China sharpens trade weapons against Trump: ready to face tariffs, Beijing bets on strategic retaliation and global resource dominance
China is preparing to face a possible new wave of trade tensions if US President-elect Donald Trump decides to reignite an economic war between the world’s two largest economies. Unlike 2016, when it was caught off guard by Trump’s victory and the imposition of aggressive tariffs, sanctions and stricter investment controls, Beijing now has robust countermeasures to protect its interests and respond accordingly.
Under the leadership of Xi Jinping, the Chinese government has implemented sweeping new laws that allow it to blacklist foreign companies, impose sanctions of its own, and even cut off American access to strategic supply chains.
These measures significantly expand Beijing’s ability to respond to Washington’s policies.
Ready to negotiate, but ready to fight
“This is a two-way process. China, of course, will try to engage with President Trump and negotiate, but if there is no breakthrough, we will resolutely defend China’s rights and interests,” said Wang Dong, executive director of the Institute for Global Cooperation and Understanding at Peking University. .
Although China has faced increasing economic fragility, with challenges such as high youth unemployment and difficulties in reaching the official 5% growth target, the country seeks to mitigate internal vulnerabilities while improving its tools to deal with external sanctions.
Among the new measures adopted are the “anti-foreign sanctions law”, which allows Beijing to retaliate against its interests, and the “list of unreliable entities”, which aims to restrict companies that harm the Chinese economy. Additionally, an expanded export control law reinforces China’s dominance over crucial resources such as rare earths and lithium, essential for modern technologies.
Signs of strength
China’s ability to retaliate has already been demonstrated recently, as in the case of the sanctions imposed on Skydio, the largest American drone manufacturer and supplier to the Ukrainian army. Beijing has banned Chinese groups from supplying essential components to the company.
Another example was the threat to include PVH, owner of the Calvin Klein and Tommy Hilfiger brands, on the list of restricted entities, which could cut off the company’s access to the Chinese market, one of the largest in the world.
“This is just the tip of the iceberg,” warns Andrew Gilholm, head of China analysis at consultancy Control Risks. He emphasizes that China has not yet fully used the “arrows” in its quiver.
“If 60% tariffs are imposed or there is aggressive intent from the Trump administration, Beijing could seriously retaliate,” said a former US trade official.
A changing global scenario
Meanwhile, China works to strengthen its supply chains and expand trade with countries less aligned with Washington. According to Joe Mazur, an analyst at consultancy Trivium, Trump’s protectionist stance could benefit Beijing by encouraging other countries to seek deeper trade ties with China, considered a more reliable partner.
However, experts warn that Beijing’s measures could also have long-term domestic implications. James Zimmerman, a partner at law firm Loeb & Loeb in Beijing, believes that despite the tools at its disposal, the Chinese government may not be fully prepared for the potential impact of a second Trump term, especially given its unpredictability.
Zimmerman also points out that Beijing’s failure to fulfill its obligations under a trade agreement signed in 2020, which provided for substantial purchases of American products, could fuel future tensions. “The likelihood of an expanded trade war in Trump’s next term is high,” he warned.
Lessons from 2016 and the next step
Looking back, Beijing recognizes the strategic mistakes made during the first Trump administration and is now seeking to minimize surprises. Wang Chong, a foreign policy expert at Zhejiang International Studies University, notes that “everyone already expected the worst, so there will be no surprises. Everyone is ready.”
Although Beijing is open to negotiations, Trump has already signaled that he may adopt 60% tariffs on all Chinese imports, a measure that would have a significant impact, especially considering China’s current economic scenario. On the other hand, Beijing is betting that its strategic approach can not only protect its interests but also expand its global influence at a time when the US is increasingly seen as a volatile trading partner.
China knows that the balance between protecting its economy and responding firmly to Washington will be decisive in the coming years. However, Beijing makes it clear that if a new trade war is inevitable, the country is more prepared than ever to face it.
With information from the Financial Times*
Source: https://www.ocafezinho.com/2024/11/14/pequim-reforca-arsenal-economico-para-desafiar-trump/
