Asia (Page 15)

Some were bracing for an instant and terrible increase of US-China industry conflicts upon Donald Trump’s returning to the White House on January 20.  

For decades, his campaign rhetoric had hinted at violent actions targeting Chinese imports, with some fearing taxes as high as 60 % on goods flowing from the world’s second-largest market into American businesses.  

But his starting moves, though destructive, were not the sledgehammer some had anticipated. Rather, they signaled a potential way toward dialogue, leaving space for cautious optimism in Beijing and among specific industry observers.

The initial volley—a 10 % tariff threat linked to China ’s role in America’s opioid crisis, particularly in relation to fentanyl—was enough to rattle markets.   The CSI 300 index fell by 1 %, Hong Kong ’s Hang Seng slid 1. 6 %, and the onshore yen weakened somewhat against the dollar.

However, the threatened methods paled in comparison to the blanket 25 % taxes Trump announced for Mexico and Canada.   For Beijing, it seems that this caution is a sign that the door to discourse remains available, at least for today.

Strategic beginning strategy

Trump’s original techniques suggest a calculated plan. By pairing the tax risk with an exploration into China ’s broader business procedures, he has given both flanks room to maneuver.  

While this method is doubtful to remove the deep trust that has built up over years of economic opposition, it does create an opening for creative deals. Beijing, accustomed to Trump’s chaotic fashion, is no fear taking note of this recorded preface.

China ’s management appears to know that Trump’s transactional approach to international relations usually leaves space for bargains. His hinted connection of business taxes to the future of TikTok—a Chinese-controlled social media platform that has drawn scrutiny from US protection eagles —underscores this place.

A package that addresses Washington ’s safety concerns while preserving some financial ties may serve as a model for broader contracts. The Chinese authorities, now faced with a slowing economy, entrenched home problems and mounting debts forces, has little taste for a full-scale trade conflict with the US.  

The consequences from the last round of US-China price wars, which strained supply chains and weighed on development, may be new in politicians ’ thoughts. With international demand uncertain and local challenges piling up, Beijing possible sees negotiations as a way to maintain its economic perspective.

For Trump, a package with China represents a major political option. While his foundation generally celebrates his aggressive stance, it also values outcomes. A trade deal that delivers agreements on issues like intellectual property theft, morphine exports or market exposure for US firms may help Trump to claim victory without tipping the global market into conflict.

At the same time, Trump’s tendency to view economic policy through the lens of personal branding complicates the picture. His willingness to reverse course or shift priorities based on perceived political gains could undermine the consistency needed for successful negotiations.  

Yet, this unpredictability may also work in his favor, creating opportunities to extract concessions from Beijing in exchange for scaling back his more extreme threats. The critical question now is what kind of deal would satisfy both sides.  

For the US, a meaningful agreement would need to address longstanding grievances such as forced technology transfers, intellectual property theft and the two sides ’ yawning trade imbalance. For China, the priority will be securing relief from tariffs while preserving its sovereign control over key industries and technologies.

One possible area of compromise could be technology regulation.   If Beijing agrees to stricter controls on data security, Washington might ease restrictions on Chinese tech companies now operating in the US, not least TikTok. Another potential avenue is joint commitments to supply chain resilience, which could help both economies weather future disruptions while fostering a sense of mutual benefit.

Risks to optimism

Of course, the risks to a potential deal remain significant. Trump’s unpredictability and penchant for last-minute demands could derail progress, as could hardliners on both sides who view compromise as weakness. Additionally, any agreement would need to address deep-seated structural issues, a task that may prove too complex for short-term diplomacy.

There is also the matter of trust—or the lack thereof. Years of tension have left both sides wary of each other’s intentions. And any agreement would likely face scrutiny from domestic constituencies eager to portray the other side as an unreliable partner.

Still, the mere possibility of negotiations has provided a glimmer of hope in an otherwise fraught relationship. For markets, Trump’s softer-than-expected opening has already delivered a sense of relief, even as uncertainty lingers. For businesses, it suggests that a return to the trade chaos of years past is not yet a done deal.

Ultimately, the road to a deal will be fraught with challenges. But the fact that both sides appear willing to engage in dialogue is a positive sign. Trump’s approach, while far from conciliatory, leaves room for pragmatism.  

For Beijing, the focus will be on crafting a deal that stabilizes its economy without conceding too much ground. For Washington, the challenge will be to balance toughness with the need for tangible results.

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