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[By Linggong Kong]<\/em><\/p>\n When Donald Trump\u00a0pulled back\u00a0on his plan to impose eye-watering tariffs on trading partners across the world, there was one key exception:\u00a0China.<\/p>\n While the rest of the world would be\u00a0given a 90-day reprieve\u00a0on additional duties beyond the\u00a0new 10% tariffs\u00a0on all U.S. trade partners, China would feel the squeeze even more. On April 9, 2025, Trump\u00a0raised the tariff on Chinese goods to 125%.<\/p>\n The move, in Trump\u2019s telling, was\u00a0prompted by Beijing\u2019s\u00a0\u201clack of respect for global markets.\u201d But the U.S. president may well have been smarting from Beijing\u2019s apparent willingness to confront U.S. tariffs head on.<\/p>\n While many countries opted not to retaliate against Trump\u2019s now-delayed reciprocal tariff hikes, instead\u00a0favoring negotiation and dialogue, Beijing took a different tack. It responded with swift and firm countermeasures. On April 11, China\u00a0dismissed Trump\u2019s moves as a \u201cjoke\u201d and\u00a0raised its own tariff\u00a0against the U.S. to 125%.<\/p>\n The two economies are now locked in an all-out, high-intensity trade standoff. And China is showing no signs of backing down.<\/p>\n And as an expert on U.S.-China relations, I wouldn\u2019t expect China to. Unlike the\u00a0first U.S.-China trade war\u00a0during Trump\u2019s initial term, when Beijing eagerly sought to negotiate with the U.S., China now holds far more leverage.<\/p>\n Indeed, Beijing believes it can inflict at least as much damage on the U.S. as vice versa, while at the same time expanding its global position.<\/p>\n A changed calculus for China<\/em><\/strong><\/p>\n There\u2019s no doubt that the\u00a0consequences of tariffs are severe\u00a0for\u00a0China\u2019s export-oriented manufacturers\u00a0\u2013 especially those in the coastal regions producing furniture, clothing, toys and home appliances for American consumers.<\/p>\n But since Trump first launched a\u00a0tariff increase on China in 2018, a number of underlying economic factors have significantly shifted Beijing\u2019s calculus.<\/p>\n Crucially, the importance of the U.S. market to China\u2019s export-driven economy has declined significantly. In 2018, at the start of the first trade war, U.S.-bound exports\u00a0accounted for 19.8%\u00a0of China\u2019s total exports. In 2023, that figure had\u00a0fallen to 12.8%. The tariffs may further prompt China to accelerate its \u201cdomestic demand expansion\u201d strategy, unleashing the spending power of its consumers and strengthening its domestic economy.<\/p>\n And while China entered the 2018 trade war in a phase of strong economic growth, the current situation is quite different. Sluggish\u00a0real estate markets,\u00a0capital flight\u00a0and\u00a0Western \u201cdecoupling\u201d have pushed the Chinese economy into a period of persistent slowdown.<\/p>\n Perhaps counterintuitively, this prolonged downturn may have made the Chinese economy more resilient to shocks. It has pushed businesses and policymakers to come to factor in the existing harsh economic realities, even before the impact of Trump\u2019s tariffs.<\/p>\n Trump\u2019s tariff policy against China may also allow Beijing a useful external scapegoat, allowing it to rally public sentiment and shift blame for the economic slowdown onto U.S. aggression.<\/p>\n China also understands that the U.S. cannot easily replace its dependency on Chinese goods, particularly through its supply chains. While\u00a0direct U.S. imports from China have decreased, many goods now imported from third countries still rely on Chinese-made components or raw materials.<\/p>\n By 2022, the U.S.\u00a0relied on China\u00a0for 532 key product categories \u2013 nearly four times the level in 2000 \u2013 while China\u2019s reliance on U.S. products was cut by half in the same period.<\/p>\n There\u2019s a related public opinion calculation: Rising tariffs are expected to\u00a0drive up prices, something that could stir discontent among American consumers, particularly blue-collar voters. Indeed, Beijing believes Trump\u2019s tariffs risk pushing the previously strong U.S. economy\u00a0toward a recession.<\/p>\n Potent tools for retaliation<\/em><\/strong><\/p>\n Alongside the changed economic environments, China also holds a number of strategic tools for retaliation against the U.S.<\/p>\n It dominates the global rare earth supply chain \u2013 critical to military and high-tech industries \u2013\u00a0supplying roughly 72%\u00a0of U.S. rare earth imports, by some estimates. On March 4, China placed\u00a015 American entities on its export control list, followed by\u00a0another 12\u00a0on April 9. Many were U.S. defense contractors or high-tech firms reliant on rare earth elements for their products.