Trump sows uncertainty - and Xi Jinping sees an opportunity - Voice of Asia

Despite the US imposing an additional 10% tariff on all Chinese goods, if China is angry about it, they are doing a good job of hiding it. In contrast, both Canada and Mexico have vowed to retaliate, with Canadian Prime Minister Trudeau announcing a 25% tariff on over $100 billion of US goods, stating that Canada "will not back down."

US President Trump subsequently reached agreements with Canada and Mexico separately, agreeing to temporarily suspend tariffs on imports from both countries. However, the tariffs on China are scheduled to take effect on Tuesday. So far, Beijing has remained restrained, taking no visible counter-measures.

In 2018, when Trump launched the first round of tariffs on Chinese imports, Beijing declared it was “not afraid of a trade war.” This time, they have urged the US to engage in dialogue and to “meet China halfway.” But this doesn't mean the new tariffs will have no impact, especially considering the 10% rate is on top of a series of tariffs imposed on hundreds of billions of dollars of goods during his first term.

The Chinese government's low-key response is partly due to a desire not to alarm the public, as many are already worried about the economic slowdown. But China’s economy is not as reliant on the US as it once was. Beijing has strengthened trade agreements in Africa, South America, and Southeast Asia, and is now the largest trading partner of more than 120 countries. Carnegie China’s Jude Blanchette says that this extra 10% tariff may not provide the leverage Trump wants.

Blanchette argues, “China may feel it can absorb a 10% tariff, hence Beijing’s relatively calm demeanor. If it's not that big of a deal, there's no reason to pick a fight with the Trump administration unless it has a practical benefit for Beijing.” Furthermore, Chinese President Xi Jinping may have another reason: he may see an opportunity.

Just a month into his presidency, Trump is threatening tariffs on allies like the EU, creating division in his own backyard. His actions may leave other US allies worried about their future. In contrast, China wants to project an image of calm, stability, and a more attractive global trading partner.

Sun Yun, the director of the China Program at the Stimson Center, stated, “Trump's ‘America First’ policy will present challenges and threats to almost every country in the world. From the perspective of US-China strategic competition, the decline in US leadership and credibility will benefit China. While this is unfavorable for China on a bilateral level, Beijing will certainly try to capitalize on it.”

As the leader of the world's second-largest economy, Xi Jinping makes no secret of China's ambition to lead an alternative world order. Since the end of the COVID pandemic, he has traveled extensively and supported major international institutions like the World Bank and agreements such as the Paris Climate Accord. Chinese state media portrays this as embracing countries around the world and deepening diplomatic relations.

Previously, when Trump halted US funding to the World Health Organization in 2020, China pledged to provide additional funding. It is widely anticipated that Beijing may step in again to fill the void left by Washington's withdrawal from the WHO. The same applies to aid freezes, which have created chaos for countries and organizations that have long relied on US funding, a gap China may be looking to fill despite its own economic slowdown.

On his first day back in office, Trump froze all US foreign aid, with the US being by far the largest aid donor in the world. Hundreds of foreign aid projects executed by USAID were brought to a standstill. While some projects have been restarted, aid contractors say there is still chaos as the agency's future remains uncertain.

John Delury, a historian of modern China at Yonsei University in Seoul, argues that Trump's "America First" policy could further undermine Washington's position as a global leader. He told the BBC, "The combination of tariffs on major trading partners and the freezing of foreign aid sends a message to the Global South and OECD countries that the US is not interested in international partnerships and cooperation."

Delury also noted, "As the US withdraws from the world stage, President Xi Jinping's consistent message of ‘win-win’ globalization takes on a whole new meaning." Beijing has been seeking opportunities to overturn the US-led world order of the past 50 years, and the uncertainty of the Trump 2.0 era may be just such an opportunity.

Blanchette stated, “As to whether this actually gives Beijing a key advantage, I'm not so sure. Many US allies and partners, particularly in the Pacific region, have reasons to work with Beijing, but they also have reasons to be wary. This is why we are seeing Japan, South Korea, the Philippines, and Australia move closer together, partly because they have concerns about China.”

The Australian Institute of International Affairs believes a trilateral relationship between Australia, Japan, and South Korea could form due to the “impact of a second Trump administration,” with “momentum building.” All three countries are concerned about China’s aggressive stance in the South China Sea and the possibility of a war over Taiwan. Beijing views Taiwan as a province that will eventually become part of China and has not ruled out using force to achieve this.

Taiwan has long been one of the most contentious issues in US-China relations, with Beijing condemning any support from Washington for Taipei. But when Trump has repeatedly threatened to annex Canada or buy Greenland, it may be difficult for Washington to push back against signs of Chinese aggression.

Most countries in the region use their military alliances with Washington to balance their economic relationships with China. But now, wary of Beijing and uncertain about the US, they may build new Asian alliances that don't rely on either of the world's great powers.

Trump announced the tariffs over the weekend as Chinese families were celebrating the New Year and inviting the god of wealth into their homes. Empty Beijing streets were adorned with bright red lanterns as most workers left to travel home for the holiday. China’s response has been far calmer than that of Canada or Mexico. The Ministry of Commerce announced plans to take legal action and use the World Trade Organization to express its displeasure.

But this poses no threat to Washington. The WTO's dispute resolution mechanism has been effectively shut down since 2019 when Donald Trump (then in his first term) blocked the appointment of judges to handle appeals. With the holiday drawing to a close, and officials returning to work in Beijing, they need to make decisions.

In recent weeks, officials have been encouraged by signs that the Trump administration may want to keep relations stable, especially after what Trump called “a great call” between the two leaders last month. For now, China is keeping calm, perhaps hoping for a deal with Washington to avoid further tariffs and prevent relations between the world's two largest economies from spiraling out of control.

But some believe this won't last, as both Republicans and Democrats have identified China as the US's biggest foreign policy and economic threat. Professor Wu Xinbo, director of the Center for American Studies at Fudan University, said, “Trump's unpredictability, impulsiveness, and recklessness will inevitably lead to major shocks in bilateral relations. Furthermore, there are quite a few China hawks, even extreme hawks, in his team. Over the next four years, bilateral relations will inevitably face severe damage.”

China is certainly concerned about its relationship with the US and the damage a trade war could inflict on its slowing economy. But it will also seek to capitalize on the current political pendulum, drawing the international community to its side and into its sphere of influence.