If China is angry at the United States for imposing an extra 10% tariff on all Chinese goods, it is doing a good job of hiding it. Both Canada and Mexico have vowed to retaliate and already Canadian Prime Minister Justin Trudeau has said his country “will not back down” as he announced a 25% levy on more than $100bn of American goods. US President Donald Trump has agreed to temporarily pause tariffs of 25% on goods imported from both countries after reaching separate agreements with each of their leaders. Beijing, however, has held its fire – for now.
In 2018, when Trump launched the first of many rounds of tariffs targeting Chinese imports, Beijing declared that it was “not afraid of a trade war”. This time, it urged the US to talk and “meet China halfway”.
This isn’t to say that the announcement will not sting. It will, especially because the 10% levy adds to a slew of tariffs he imposed in his first term on tens of billions of dollars of goods. And the Chinese government’s muted response is partly because it doesn’t want to worry its population, when many are already concerned about the sluggish economy.
President Xi Jinping may also have another reason: he may see an opportunity here. Trump is sowing division in his own backyard, threatening to hit even the European Union (EU) with tariffs – all in his first week. His actions may have other US allies wondering what is in store for them. In contrast, China will want to appear a calm, stable and perhaps more attractive global trade partner.
China has been looking for a chance to upend the American-led world order of the last 50 years – and the uncertainty of Trump 2.0 may well be it.
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