Donald Trump might be the most important threat to the global economy in 2025 when US President Joe Biden and Chinese leader Xi Jinping meet on Saturday ( November 16 ).
Former and current US president has been a pro-China hardliners and a long-standing loyalist for major case positions in the days following his victory on November 5.
Marco Rubio, a senator from Florida, serves as the head of US politics. Rubio would be the first hanging secretary of state to remain barred from traveling.
Rubio’s appearance alone would symbolize” a nightmare come true” for Xi’s Communist Party, notes Zhu Junwei, a producer at Grandview Institution in Beijing and a former scientist for the People’s Liberation Army.
Increase in policy hawk , Robert , Lighthizer, Trump’s past and possible future business king. Earlier this year, he talked of a Trump 2.0 wish to degrade the US dollar, Argentina-style, to boost exports.
And then there’s Mike Waltz, one of the most outspoken China reviewers in Congress who’s called Xi’s state an “existential danger”, as Trump’s national security adviser.
Trump tapped New York Congresswoman Elise Stefanik, a furious China writer, to get his United Nations adviser. Xi’s inner circle wo n’t be happy if Trump names FOX News host Pete Hegseth as defense secretary or Beijing critic John Ratcliffe as the CIA’s head of office.
Hegseth claimed in a new YouTube video that China “built an military specifically to defeat the United States of America” and that it was using its growing market share in manufacturing and technology to acquiesce globally.
” They have a full-spectrum long-term view of not just local but international domination”, Hegseth said. They can only do so by defeating us, which is the only means they can put in place a framework that can benefit them. They have the guts to make a schedule for it.
These viewpoints explain why Xi’s group is anticipating a Trumpian storm. And why Biden and Xi have much to discuss this weekend, when the two men meet on the sidelines of the Asia-Pacific Economic Cooperation ( APEC ) summit , in Peru.
The tete-a-tete may function as a sendoff for Biden’s personal efforts since 2021 to take on an increasingly assertive China.
Biden was never interested in going through with the 60 % tax Trump intends to impose on all products made in China. And properly so, given that Trump’s ripped-from-the-1980s trade strategy may thread backwards on American households first and often through higher inflation.
Back in the mid-80s, an age when Trump’s financial view calcified, trade wars, money loss, trickle-down economics and fear about Chinese CEOs stealing America’s potential dominated the zeitgeist.
The problem with Trump’s tariff-heavy reaction to today’s financial evil – China – is that it’s an attempt to revive and listen to a method that no longer exists.
This 1985 difficulty was evident during the Trump 1.0 , period from 2017 to 2021. Trump’s personal “reform” was a large US$ 1.7 trillion tax cut, more like Ronald Reagan’s days than a plan to resurrect National competitiveness for the future, in addition to the taxes on Chinese goods.
It did little to incentivize lords to compete with China the natural way — by getting , the US economy , in better condition internally.
Trump’s most recent tariffs did n’t boost US productivity, create new business booms, or create new domestic economic strength. Nor will the assault of Trump 2.0 fees coming Asia’s manner.
The 60 % duty could easily climb to 100 % or more. But may the 20 % blanket across-the-board taxes Trump is mulling for all items from anywhere.
The 100 % charges that Trump telegraphed for cars made in Mexico may soon become widened to lorries from Germany, Japan, South Korea, Sweden and elsewhere.
Biden currently beat Trump to China, of training. In May, Biden’s White House slapped a 100 % tax on Chinese energy cars and solar panel amid worries cheap products are “flooding” the US market.
The EV tax is four times the current 25 % level, aimed at offsetting what Lael Brainard, Biden’s national financial adviser, calls” China’s cruel practices and incentives and level the playing field for US manufacturers and engine staff”.
Even higher EV taxes may be coming now that Tesla founder Elon Musk is listening to Elon Musk. Twelve months ago, Musk enjoyed folk-hero status in China after building his first overseas” Gigafactory” in Shanghai.
Now, Musk warns that China will “demolish” global car rivals unless Washington erects higher trade barriers.
Clearly, Xi’s government is n’t looking forward to the Trump 2.0 era. According to Chinese Foreign Ministry spokesperson Mao Ning, “let me repeat that there is no winner in a trade war, nor will the world profit from it.”
Neither is the rest of Asia. As Trump obsess over bilateral trade deficits, the entire region could find itself in the firing line.
