There have been many interpretations regarding the likelihood and possibility of Trump backing down from the economic war with China, who will endure to the end, who is stronger, whether China can withstand it, and whether these global tensions could lead to a third world war.
We must consider the extent of the impact of the US trade war on China on the overall global trade, economy, and investment movement, especially given that the United States and China together constitute a large share of the global economy, estimated at 43%, according to International Monetary Fund statistics. Therefore, it is expected that if the two countries engage in a comprehensive trade war, it will slow their growth, push them into recession, and consequently slow global economic growth. This will likely harm the economies of other countries through slowing global growth. Global investment will likely suffer due to their trade war, in addition to other potential consequences. Chinese Foreign Minister “Wang Yi” described the US tariff hike on Chinese goods as unjustified. In his opinion, these measures will harm global markets and damage the reputation of the leadership in Washington itself. Wang Yi also warned of a decisive response if the United States does not cease its economic pressure on China.
China is the world’s largest industrial country, producing far more than its population consumes. It already boasts a goods surplus of nearly $1 trillion, meaning that China exports more goods to the rest of the world than it imports. China often produces these goods at prices below their true cost, thanks to domestic and government financial support, such as soft loans, for companies that have government concessions. Steel is a prime example. There is a risk that if these products cannot enter the United States, Chinese companies may resort to dumping them in foreign markets. While this may benefit some consumers, it could undermine producers in countries where jobs and wages are threatened. Global warnings have been issued about the danger of excess Chinese steel being redirected and dumped in several global markets, particularly the British market, which would have dire economic and trade consequences.
Many indirect effects of the comprehensive trade war between China and the United States are expected to be felt globally, and most economists, even within China, believe the impact will be extremely negative. Here, we must understand that the United States itself suffers from a large trade deficit to China, with the difference between its imports and exports estimated at $295 billion in 2024. This represents a significant trade deficit, equivalent to nearly 1% of the US economy, but less than the trillion-dollar figure repeatedly claimed by Trump.
Despite the US trade war with China, China had already succeeded, even during Trump’s first term, in redirecting some of its exports and essential goods from the United States, redirecting them back through Southeast Asian countries. The US Department of Commerce confirmed in 2023 that Chinese solar panel manufacturers had moved assembly operations to countries, such as: (Malaysia, Thailand, Cambodia, and Vietnam), and then shipped the finished products to the United States from those countries, avoiding the tariffs imposed on them by the Trump administration. The new tariffs imposed by Trump on these countries will therefore raise the prices of a wide range of Chinese-made goods in the United States.
The US trade war with China will also negatively impact the US economy and domestic trade, especially given that smartphones constitute the largest category of US imports from China, representing approximately 9% of total imports. A large proportion of these smartphones are manufactured in China for Apple, an American multinational corporation. Therefore, these US tariffs on China were one of the main factors contributing to the recent decline in Apple’s market value, with Apple’s share price falling by 20% over the past period.
It should also be noted that China plays a central role in refining many vital minerals for the industry, from copper and lithium to rare earth minerals. Therefore, Beijing is expected to place obstacles to the access of these minerals to the United States. The US response to China is expected to be through pressure on other countries, including Cambodia, Mexico, and Vietnam, to halt trade with China if they want to continue exporting to the United States.
Here, US President Donald Trump emphasized that US farmers are the victims of the trade war with China. Trump’s statements came in response to an order issued by China to its airlines not to receive any additional shipments of American Boeing aircraft, in response to the US decision to impose tariffs on Chinese goods. Consequently, the Chinese authorities banned all airlines in China from purchasing Boeing aircraft, equipment, and spare parts from the US. The Chinese government also confirmed, through its airlines, that it is considering providing support to airlines that lease American Boeing aircraft to offset their increasing costs. It is noteworthy that the China Development Bank (CDB) agreed in September 2024 to purchase 50 aircraft from the American Boeing company, at a time when the American aviation manufacturer was suffering from financial crises and labor strikes. However, the US trade war with China during Trump’s second term dashed any possibility of cooperation between the two sides. But in general, the Trump administration’s implementation of new tariffs on imports will enable Beijing to strengthen its economic and investment position with Southeast Asian countries and emerge as an alternative to Washington. This will ignite tensions between the two sides.
Trump’s trade war with China will also open new economic and diplomatic opportunities for China, especially in light of Chinese President Xi Jinping’s visit to Southeast Asia. Xi himself is leading an anti-tariff campaign aimed at strengthening trade and other ties between the region’s countries and China as an alternative to the United States. Xi visited Vietnam, followed by Malaysia and Cambodia, all to strengthen economic relations with China in the face of Trump’s protectionist policies and economic pressure on China and its partners in Southeast Asia and the developing global South.
Therefore, it is expected that if the United States closes its doors to Southeast Asian countries and developing countries in the Global South, China will quickly become the main player. This is especially true given that Southeast Asian economies are still developing, and hundreds of millions of people live in extreme poverty. Therefore, the leaders of these countries cannot wait long to sign trade and investment agreements as a result of these US trade maneuvers and pressures on China by manipulating these poor countries, while “Trump” determines his tariff policy. Therefore, it will be difficult in the future to disentangle trade and economic relations between China and Southeast Asian countries, which are currently developing significantly, especially after Chinese President Xi Jinping’s tour there as a result of the US trade war with China.
Here, the Chinese Ministry of Commerce called on the United States to cancel the tariffs and fully correct its mistakes. Chinese Commerce Minister Wang Wentao also called on all WTO members to unite in the face of US unilateralism and protectionist policies, calling for the need to resolve disputes through dialogue and cooperation, rather than unjustified US escalation. China called on all WTO member states to join forces to confront unilateral measures and promote open cooperation and the multilateral trading system. Official statements by “He Lifeng”, in his capacity as Chinese Vice Premier, stated: “The United States’ successive imposition of excessively high tariffs on China has become a mere numbers game, with no real economic significance. This only reveals the United States’ practice of weaponizing tariffs as a tool of bullying and coercion, which calls for a strong response”.
