China Braces for a Trump Trade Tsunami: Tariffs, Tech Battles, and Taiwan Showdown on the Horizon
As former President Donald Trump heads toward his second term, China braces for what could be a turbulent era in U.S.-China relations. Trump’s initial time in office saw a series of confrontations—trade wars, technology crackdowns, and diplomatic tension over Taiwan—that left a lasting mark on both countries’ economies and diplomatic ties. Now, with Trump back on the world stage, China is anticipating a fresh wave of challenges, particularly in three critical areas: trade, technology, and Taiwan.
Trade Tensions: Potential for 60% Tariffs on Chinese Goods
One of Trump’s most prominent economic proposals is a sweeping 60% tariff on all Chinese exports to the U.S., a drastic step that could seriously impact China's economy. For a country already grappling with high youth unemployment, a sluggish property market, and substantial government debt, this policy could be a severe blow. According to UBS analysts, such a tariff could cut China's projected economic growth by up to 2.5 percentage points, nearly halving it. During Trump’s previous administration, tariffs were imposed on over $360 billion worth of Chinese goods, ultimately forcing China to negotiate.
The resulting 2020 trade agreement had Beijing pledging to strengthen intellectual property protections and commit to $200 billion in U.S. product purchases, though analysts noted that China failed to fully meet these targets. Despite these challenges, President Biden has retained most of Trump’s tariffs, adding new duties on products like steel and solar panels, signaling that tariff tensions are here to stay regardless of the administration.
According to Henry Gao, a trade law professor at Singapore Management University, tariffs could again be wielded to bring Beijing back to the negotiating table. "Given China’s weak economic position this time around, there may be a greater willingness to negotiate," Gao suggests. "While the tariffs could hurt China’s economy initially, the situation could improve if a deal is reached."
Taiwan: An Ongoing Diplomatic Flashpoint
Taiwan, a self-governed democracy that Beijing views as a breakaway province, remains a critical point of tension. Trump made waves in 2016 by breaking protocol and accepting a congratulatory call from Taiwan’s then-president Tsai Ing-wen. It was the first direct conversation between a U.S. president and a Taiwanese leader since formal diplomatic ties between the U.S. and China were established in 1979. Although Trump’s stance on Taiwan ultimately aligned with the traditional U.S. approach of maintaining the status quo, China anticipates potential flashpoints under his renewed leadership.
In his campaign, Trump suggested that he might impose even more punitive tariffs of 150% to 200% on Chinese goods if Beijing were to invade Taiwan. Additionally, he hinted that Taiwan might need to "pay for protection" from the U.S., likening the relationship to an insurance policy. This rhetoric, combined with Trump's unpredictable style, raises concerns about future U.S. support for Taiwan’s independence.
“While Trump’s approach is unlikely to advocate directly for Taiwan’s independence, China remains wary of his influence over the U.S.-Taiwan relationship,” said Zhu Feng, dean of the School of International Relations at Nanjing University.
In the eyes of Wang Huiyao, founder of Beijing’s Center for China and Globalization, Taiwan’s economic role could also complicate matters. "China is the largest trading partner for both Russia and Ukraine," Wang wrote in a recent commentary, suggesting that China could leverage these ties for potential peace-brokering roles if Trump seeks Beijing’s cooperation on broader global issues, such as the Ukraine conflict.
Technology and the Ongoing Battle over Semiconductors
During Trump’s initial term, Chinese technology giants like Huawei faced intense scrutiny due to security concerns. Under Biden, the pressure continued, with restrictions on China’s access to advanced semiconductors—crucial for strategic industries like artificial intelligence. Trump has frequently criticized Biden’s CHIPS and Science Act, which earmarked $53 billion to boost domestic semiconductor manufacturing. Ironically, Taiwan produces nearly 90% of the world’s advanced chips, making it a linchpin in the semiconductor market.
The CHIPS Act has already prompted Taiwan’s largest chip manufacturer, TSMC, to expand production in Arizona, a response partly designed to align with U.S. protectionist policies. But Trump’s plan to dismantle the CHIPS Act, coupled with his claims that Taiwan “stole” the chip industry from the U.S. decades ago, could heighten tensions between Taipei and Washington. Shihoko Goto, director of the Indo-Pacific Program at the Wilson Center, warns, "Rather than acting as a ‘silicon shield,’ Taiwan’s success in chips may spark tension if Trump sees it as a result of the U.S. being taken advantage of."
The Bigger Picture: Economic and Strategic Challenges in a New Era
For China, Trump’s re-election raises fundamental questions about its future on the world stage. In the lead-up to this renewed relationship, Chinese President Xi Jinping has called for a cooperative stance, emphasizing that both countries stand to benefit from collaboration rather than confrontation. Xi’s recent congratulatory message to Trump underscored the importance of "managing differences" in this "new era."
Da Wei, director of the Center for International Security and Strategy at Tsinghua University, sees Trump’s unpredictability as both a challenge and a potential advantage. "While we understand the challenges ahead, the opportunities remain uncertain," Da said. For China, the stakes couldn’t be higher. Whether through negotiation, economic resilience, or geopolitical maneuvers, Beijing is poised for a delicate balancing act in response to Trump’s evolving policies.
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A Potential for Global Diplomacy: Balancing Conflict with Cooperation
Trump has previously sought China’s assistance in diplomatic matters, such as securing a resolution with North Korea. He could look to repeat this approach, enlisting Xi’s cooperation in addressing pressing global issues like the Ukraine conflict. As China is a key trading partner for both Russia and Ukraine, this positioning offers a unique role in peace-making initiatives, albeit one that could come with strings attached.
Amid these multifaceted issues, Trump’s return poses both challenges and potential diplomatic opportunities for China. Henry Gao believes the key will be finding mutually beneficial avenues to mitigate the economic impact of tariffs while aligning on certain international issues.
While the coming years may bring new economic and political turbulence between Washington and Beijing, both sides will need to navigate this era of uncertainty strategically. For China, it will mean reconciling its ambitions for technological and economic independence with the realities of a global economy intertwined with the United States.
