US-China Relations

Following Donald Trump’s victory in the 2024 US presidential election, Chinese officials braced for another turbulent chapter in China-US relations. At present, it is crucial to approach scenarios regarding the actions of the new Trump administration with caution.

On one side, the administration's controversial personnel appointments to key cabinet positions could trigger significant domestic and intra-party turbulence. Conversely, President Trump's unpredictable nature complicates assessments of his likely approach. Will he act as a pragmatic, transactional business leader open to negotiation? Or has his first-term experience with Beijing convinced him that China must be curtailed, leading him to heed the advice of security hawks within his circle disproportionately?
Furthermore, the emergence of rival factions adds another layer of complexity. The divide between traditional neoconservative Republican premacists and those advocating for a more restrained foreign policy underscores the uncertainty surrounding the administration's trajectory.

• Is the US-China relationship the most consequential relationship for America in the world? (Brookings 02/2024)

Geopolitics

A second Trump term is likely to perpetuate confrontational rhetoric and unilateral actions against China, potentially reshaping global geopolitics through protectionist, isolationist, and nationalist policies.

This approach could see a redirection of US resources toward domestic priorities, further exacerbating tensions with Beijing. The appointment of prominent China hawks, such as Marco Rubio (Secretary of State) and Mike Walz (National Security Adviser), to key cabinet positions signals a likely escalation of tough policies targeting China across multiple fronts. These include challenges to Beijing’s geopolitical influence in the Indo-Pacific and South China Sea, the imposition of new tariffs/ trade barriers, and stricter restrictions on access to Western technology. Such actions would contribute to an increasingly adversarial relationship between the two nations. 

However, an alternative scenario involves Trump adopting a more isolationist stance, driven by internal Republican Party pressure to curtail US involvement in overseas engagements. While Trump has maintained ambiguity regarding Taiwan, some of his China-focused advisors may advocate for a more explicit pro-independence policy. This would represent a significant escalation of tensions, as it crosses a well-established red line for Beijing, increasing the risk of confrontation in the Taiwan Strait. Additionally, military-to-military dialogues with China, which were disrupted during Trump’s first term but later reinstated under Biden, could again face suspension, heightening the risk of miscalculation or conflict.

From Beijing’s perspective, a second Trump administration’s isolationist tendencies could present challenges and opportunities. The return of "America First" diplomacy may allow China to position itself as a responsible global power, championing free trade and multilateralism, contrasting sharply with rising US protectionism and unilateralism. This shift could facilitate Beijing's efforts to expand its influence, particularly in the Global South, and strengthen trade and security partnerships within regional blocs. By exploiting a disengaged and commercially aggressive US, China could bolster its role in shaping an increasingly multipolar world order aligned with its interests.  

• Trump’s ‘America First’ foreign policy will accelerate China’s push for global leadership (Chatham House 11/24)
• What Does America Want From China? (Foreign Affairs July/August 2024)

Trade and Tariffs - A Renewed Escalation?

Trade and tariff policies have become central to the US strategy toward China, garnering bipartisan support across the political spectrum. Both Republicans and Democrats emphasize the importance of reducing the trade deficit with China and curbing reliance on Chinese imports—a process commonly referred to as "de-coupling." This consensus has driven the adoption of significant trade barriers under both the Trump and Biden administrations.

With President-elect Trump preparing for a second term, his administration has signaled a more aggressive approach to US-China trade relations. Trump has proposed imposing sweeping tariffs of 60% or more on all Chinese imports—a policy that, if enacted, could severely impact bilateral trade and create substantial disruptions in global supply chains. While it remains uncertain whether tariffs of this magnitude will materialize, it is highly likely that new trade barriers will be introduced, escalating tensions between the two countries. 

Timing is another critical factor. During Trump’s first term, significant trade actions were not undertaken until the second year. However, given the current geopolitical climate, a faster implementation of tariff measures may occur.

• Trump’s tariff gambit doesn’t have to make sense (Reuters 26.11.2024)

Beyond tariffs, Trump is also expected to intensify restrictions on Chinese technology exports and may even consider revoking China's permanent normal trade relations (PNTR) status, formerly known as most-favored-nation (MFN) status. 

Notably, China's economic position has evolved since the initial wave of tariffs in 2018, which eventually covered approximately $400 billion worth of Chinese goods. Chinese manufacturers have diversified their markets, increasingly targeting customers in Southeast Asia and Latin America. As a result, China’s share of US imports has declined from 20% to 13% over the past six years. However, part of this shift is attributable to Chinese goods being routed through intermediary countries like Mexico and Vietnam to bypass US tariffs. While the specifics of the forthcoming US-China trade strategy remain uncertain, the potential for a renewed trade war is high, with significant implications for global economic stability.

In a worst-case scenario, the disintegration of the World Trade Organization (WTO) or the emergence of competing geopolitical blocs could result in significant global economic disruptions. Projections suggest that such a scenario could reduce EU GDP by up to 0.5%, with Germany experiencing a more pronounced contraction of 3.2%. China, however, would incur the most substantial economic losses under these conditions (IFW).

Conversely, analysis from Bloomberg Economics on the potential impact of former US President Donald Trump’s proposed tariffs indicates that other countries might mitigate their trade losses with the US by intensifying trade relations with alternative partners. This finding underscores the possibility that globalization could persist robustly, albeit with the US no longer at its core.

• US Trade Policy After 2024: What Is at Stake for Europe (IFW 10/2024)
• What’s Left of Globalization Without the US? (Bloomberg 11/2024)