If China was upset about the United States imposing an additional 10% tariff on all Chinese goods, it did not outwardly show it.
Instead, Beijing urged Washington to engage in talks, maintaining its previous warnings that a trade war would produce no winners.
China held off on immediate retaliation, waiting until midnight Washington time. Just as the U.S. tariffs took effect, Beijing announced countermeasures—tariffs of 10-15% on a range of American imports, including coal, crude oil, and large automobiles, set to begin on February 10.
The Chinese government’s measured response may have been an attempt to keep negotiations with Washington open, hoping to prevent further tariff escalations and to maintain stability between the world’s two largest economies.
This approach is not unprecedented. U.S. President Donald Trump had granted last-minute tariff reprieves to Canada and Mexico just hours before their respective levies were set to take effect. Trump and Chinese President Xi Jinping are also expected to hold discussions later this week.
The U.S. tariff increase will be painful for China, particularly because it adds to the existing set of tariffs Trump implemented during his first term on tens of billions of dollars’ worth of Chinese goods. Chinese citizens, already wary of a slowing domestic economy, may feel the impact even more.
Beijing and Washington have clashed over tariffs before, but much has changed since Trump’s first administration.
For one, China is no longer as dependent on U.S. trade as it was in 2020. Over the past few years, Beijing has expanded its trade agreements across Africa, South America, and Southeast Asia. It has now become the primary trading partner for over 120 countries.
While a deal remains possible, the additional 10% tariff may not provide the leverage Trump seeks, according to Chong Ja Ian of Carnegie China.
Xi’s ‘Win-Win’ Strategy as the U.S. Retreats
President Xi Jinping may see a broader opportunity in this moment.
Trump is creating divisions among U.S. allies, even threatening the European Union (EU) with tariffs—all within his first month back in office. His aggressive approach may leave other U.S. partners wondering if they will soon be in his crosshairs.
In contrast, China will likely position itself as a stable and reliable global trade partner.
“Trump’s America-first policy will bring challenges and threats to almost all countries in the world,” says Yun Sun, director of the China program at the Stimson Center.
“From the perspective of U.S.-China strategic competition, a deterioration of U.S. leadership and credibility will benefit China. It is unlikely to turn well for China on the bilateral level, but Beijing surely will try to make lemonade…”
China has been steadily working toward global leadership. Since the end of the COVID-19 pandemic, Xi has traveled extensively, supporting international institutions such as the World Bank and agreements like the Paris Climate Accord.
Chinese state media has portrayed these efforts as strengthening diplomatic ties and fostering global collaboration.
Previously, when Trump cut U.S. funding to the World Health Organization (WHO) in 2020, China stepped in with additional financial support. Now, with Washington withdrawing aid from the WHO once again, Beijing may step up to fill the void.
The same dynamic applies to Trump’s broader foreign aid freeze, which has disrupted operations for nations and organizations that have long relied on U.S. funding. Despite its economic slowdown, China may see an opportunity to assert itself as a leading global benefactor.
China Prepares for the Trade War Round Two
During his first day back in office, Trump halted all U.S. foreign assistance, dealing a significant blow to the world’s largest aid donor.
This decision immediately stalled hundreds of foreign aid programs run by USAID. While some have resumed, uncertainty looms over the agency’s future.
Xi Jinping (Photo: Manuel Orbegozo)Trump’s “America First” strategy could further weaken Washington’s global standing, says John Delury, a historian of modern China and a professor at Yonsei University in Seoul.
“The combination of tariffs on major trade partners and freezing of foreign assistance sends a message to the Global South and OECD alike that the U.S. is not interested in international partnership, collaboration,” Delury told.
“President Xi’s consistent message of ‘win-win’ globalisation takes on a whole new meaning as America retreats from the world.”
China has long sought an opportunity to challenge the U.S.-led global order of the past five decades. The unpredictability of Trump’s presidency may provide that opening.
“Whether this truly gives Beijing a significant advantage is still uncertain,” says Chong Ja Ian.
“Many U.S. allies and partners, particularly in the Pacific, have reasons to cooperate with China, but they also have reasons to remain cautious. That’s why we’ve seen Japan, South Korea, the Philippines, and Australia strengthen their ties—partially due to concerns over China.”
The Australian Institute of International Affairs has noted “gathering momentum” for a trilateral partnership between Australia, Japan, and South Korea, motivated in part by “the impact of a second Trump administration.”
Rising Tensions in the South China Sea
Several regional players, including the Philippines, have expressed concerns about China’s assertive actions in the South China Sea. There are also fears of a potential conflict over Taiwan, which Beijing views as a breakaway province. China has not ruled out the use of force to reclaim it.
Taiwan has long been a contentious issue in U.S.-China relations, with Beijing condemning any perceived support from Washington for Taipei.
However, Washington’s ability to push back against Chinese military aggression may be complicated by Trump’s controversial foreign policy approach—including his threats to annex Canada or purchase Greenland.
Historically, many nations in the region have relied on military alliances with the U.S. as a counterweight to their economic ties with China.
Now, uncertain about both Washington and Beijing, some countries could form new regional alliances that bypass both powers.
Trump announced the latest round of U.S. tariffs over the weekend, just as Chinese families were celebrating the Lunar New Year, welcoming the God of Fortune into their homes.
At first, China’s response was restrained. It stated that it would take legal action through the World Trade Organization (WTO) to challenge the tariffs.
However, this is unlikely to pose a significant threat to Washington. Since 2019, the WTO’s dispute resolution system has been largely inoperative, following Trump’s earlier decision to block the appointment of appellate judges.
Then, China escalated its response by imposing retaliatory tariffs. With the holiday coming to an end and government officials returning to work in Beijing, critical decisions will need to be made.
In recent weeks, some Chinese officials were encouraged by indications that the Trump administration might prefer stability in U.S.-China relations—especially after what Trump described as “a great phone call” between himself and Xi last month.
However, sustaining that stability will become increasingly difficult. Both major U.S. political parties now view China as America’s greatest foreign policy and economic rival.
“Mr. Trump’s unpredictability, his impulsiveness and recklessness will inevitably lead to significant shocks in the bilateral relationship,” says Wu Xinbo, professor and director at the Center for American Studies at Fudan University.
“Additionally, his team contains quite a few hawks, even extreme hawks on China. It is unavoidable that the bilateral relationship will face serious disruption over the next four years.”
While China remains concerned about the economic impact of a prolonged trade war, it will also be looking for ways to capitalize on shifting global dynamics and expand its influence on the world stage.