” Burgeoning bilateral deficits could eventually prompt US tariffs on other Asian economies”, says Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs. ” Compared to the US, Korea, Taiwan, and especially Vietnam have experienced significant trade gains.”
At the same time, Tilton notes, Korea and Taiwan’s positions are in “privileged positions” in the semiconductor supply chain at a moment when Trump is keen to tilt the playing field toward America.
Trump will surely be reminded, meanwhile, that Vietnam has been a key winner from US efforts to pull jobs away from China, he says. Japan and India also have US trade surpluses.
Last year, Korea’s trade surplus with the US hit a record US$ 44.4 billion, its largest surplus with any country. About 30 % of Korean shipments to the US are made up of exports of cars.
Exports from Taiwan to the US reached a record$ 24.6 billion in the first quarter of 2024, a 57.9 % year-on-year jump. The sectors of information technology and audio-visual goods accounted for the majority of those gains.
In the first nine months of this year, Hanoi’s US trade surplus totaled$ 90 billion.
As 2025 begins, Tilton reckons there will be efforts by Asian trading partners to take steps to “deflect attention” by masking these imbalances. At a time when the dollar is strengthening and rising, that is easier said than done.
In a recent report, Barclays Bank analysts claim that Asian leaders will struggle to resist Trump’s draconian approach. In his second term as US president, they write,” Trade policy is where Mr. Trump is likely to have the biggest impact on emerging Asia.”
Staunch US ally Japan will be in harm’s way, too. And at a time when the Bank of Japan has been attempting to raise rates to support the yen’s decline. The troubled Japanese government’s embattled government needs more than the US-China clash that will come.
Trump, remember, has said “tariff” is the “most beautiful word” in the dictionary.
It makes for the “perfect storm”, says Wendy Cutler, who , spent three decades as a diplomat and negotiator in the Office of the US Trade Representative ( USTR ). As the “tariff man” takes office, China’s global trade surplus is projected to exceed$ 1 trillion this year. Buckle your seatbelts”.
The fallout from the damage tariffs do to China’s 2025 could be a game-changer all their own.
According to economist Larry Hu of Macquarie Group, who believes that 60 % tariffs could reduce mainland exports by 8 % in a year,” Trade war 2.0 could end China’s ongoing growth model, in which exports and manufacturing have been the main growth drivers.” ” Under the next growth model, domestic demand, especially consumption, could become the main driver again as it was during the 2010s”.
Of course, no one really knows what to expect. ” In reality”, Hu says,” the tariff hike may be smaller and narrower than what Trump has floated. In response to the actual tariffs, Beijing may decide later whether to implement the stimulus.
Or Trump’s levies could be even higher. Next month’s Politburo meeting , and central economic work , conference , will give Team Xi an opportunity to weigh risks and imponderables for the year ahead. And to mull ways that China might retaliate.
Trump 2.0 might have a positive impact on Team Xi’s need to rebalance its domestic growth engines and intensify efforts to increase its economic self-reliance.
” China will seize the opportunity to position itself as the defender of globalization and multilateralism as Trump alienates the world with protectionism, isolationism and bombast”, Paul Triolo, a partner at advisory firm DGA , Group. During Trump’s first term, China lacked the ability to exploit the world’s dissatisfaction with the United States. It wo n’t ever commit the same error again.
There are also possible responses China might have. Options include dumping large amounts of the US Treasury’s$ 770 billion debt, limiting American access to minerals, stifling agricultural imports, punishing a number of businesses like Apple and Tesla, and devaluing the yuan.
According to Matt Gertken, chief strategist at BCA Research,” a far more effective approach for Beijing would be the formation of alliances in Eurasia and commercial diplomacy to persuade American allies and partners that US policy is reckless and harmful to peace and prosperity.”
” Xi is in fact doing both: strengthening ties with Vladimir Putin, even condoning a new Russo-North Korean mutual security pact, while courting Germany, Japan, Australia, and other states eager for Chinese investment”, Gertken said.
Increasing the role of Global South and the BRICS nations – Brazil, Russia, India, China and South Africa– also could blunt the damage from Trump’s trade policies.
In August, the BRICS added to their ranks Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates. Beijing believes that a world order is in need of being reshuffled by the BRICS expansion.
Nothing seems more dated than Trump’s attempt to resurrect a functioning, 1980s-like global trading system. And at the expense of Asia’s 2025 growth prospects.
Follow William Pesek on X at @WilliamPesek