond narrow issues like the future of TikTok, the Chinese-owned app facing a U.S. ban. As both sides navigate this uncertain landscape, the stakes are high—not just for their own economies but for the global economy as a whole. The path forward will require careful diplomacy, strategic calculus, and a willingness to balance economic interests with the imperative of maintaining a fragile peace in one of the world’s most critical relationships.