The ongoing trade tensions between the United States and China continue to escalate as President Donald Trump persists in imposing tariffs on imports. In response, China has strategically targeted approximately $15 billion worth of U.S. imports. This figure is notably smaller compared to the $50 billion targeted during Trump's first term. On Monday, February 10, China implemented fresh tariffs on American goods, including a 15% levy on coal and liquefied natural gas, and a 10% tariff on crude oil, agricultural machinery, and large-engine cars. Beijing announced its retaliatory measures shortly after the new U.S. tariffs became effective.
China's actions are not limited to tariffs alone. The nation has launched an antitrust investigation into tech giant Google, signaling potential sanctions. This move aligns with China's broader geopolitical strategy against the United States. According to Alex Capri, a senior lecturer at the National University of Singapore (NUS) Business School, China possesses a mid-term to long-term focus in its strategies.
“China's clearly got the mid-term to long-term game,” – Alex Capri, a senior lecturer at the National University of Singapore (NUS) Business School.
Capri further elaborates on China's strategic maneuvers in response to U.S. policies. These include conducting anti-monopoly investigations, imposing stiffer audits on U.S. firms operating in China, and enforcing export controls and restrictions.
“When it comes to the broader geopolitical competition between China and the US… (China could) look at things like conducting anti-monopoly type investigations, performing (stiffer) audits of (US) firms in China, and (exerting) export controls and restrictions.” – Alex Capri, a senior lecturer at the National University of Singapore (NUS) Business School.
Meanwhile, Tommy Xie, head of Asia Macro Research at OCBC Bank, describes China's retaliation as controlled and measured. He notes that the current targeted amount is significantly smaller than previous years.
“This time, the (targeted amount) is much, much smaller. From that perspective, it seems like Beijing is maybe trying to moderate the tensions,” – Tommy Xie, head of Asia Macro Research at OCBC Bank.
China's strategic moves coincide with shifts in global supply chains. Companies are increasingly relocating parts of their operations to Southeast Asian countries such as Malaysia, Vietnam, Thailand, and Indonesia. These shifts aim to mitigate the impact of tariffs and capitalize on ASEAN's emerging role in the global supply chain. As firms seek to de-risk and decouple from China, ASEAN is poised to benefit from increased foreign direct investment.
“But in the longer run, whether the US imposes tariffs on ASEAN or not, the trend is very clear: ASEAN is going to play a very important role (with) all the supply chain coming from China. This part of the world should continue to thrive in the coming years.” – Tommy Xie, head of Asia Macro Research at OCBC Bank.
In addition to its dealings with China, the Trump administration has temporarily paused tariffs on Canada and Mexico after both countries pledged to reinforce their borders with the United States. Trump's negotiation tactics reflect his transactional approach to policy-making, as noted by Xie.
“Trump is a very transactional person. He uses tariffs as a tool to try to pursue his agenda. So, I think he did quite well in terms of how he tried to secure the US border,” – Tommy Xie, head of Asia Macro Research at OCBC Bank.
Despite these developments, the United States has imposed a 10% tariff on all Chinese products. However, President Trump has expressed no urgency in engaging Chinese President Xi Jinping for discussions to defuse the trade war. His announcements often appear unpredictable and subject to frequent changes.
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