Trump vs. Xi: The Battle of Tariffs and the Tension in Global Trade

            Will Trump give in to Xi Jinping first in trade war?

Donald Trump and Xi Jinping Photo Credit: Reuters

A significant trade conflict has emerged between the United States and China, positioning U.S. President Donald Trump and Chinese President Xi Jinping in direct confrontation. This ongoing tension has created instability in global markets, impacting businesses of all sizes. As the impasse persists, the international community is keenly observing to see which side will yield first.

The United States has enacted a retaliatory tariff of 145% on imports from China, while China has countered with its own tariffs of 125% on American products. This intensifying tariff conflict is already undermining the foundations of international trade.

On Tuesday, Trump further escalated his approach by initiating a national security review concerning critical mineral imports, most of which come from China. This action indicates a more assertive stance by the U.S. in its trade negotiations.

Earlier reports from Bloomberg News indicated that China had directed its aviation firms to halt purchases of aircraft and components from American manufacturers like Boeing. Additionally, Hong Kong's postal service announced it would cease sending letters to the United States as part of its retaliatory actions.

“The 145% tariff has rendered it nearly impossible for China to export goods to the U.S.,” stated Vina Nadjibulla, Vice President of Research and Strategy at the Asia Pacific Foundation of Canada, during an interview with Al Jazeera. “The economic repercussions for both nations will be significant.”

Nadjibulla posits that the resolution of this trade conflict will hinge on which leader can endure greater hardship and who is more strategically equipped to navigate the situation.

President Trump has consistently accused China of taking advantage of the United States in trade agreements. Nevertheless, analysts are uncertain about the clarity of the Trump administration's objectives. Is the intention to diminish the trade deficit, or to completely sever economic relations with China?

Harry Broadman, a former U.S. Assistant Trade Representative and a prominent member of the World Trade Organization, expresses doubt. “It remains unclear whether Trump aims to narrow the trade gap or entirely halt trade with China,” he remarked.

Broadman further questioned, “How will Trump address the needs of U.S. companies that depend on Chinese parts? The global economy operates in interconnected layers of production, with goods sourced from various countries. There is no definitive victor in this situation.”

He characterized Trump’s perspective on trade as “unrealistic,” noting that while Trump may be adept in real estate, he lacks a comprehensive understanding of global trade dynamics.

During a press briefing, White House Press Secretary Karoline Leavitt reiterated Trump’s position, stating, “The ball is in China’s court.” She asserted, “China must negotiate with us. We are not obligated to negotiate with them.”

Despite the strength of the American economy, analysts indicate that Beijing has been preparing for this trade conflict since Trump’s initial term. Dexter “Tiff” Roberts, a senior fellow at the Atlantic Council’s Global China Hub, believes the Trump administration misjudged the situation, anticipating that China would swiftly return to negotiations.

The People’s Daily, the official newspaper of the Chinese Communist Party, recently noted that China has acquired substantial experience in managing U.S. trade pressures over the past eight years and is now ready to respond to the latest round of tariffs.

“This is a critical struggle for China,” Roberts stated, referencing Xi Jinping’s repeated claims that trade is increasingly shifting towards the East while declining in the West.

In a significant strategic shift, China has been actively working to reduce its trade dependencies over the past several years. For example, it has increasingly turned to Brazil for soybean imports, thereby lessening its dependence on American agricultural products. In 2018, 19.2% of China's exports were directed to the United States; by 2024, this percentage had decreased to 14.7%.

Recently, Xi Jinping undertook a five-day visit to Southeast Asia aimed at enhancing China's reputation as a proponent of free trade and fostering more reliable partnerships in the region compared to those provided by the United States.

Xi Jinping and Donald Trump File Photo: Reuters

Political dynamics also influence these developments. As noted by Roberts, Xi's carefully cultivated image as a formidable leader prevents him from appearing weak by yielding to U.S. demands too swiftly. "There may be a compromise where both sides can claim victory," he remarked. "However, if that does not occur, we risk a total collapse in trade, which would disrupt the global economy."

Robert Rogowsky, a professor specializing in trade and economic diplomacy at the Middlebury Institute of International Studies in California, expressed optimism that Trump might be the first to concede. "Washington has a history of retreating under pressure, and it is difficult to believe that this pattern will not repeat itself," he stated in an interview with Al Jazeera.

Rogowsky criticized Trump's tariff strategy as misguided, attributing it to the influence of affluent special interest groups. He pointed out that recent market instability has diminished public support for Trump.

While the United States remains an essential trading partner for many nations, Rogowsky and other analysts contend that countries will increasingly seek alternatives. "The U.S. is no longer perceived as the most dependable partner in security agreements," remarked Wei Liang, another professor at the Middlebury Institute.

Liang highlighted that Trump's lack of coordinated policy is detrimental to America's global standing. In contrast to former President Joe Biden, who prioritized strategic alliances in his dealings with China, Trump's confrontational approach is leading to the U.S. becoming more isolated from its allies.

In a temporary measure, the Trump administration has exempted technology products from the 145% tariff; however, White House officials later specified that this exemption is merely temporary. A phased implementation of tariffs by sector is currently in progress.

On Monday, Trump suggested the possibility of lifting the 25% tariff on automobiles, a move that may indicate apprehensions about alienating support from leaders within the auto industry.

Ultimately, regardless of whether the U.S.-China trade conflict concludes with a compromise or a breakdown, its repercussions will extend well beyond the two dominant nations. The global community is preparing for the fallout.