This time around, China is surely ready to respond to Trump's tariffs, analysts say
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This time around, China is surely ready to respond to Trump's tariffs, analysts say

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(Photo: South China Morning Post)
(Photo: South China Morning Post)

China is "not afraid" of Donald Trump's fresh tariffs on Chinese goods and is prepared to firmly retaliate, analysts said, adding that there might still be room for the two geopolitical rivals to manoeuvre.

The assessment followed the White House's announcement on Friday that the United States would impose a 10% tariff on imports from China, effective from Saturday.

The import tax was announced alongside a 25% tariff on goods from Canada and Mexico.

White House press secretary Karoline Leavitt said the tariffs were a necessary response to "the illegal fentanyl that they have sourced and allowed to distribute into our country, which has killed tens of millions of Americans".

According to the White House, the tariffs will stay in place until significant progress is made in halting the flow of illegal drugs and migrants into the United States.

Dylan Loh, assistant professor of foreign policy at Nanyang Technological University in Singapore, noted that the 10 per cent tariff imposed on Chinese goods was "significantly scaled down" from Trump's earlier threats.

At one point on the campaign trail, Trump threatened tariffs as high as 60 per cent on imports from China.

Considering this, Loh said, the Chinese government would "surely" have formulated options to respond to Trump's moves, including slapping its own retaliatory tariffs on American products.

"But these would probably not be sweeping," he added. "I believe this will be measured, appropriate and carefully crafted such that it does not invite further punitive measures from Trump.

"I do not think this, alone, will move the needle that much in terms of US-China relations. Most markets have already factored in tariffs and Beijing would have already anticipated this move."

The tariff announcement followed a period of relative calm between Washington and Beijing in the first weeks of Trump's second term.

Ahead of his inauguration last month, Trump held a call with Chinese President Xi Jinping, which he described as a "good one".

And in a first for a senior Chinese leader, Beijing sent Vice-President Han Zheng to the US president's inauguration. Trump also reportedly expressed his intention of visiting China within his first 100 days in office.

Wang Yiwei, director of the Institute of International Affairs at Renmin University in Beijing, suggested that China would have "long been prepared" for Trump's tariffs, saying "it was only a matter of time".

He noted that when Trump imposed tariffs on Chinese imports during his first presidential term, he was focused on the trade deficit between the US and China. Now, the American leader appeared to be using tariffs as a tool to bring industries back to the US.

Wang also said Trump seemed to have "more power and is more mature".

"But China is also not the same China that it was eight years ago," Wang said, adding that the US would not be able to shake China's leading position in areas such as the global supply chain. "China will definitely respond firmly."

Wang said China would have drawn up contingency plans that factored in industries such as rare earths, where the US is highly reliant on China. While the US has explored ways to reduce its dependence on China, Wang said it would require time and high costs, which could form part of China's strategy.

Wang also said that China was "not afraid" of Trump's tariffs particularly as the Chinese economy was relatively self-sufficient compared with other economies, reducing the impact of the duties. Tariffs would also trigger inflation in the US, affecting domestic consumption and the American economy, he said.

Still, Wang suggested that there were signs of improvement in US-China relations, saying they "don't seem as bad in the short-term".

China and the US shared similar interests, he said, and there were areas in which Beijing could work with Trump, including the war in Ukraine.

"In the longer term, there are structural challenges in US-China relations … but Trump in office actually offers room for negotiation with China," he said.

This article originally appeared on the South China Morning Post (SCMP).

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