context: Under Trump’s 'America First' agenda, the global economic landscape faces unprecedented uncertainty. Trump’s proposed high tariffs threaten to rewrite trade relationships, disrupt global supply chains and weaken the multilateral trade system. During Trump's first term, the PRC initially reacted with a ‘rational and reserved’ tit-for-tat counter-tariffs that many interpreted as a over-assertive foreign posture. Beijing then refocused on 'doing our own thing well', excluding industrial policy from trade negotiations. Economist Zhang Monan 张茉楠 argues basic disagreements over political and economic structures will fuel tensions for decades to come.
The return of Trump could escalate US–PRC trade tensions, warns Zhang Monan 张茉楠 China Centre for International Economic Exchanges US and Europe Research Department deputy director.
Trump's proposed measures—such as revoking the PRC’s PNTR (Permanent Normal Trade Relations) and imposing tariffs of up to 60 percent—would not only disrupt bilateral trade but also severely impact the global industrial and supply chain system. Zhang cites a Peterson Institute estimate, which shows that canceling PNTR would harm US industries, widen the trade deficit and worsen inflation.
Trump has vowed to impose a 10–20 percent tariff on all foreign goods. While it remains uncertain how much of this agenda will materialise, Zhang cautions that such a framework would trigger a 'new tariff cold war', fundamentally rewriting US–PRC trade relations and likely spark a serious global trade war.
Trump’s initial tariffs, which began in 2018, targeted a wide range of PRC goods—from high-tech products to raw materials and consumer goods—and Biden has largely upheld these measures. In 2023
- bilateral trade between the US and the PRC fell 11.6 percent to $664.5 bn that year
- PRC exports to the US dropped 13 percent, while imports fell 6.8 percent
- the PRC’s trade surplus with the US narrowed to US$336 bn, a 17 percent y-o-y decline, marking its lowest level in over a decade
- US dependence on PRC imports shrank from 21 percent in 2018 to around 14 percent in 2023
- the share of capital goods and intermediate goods imported by the US from the PRC dropped to 16.1 percent and 9.2 percent, respectively—declining by 15.2 and 4.6 percentage points since 2017
Despite these declines, trade has not disappeared—it has shifted, says Zhang. She highlights that tariffs have altered bilateral trade volumes but not the broader global trade structure. Paradoxically, these policies have strengthened the PRC’s economic ties with emerging markets and extended its indirect trade links with the US, she says, noting
- PRC–Mexico trade grew at an annual rate of 15 percent from 2019 to 2022
- Indian imports from the PRC surged, particularly in sectors like machinery and chemicals