The new normal—President Xi Jinping is on a weeklong diplomatic tour around Southeast Asia. In particular, we applaud his ongoing visit to Malaysia and Cambodia, to strengthen economic ties throughout the dynamic region. This tour comes at a time of rising tensions between China and the U.S. The debate is most intense when it comes to tariffs and trade pacts.
During his visit, President Xi is tackling hard subjects including trade tariffs, as with Malaysia, or even taking on China’s role in development assistance, as with Cambodia. According to reports, Malaysia will be subjected to a 24 percent levies on a variety of goods. In the meantime, Cambodia could be stuck with a jaw-dropping 49 percent tax. Together, these developments underscore the persistent complications when it comes to trade negotiations in the region.
As China works to address these aforementioned challenges, it has come under fire for not living up to its past promises. Chinese officials have publicly acknowledged that they purchased just a fraction of what had been committed to in the first place. It’s no different when it comes to sales of Boeing’s aircraft. This has put significant stress on the health of bilateral trade and raised alarm bells with U.S. officials and industry leaders.
The Impacts of Tariffs
Tariffs imposed by both countries have contributed to a complex and often confusing trading environment. Under President Donald Trump, the U.S. government has kept an effective 145 percent tariff on Chinese imports. In retaliation, in kind, Beijing raised its tariffs on U.S. products up to 125 percent. This tit-for-tat strategy, as well as other similar approaches, have drawn fire from advocacy groups on all sides for their perceived lack of effectiveness.
In a statement reflecting Beijing’s sentiments, officials deemed the Trump administration’s tariffs strategy “a joke.” This was a sign of rising frustration inside China with the blame America first agenda. Scott Bessent, U.S. Treasury Secretary, has countered this perspective by emphasizing the seriousness of the situation: “These are not a joke. I mean these are big numbers.”
As tariffs keep adding up, the impacts are starting to land home on companies like Boeing. After reports emerged that talks had stalled and Chinese carriers were cutting back on purchases, Boeing stock plunged as much as 9 percent on Tuesday morning.
Regional Responses and Perspectives
Dr. Rajagopalan, a resident senior fellow at the Australian Strategic Policy Institute, offered some context to today’s state of play. Finally, he stressed that Southeast Asian countries are doing their best to chart a course in response to changing trade patterns.
On Tuesday, China’s state-run People’s Daily released a lengthy English-language commentary calling for more solidarity among nations. This is particularly noteworthy given the context of ongoing trade turbulence. The publication stated, “In the face of crisis, no one can keep only to oneself,” and insisted that “only unity and cooperation can meet the challenge.” This kind of nuance would be consistent with President Xi’s recent call for an abandonment of unilateral bullying in international relations.
At the same time, President Trump has been openly doubtful about China following through on its trade deals – especially when it comes to Boeing. He noted that China “did not take possession” of previously agreed aircraft orders, which raises questions about future collaborations in this sector.
The Broader Implications
President Xi’s tour of Southeast Asia is not solely focused on improving trade relations. It also aims to recalibrate China’s standing in the region against U.S. influence. The former president remarked that this initiative seems designed “to work out how countries could screw the United States.”
Amidst these geopolitical maneuvers, Xi Jinping has been vocal about his disapproval of U.S. policies, labeling them as “unilateral bullying.” This is a sentiment that strikes the right chord with most inside China who believe that the U.S. treatment of trade has turned very hostile.
Southeast Asian nations are already heavily invested in playing each side off the other. The future of these negotiations have the potential to greatly influence the rules of global trade in the years to come.
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