The text discusses the escalation of trade tensions between the United States and China, with both leaders imposing tariffs that could have significant economic consequences. While China faces greater economic pain, it also possesses more leverage in this second trade war. The article analyzes the strategic moves made by both sides, including targeting critical materials and seeking opportunities to influence global alliances.
U.S. President Donald Trump and Chinese leader Xi Jinping have engaged in a new trade war , exchanging sharp tariffs that could have significant consequences for the U.S.-China rivalry. This tit-for-tat escalation revives the trade tensions that characterized Trump's first term, potentially inflicting economic pain on China once again. However, unlike the previous trade war , Xi enters this conflict with greater leverage.
This presents China with new opportunities to challenge the United States on the global stage. To capitalize on these gains, Beijing must navigate the complex challenges of a renewed trade war, which will be more economically damaging for itself than for the United States. Moreover, China is currently facing slowing economic growth domestically.The Chinese economy heavily relies on manufacturing and exporting goods, with the United States being its largest single-country trading partner. The 10 percent U.S. tariffs implemented on February 4th will negatively impact the Chinese economy, adding to the existing levies imposed by former President Joe Biden and Trump during his first term. Trump's actions also leave room for further tariffs from Washington, potentially inflicting even greater damage on China.But Xi is better prepared than during his last confrontation with Trump. Beijing appears confident in its ability to escalate trade tensions and retaliate with its own tariffs, set to take effect on February 10th. These include 15 percent Chinese levies on U.S. coal and liquefied natural gas (LNG), as well as 10 percent tariffs on crude oil, farm equipment, and some cars.More strategically, Beijing has also targeted crucial materials essential to U.S. industries, of which China largely controls the global supply. This includes critical minerals such as tungsten, tellurium, ruthenium, and molybdenum, vital for the production of batteries and other high-tech goods. This follows a December 2024 Chinese export ban to the United States of minerals like antimony and gallium, crucial for manufacturing some semiconductors. This move coincides with both Beijing and Washington's intensifying competition for dominance in the global technology sector.The United States has maintained its technological edge, partly due to its access to advanced semiconductors—primarily designed in the United States and produced in Taiwan—essential for fueling the next generation of goods, such as artificial intelligence (AI), which are projected to shape the future global economy. China aspires to achieve technological parity and has thus far endured the pain inflicted by measures from both Trump and Biden, which have included lobbying U.S.-allied governments to reject Chinese equipment for next-generation telecom networks and export bans on some microchips. These measures have been partially successful due to coordination with other countries, many of which Trump has also threatened with tariffs. This is where Xi is seeking opportunities.While Trump has suspended tariffs against Canada and Mexico for a month, he has indicated that similar measures could be imposed on the European Union. Following Trump's announcement, EU foreign policy chief Kaja Kallas stated that 'the one laughing on the side is China' as it seeks to exacerbate divisions between Brussels and Washington and launch a charm offensive within the bloc. European Commission President Ursula von der Leyen, who has previously taken a more aggressive stance against China and retaliated against Beijing on trade issues, has also expressed openness to a rapprochement, stating in January that she saw 'an opportunity to engage and deepen our relationship with China and, where possible, even to expand our trade and investment ties.'Similar opportunities could arise for Xi in other parts of the world. Meanwhile, the exchange of tariffs sets the stage for further negotiations and a potential deal between Trump and Xi. China still requires access to U.S. technology, and domestic economic pain could create new pressure for Xi. The recent U.S. tariffs were primarily implemented due to Beijing's failure to stop the flow of illicit drugs into the United States, and Trump has hinted at linking tariffs to the fate of TikTok, which he has asserted should be half-owned by an American company.The White House has stated that the two leaders do not plan to speak until later this week, but Trump has indicated his willingness to engage in negotiations and reportedly also desires to visit China within the first 100 days of his administration
TRADE WAR US-CHINA RELATIONS TARIFFS XI JINPING DONALD TRUMP TECHNOLOGY COMPETITION GLOBAL ECONOMY
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