<\/p>\n China also retains the ability to target key U.S. agricultural export sectors such as poultry and soybeans \u2013 industries heavily dependent on Chinese demand and concentrated in Republican-leaning states. China accounts for\u00a0about half of U.S. soybean exports\u00a0and\u00a0nearly 10%\u00a0of American poultry exports. On March 4, Beijing revoked import approvals for\u00a0three major U.S. soybean exporters.<\/p>\n And on the tech side, many U.S. companies \u2013 such as Apple and Tesla \u2013 remain deeply tied to Chinese manufacturing. Tariffs threaten to\u00a0shrink their profit margins significantly, something Beijing believes can be used as a source of leverage against the Trump administration. Already, Beijing is\u00a0reportedly planning\u00a0to strike back through regulatory pressure on U.S. companies operating in China.<\/p>\n Meanwhile, the fact that Elon Musk, a senior Trump insider who has\u00a0clashed with U.S. trade adviser Peter Navarro against tariffs, has\u00a0major business interests in China\u00a0is a particularly strong wedge that Beijing could yet exploit in an attempt to divide the Trump administration.<\/p>\n A strategic opening for China?<\/em><\/strong><\/p>\n While Beijing thinks it can weather Trump\u2019s sweeping tariffs on a bilateral basis, it also believes the U.S. broadside against its own trading partners has created a generational strategic opportunity to displace American hegemony.<\/p>\n Close to home, this shift could significantly reshape the geopolitical landscape of East Asia. Already on March 30 \u2013 after Trump had first raised tariffs on Beijing \u2013 China, Japan and South Korea\u00a0hosted their first economic dialogue\u00a0in five years and pledged to advance a trilateral free trade agreement. The move was particularly remarkable given how carefully the U.S. had worked to cultivate its Japanese and South Korean allies\u00a0during the Biden administration\u00a0as part of its strategy to counter Chinese regional influence. From Beijing\u2019s perspective, Trump\u2019s actions offer an opportunity to directly erode U.S. sway in the Indo-Pacific.<\/p>\n Similarly, Trump\u2019s steep tariffs on Southeast Asian countries, which were also a\u00a0major strategic regional priority\u00a0during the Biden administration, may push those nations closer to China. Chinese state media announced on April 11 that President Xi Jinping\u00a0will pay state visits\u00a0to Vietnam, Malaysia and Cambodia from April 14-18, aiming to deepen \u201call-round cooperation\u201d with neighboring countries. Notably, all three Southeast Asian nations were targeted with now-paused\u00a0reciprocal tariffs by the Trump administration\u00a0\u2013 49% on Cambodian goods, 46% on Vietnamese exports and 24% on products from Malaysia.<\/p>\n Farther away from China lies an even more promising strategic opportunity. Trump\u2019s tariff strategy has already prompted China and officials from the European Union to contemplate strengthening their own\u00a0previously strained trade ties, something that could weaken the transatlantic alliance that had sought to decouple from China.<\/p>\n On April 8, the president of the European Commission\u00a0held a call with China\u2019s premier, during which both sides jointly condemned U.S. trade protectionism and advocated for free and open trade. Coincidentally, on April 9, the day China\u00a0raised tariffs on U.S. goods to 84%, the EU also announced its first wave of retaliatory measures \u2013 imposing a\u00a025% tariff\u00a0on selected U.S. imports worth over \u20ac20 billion \u2013 but\u00a0delayed implementation\u00a0following Trump\u2019s 90-day pause.<\/p>\n Now, EU and Chinese officials are holding\u00a0talks over existing trade barriers\u00a0and considering a\u00a0full-fledged summit\u00a0in China in July.<\/p>\n Finally, China sees in Trump\u2019s tariff policy a potential\u00a0weakening of the international standing of the U.S. dollar. Widespread tariffs imposed on multiple countries have shaken investor confidence in the U.S. economy, contributing to a\u00a0decline in the dollar\u2019s value.<\/p>\n Traditionally, the dollar and U.S. Treasury bonds have been viewed as haven assets, but\u00a0recent market turmoil has cast doubt on that status. At the same time, steep tariffs have raised concerns about the\u00a0health of the U.S. economy and the sustainability of its debt, undermining trust in both the dollar and U.S. Treasurys.<\/p>\n While Trump\u2019s tariffs will inevitably hurt parts of the Chinese economy, Beijing appears to have far more cards to play this time around. It has the tools to inflict meaningful damage on U.S. interests \u2013 and perhaps more importantly, Trump\u2019s all-out tariff war is providing China with a rare and unprecedented strategic opportunity.<\/p>\n Linggong Kong is a Ph.D. candidate in Political Science at Auburn University.<\/em><\/p>\n This article appears courtesy of The Conversation and may be found in its original form here<\/a>.\u00a0<\/em><\/p>\n \t![\"The](\"https:\/\/i0.wp.com\/counter.theconversation.com\/content\/254173\/count.gif?ssl=1\")
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