Since Donald Trump became president of the United States in 2017, trade tensions between the world’s two largest economies have reached unprecedented levels. The Trump administration imposed significant tariffs and limited investment by Chinese companies in strategic sectors, sparking a trade war that has reverberated throughout the global economy.
However, the current situation, in which Trump takes over the presidency, could return with an even more aggressive stance, which has caused China to take preemptive measures and develop robust defense strategies in anticipation of a possible trade confrontation.
China adapts and strengthens its response capacity
Trump’s victory in 2016 surprised China, which had not anticipated the scale of the economic confrontation that would erupt. During his first term, the United States not only imposed tariffs but also sanctions that affected major Chinese technology companies such as Huawei and ZTE. In response, the government of Xi Jinping adapted its strategy and established new regulations which allow China to effectively defend its economic interests. Among the most notable are the Foreign Sanctions Act and the “unreliable entities” list, which allows China to retaliate against foreign companies that threaten its national security.
These laws are complemented by an expansion of export controls, giving China the ability to restrict access to key resources in which it dominates the global supply chain, such as rare earths and lithium, both essential to modern technology. This ability to use strategic resources to respond to potential sanctions has been described by some analysts as “commodity diplomacy”, as China can pressure the United States by limiting exports of these essential products.
China’s cautious but firm stance on Trump’s second term
The arrival of Joe Biden in 2021 has not entirely eased tensions, as he has maintained many of Trump’s policies toward China. However, the possibility of a second Trump term, now accompanied by even more protectionist and aggressive rhetoric, has forced Beijing to devise defensive strategies. Trump has hinted he could impose 60% tariffs on all Chinese imports, which would have a devastating impact on the Chinese economy, especially at a time of slow economic growth, low consumption and unemployment raised young people.
According to experts such as Wang Dong, executive director of the Institute of Global Cooperation and Understanding at Peking University, China is willing to negotiate to seek solutions to avoid direct economic conflict. However, if an agreement is not reached through dialogue, China will “firmly defend its rights and interests”, he said. This cautious but determined stance reflects China’s desire to avoid escalation, although it is prepared to respond proportionately if it finds no other alternative.
Measures to reduce economic dependence on the United States
China’s strategy is not based solely on direct retaliation, but on an active effort to diversify its trade relationships and strengthen its technological and resource independence. Beijing has stepped up its search for trading partners in countries less aligned with Washington, which could offer China alternative markets and reduce its exposure to U.S. protectionist policies.
Likewise, China has invested in developing its own technological capabilities, with the aim of reducing its dependence on American components and technology. This includes the creation of research centers in areas such as artificial intelligence, robotics and semiconductors. Although these efforts cannot immediately replace advanced foreign technologies, The Chinese government hopes that in the long term, these investments will strengthen its economy against future sanctions or trade restrictions.
Possible consequences for foreign companies in China
The application of laws such as Foreign Sanctions Act and the “untrustworthy entities” list could have consequences for American companies that rely on the Chinese market. Recent examples include the inclusion of US company Skydio on the restricted list and the threat of sanctions against PVH, the company that owns brands such as Calvin Klein and Tommy Hilfiger. These measures not only send a message of toughness, but could also affect businesses that depend on access to China’s huge consumer market.
However, some experts warn that aggressive use of these measures could have counterproductive effects for China. James Zimmerman, a partner at the law firm Loeb & Loeb in Beijing, stressed that these measures could deter foreign investment in China, especially in an already difficult economic context. According to Zimmerman, although these retaliations offer Beijing a defense tool, they could also end up isolating the Chinese economy.
The risk of an unprecedented escalation of the trade war
If Trump took an even more aggressive stance, China and the United States would face an unprecedented economic confrontation. Joe Mazur, trade analyst at Trivium, says that if the United States becomes an unreliable trading partner, other major economies may view China as a preferred trading partner, encouraging deeper trade ties with Beijing.
In conclusion, China’s preventive strategy against the departure of Donald Trump is based on a combination of defensive measures and greater economic independence. Despite their efforts, the trade confrontation could affect both China and the United States, as well as their respective economies. Beijing, aware of the internal challenges it faces, is ready to defend its interests, even if this comes at the cost of an escalation of the tariff war which could have unpredictable consequences for both countries.
