The Trump administration of the United States announced that it would impose so-called reciprocal tariffs on the whole world, causing a huge shock to the world’s economic and trade pattern and the market. China took the lead in retaliating against the 34% tariff imposed by the United States. Subsequently, the fight between the two sides spiraled and escalated. The close economic and trade relations established by China and the United States over the past 30 years have actually entered a fuse state.
It is worth noting that on April 9, Trump suddenly announced a 90-day suspension of the implementation of reciprocal tariffs, maintaining only a 10% basic tariff. During this period, the United States will conduct trade negotiations with various countries, with the exception of China, unless China cancels its retaliatory tariffs against the United States. This also means that the United States has adjusted its tariff strategy, from an unwise attack on all sides to a high-pressure focus. The United States has adjusted, and whether China can adjust is the key to the next evolution of the situation.
The current situation in the United States is that Trump himself is indeed obsessed with tariffs. He must earn this income, but his obsession seems to be limited to tariffs. China has declared that whether the United States wants to fight a trade war or other forms of war, it will fight to the end. Trump was quite surprised when he heard the news, saying how did the trade dispute become a war? The US political circles are indeed hostile to China politically, but they are basically “containmentists” and no one has advocated a direct confrontation with China.
It is not difficult to understand why China reacted strongly to the US tariff stick. First, the means and style of the Trump administration’s operation of tariff policy are simple, crude and vulgar, lacking a benign platform and mechanism for reaching a “gentleman’s agreement”; second, China has a historical psychological shadow of trade with the West. The origin of the “Sino-British Opium War” was about international trade disputes.
But the times are different after all. China is no longer the Qing Dynasty in the late 19th century. China’s wise strategic choice in this round of Sino-US trade disputes is to achieve two “resoluteness”, that is, to resolutely fight back against the bullying means and style of the Trump administration, and at the same time to resolutely engage in tariff and trade consultations with the United States. These two resolutenesses are indispensable and are the key to victory.
There are three basic facts and cognitions that are the premise for guiding China to adopt the right strategy. First, the United States is the world’s largest consumer market and commodity importer, and China is the world’s largest manufacturing plant and commodity exporter. This is the basic pattern. In other words, the United States is China’s number one customer, and China is the United States’ number one supplier. If the two sides are in harmony, they will make money, but if they fight, both will suffer. There is a basic common sense in the business world: you must take good care of your customers. Even if customers sometimes have a childish temper, suppliers don’t have to dance and get angry with them. Don’t lose the big picture for the sake of small gains. China’s export industry to the United States involves the employment of millions of people, and with families and partners, it may reach tens of millions. The interests of the people are always the top priority.
Moreover, even if the Trump administration is a bit simple and crude, the basic fact that the United States is a huge and high-quality market has not changed, which is also the basis for Trump to dare to impose tariffs on the world. If the African country Kenya announces an upgrade of tariffs on countries around the world, the world may laugh it off. Why are all countries scrambling to export to the United States? Why don’t they increase exports to Russia, which is also a great country? The answer is simple: the quality of the Russian market is not good, there is not much purchasing power, and it may not be paid for the goods, and the ruble is difficult to become a hard currency. The whole society is full of gangs and corruption. Therefore, China can be angry with Trump, but there is no need to compete with the United States, a high-quality market. It still needs to rely on negotiations to solve the trade balance problem.
In addition, tariffs are actually still a means of game competition in a civilized environment. They are open cards on the table. There is neither Putin’s blatant invasion and bombing of the sovereign country Ukraine, nor the detention, abuse and killing of hostages like the Middle East terrorist organization Hamas. It is even more different from the time when trade was difficult and Britain sent an expeditionary force to the Qing Dynasty to ask for punishment. Therefore, China should not overreact to the issue of tariffs at present. The high or low tariffs have nothing to do with the loss of sovereignty and humiliation of the country, let alone kneeling and surrendering. The extreme thinking of the Boxer Rebellion is of no help. We still need to keep a clear and calm mind, rely on consultations and negotiations, and solve problems on the track of civilization and peace.
Breaking through negotiation obstacles sooner rather than later
In terms of specific operational procedures, Trump’s style prefers to go from top to bottom, get straight to the point, and have high-level dialogues. He first gets the general principles and policies in place, and then lets his subordinates plan and implement them specifically; China’s procedures seem to be the opposite. Generally, it is from bottom to top, letting subordinates discuss matters and projects with the other party first, and then hold a summit meeting or issue a joint statement as an official ceremony for confirmation. In this round of tariff war, Trump basically operated it himself. He was eager to start equal negotiations with China, but China lacked similar procedures. During Trump’s administration 1.0, China appointed then Vice Premier Liu He as the plenipotentiary representative. But so far, Trump 2.0 is still unclear about who China’s negotiating partner is. This kind of high-level communication dislocation and misunderstanding between China and the United States needs to be made up and corrected as soon as possible.
Some analysts say that China believes that the Trump administration is arrogant and in the limelight at this stage, and it is estimated that there will be no decent results in negotiations with it. After a period of time, the consequences of high tariffs will appear in the US market, and inflation will make American people complain. At that time, negotiations with Trump may be more effective. This statement is reasonable, but it should be remembered that high tariffs are also seriously damaging the interests of China’s economy and people. It is hard to say who is on the side of time. Therefore, it is better to break through the obstacles of tariff trade negotiations between China and the United States sooner rather than later.
In fact, the timing is very good now. Trump is eager to seek considerable political achievements, and also to quell the centrifugal and complaints within the political party and government circles, and to keep the overall public support rate from diving. So far, Trump has made little progress in resolving the Ukraine issue and was forced to suspend the issue of reciprocal tariffs for 90 days, although he has made some gains in the basic 10% tariff. The tariff issue in China has also reached a deadlock, and he has been expressing his desire to communicate directly with China. If China can cooperate with the negotiations at this time, it will not only not lose the initiative, but also be able to reach an agreement acceptable to both parties, resolve the deadlock, and solve problems for the benefit of the people of the world.
If you want to see farther, you must climb to a higher level. Trump’s style and pattern in dealing with tariffs may not be enough, but the opponent’s cognition and strategy do not have to be limited by this. If China can deal with the problem with the mind and wisdom of looking at the next 100 years of Sino-US relations, there will be no obstacles that cannot be overcome at present.
