Opinion | How China could turn Trump’s tariffs into a geopolitical opportunity

With little economic or political rationale, US President Donald Trump has introduced some of the highest tariffs in more than a century and imposed them on nearly every economy in the world. Then suddenly, despite his insistence that the tariffs were here to stay, he paused the new “reciprocal” tariffs for all countries except one, keeping in place an across-the-board 10 per cent levy for the rest.

For China, on top of the two 10 per cent tariff hikes in February and March, Trump added a 50 per cent tariff and the 34 per cent “reciprocal” tariff levied on his “Liberation Day” (the sum of which he then increased to 125 per cent). The result? An effective minimum tariff rate of 145 per cent on all Chinese goods entering the United States, with a temporary reprieve for consumer electronics.

China, which had retaliated with proportional tariffs to the two initial 10 per cent increases and had hoped for a deal with Trump, has responded to his last two hikes with matching increases, bringing the overall tariff on US imports to 125 per cent.

The Trump administration is betting that the Chinese government cannot withstand the economic losses from a sharp reduction in US trade. Just under 20 per cent of Chinese GDP comes from exports, and around 14.7 per cent of its exports go to the United States – China’s second-largest export market in 2024. A 145 per cent levy on these exports will exact a heavy toll on Chinese firms, workers and families at a time when China is struggling to re-energise a stalling economy.

But Trump’s bizarre and aggressive launch of his tariffs handed the Chinese government an important political advantage. Unlike economic downturns that can be attributed to domestic policy, Trump’s bluster and indiscriminate, punitive tariffs against small, poor countries like Lesotho, or islands populated only by penguins, will lead most ordinary Chinese to blame economic pain on US bullying.