context: PRC–US trade tensions intensified following two rounds of US trade restrictions by the Trump administration. Retaliating in sectors with focused political impact, Beijing's response has remained targeted and even-handed. While the PRC's strategy remains rooted in building domestic resilience and diversifying trade with other partners, senior officials have expressed willingness to undergo more 'explorations and negotiations' to resolve trade conflicts with the West. The primary challenge, however, lies in finding the middle ground, as either party is unlikely to make major compromises in key contentious areas.
Trump 2.0 has kickstarted a new round of PRC–US trade rivalry unprecedentedly intertwined with industries, finance, security and geopolitics, seriously shocking the bilateral relationship, notes Sun Lipeng 孙立鹏 China Institutes of Contemporary International Relations Institute of American Studies vice director
- new characteristics of US restrictions on the PRC
- linking economics and trade with security
- Trump's 2025 presidential trade policy agenda mentioned national security four times
- the US is using the PRC as a way to reshape American capitalism (which is becoming increasingly unsustainable because of its over-reliance on consumption and debt)
- the US has three goals
- attract manufacturing (partciularly mid-range sectors) back to the US from the PRC to spur its traditional production capacities
- correct the trade imbalance
- promote 'tariff finance'–funding Trump's US' tax cuts program by collecting duties from the PRC
- the US has three goals
- different from the Biden administration, Trump's strategy is to force its allies to curb the PRC and bring back the winner-take-all style in exerting extreme economic pressure on Beijing (this approach is extreme and unpredicatable)
- linking economics and trade with security
- future preditions
- more tariffs may be coming
- Washington is mulling 'reciprocal tariffs', cancelling the PRC's permanent normal trade status and reexamining the phase one PRC–US trade deal
- more restrictions for re-routed trade
- the latest report from the US trade representative mentioned investigating PRC transhipment and re-exported trade
- Trump's next step may be to demand Asian countries like Vietnam to raise tariffs on the PRC
- more restrictions on currency is likely
- a White House economic adviser recently publicly advocated for a 'Mar-a-Lago Accord' targeting the PRC in a way similar to the Plaza Accord, which led to economic breakdown of Japan and rapid appreciation of its currency in the 1980s
- PRC–US trade rivalry is upgrading to a battle betweeen currencies, finance and fundamental economic structures
- more US pressures under the cue of 'strategic economic security'
- Trump has expanded sanctions on two-way investment, finance and other tools
- US restrictions on the PRC will likely escalate and expand from traditional tariff barriers and scitech restrictions to more serious economic security barriers and restrictions in key strategic areas (e.g. global trade flows, key minerals and energy, shipping lanes, financial and payment transaction channels)
- more tariffs may be coming
- policy recommendation
- PRC–US cooperation in the field of economic security is possible
- provided that they can find the boundaries of economic security and seek cooperation outside of areas with 'core security concerns'
- tariffs, investment restrictions and export controls should all fall under the scope of these negotiations
- provided that they can find the boundaries of economic security and seek cooperation outside of areas with 'core security concerns'
- PRC–US cooperation in the field of economic security is possible