When China met Trump in the White House for the first time, there was a trade war, a breach of protocol involving Taiwan’s former leader, and a friendship between the two presidents that went bad.
As President-elect Trump gets ready to begin his second term, China is getting ready for its relationship with the US to become less stable and for trade, technology, and Taiwan to become sources of renewed tension.
A new tariff war looms
If Trump keeps his campaign promises, his threat to put 60% tariffs on all Chinese goods coming into the U.S. could be the worst thing that could happen to China.
It is already hard for China’s economy to handle high youth unemployment, a long property slump, and government debt, so these kinds of tariffs would make things even worse.
An earlier this year study by UBS found that a 60% duty on Chinese imports could cut China’s expected economic growth by 2.5 percentage points, or about half.
The United States put tariffs on more than $360 billion worth of Chinese goods during Trump’s first term in office.
So, Beijing came to the table to talk. In 2020, they signed a trade deal where China agreed to buy an extra $200 billion worth of American goods and protect intellectual property rights.
A research group found a few years later that China had not really bought any of the goods it said it would.
Most of those tariffs were kept by President Joe Biden, and new ones were added this year on imports like steel, solar cells, and electric vehicles.
Henry Gao, a law professor at Singapore Management University who specializes in international trade, said that tariffs could be used again to get Beijing to the negotiating table.
He said, “Because China’s economy is more weak this time, I think they will be more willing to talk.” In other words, the tariff may hurt the Chinese economy in the short term, but things may get better once they reach a deal.
Trump may have asked Chinese President Xi Jinping to help him negotiate an end to the war in Ukraine, which could affect the trade talks. Trump has said he can do this quickly, but he has not said how.
Trump has asked Xi for help in the past when dealing with Kim Jong Un, the crazy leader of North Korea.
Wang Huiyao, founder of the Beijing-based think tank Center for China and Globalization, says that this could happen again, with Trump weighing trade complaints against asking China for help in times of global crisis.
Wang wrote in a recent piece that “China is the biggest trading partner of both Russia and Ukraine.” “China has a unique chance to play a bigger role in making peace because of its close economic ties.”
Willing to go ‘crazy’ over Taiwan
There is one scenario in which Trump has threatened to impose even higher tariffs — 150% to 200% — on Chinese goods: if China invades Taiwan, a self-ruled democracy that Beijing claims as its own.
The U.S. does not recognize Taiwan as a country, but is its strongest backer and biggest arms provider.
Trump angered Beijing in December 2016 by taking a congratulatory call from Taiwan’s then-president Tsai Ing-wen in a breach of diplomatic protocol. No U.S. president had spoken directly to a Taiwanese leader since Washington and Beijing established ties in 1979.
Trump’s move created anxiety in China-watching circles, but ultimately, he stuck to supporting the status quo in relations between Taipei and Beijing.
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- The latest: Kamala Harris urged supporters to accept her election loss in her concession speech Wednesday, encouraging a focus on the future.
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- AP VoteCast: Anxiety over the economy and a desire for change returned Trump to the White House. AP journalists break down the voter data.
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China expects him to continue to do so, said Zhu Feng, dean of the School of International Relations at Nanjing University.
“Will (he) want to turn to support Taiwan independence? It is unlikely,” he said.
As for China’s repeated threats to annex Taiwan, Trump told The Wall Street Journal last month that he would not have to use military force to prevent a blockade of Taiwan because Xi “respects me and he knows I’m (expletive) crazy.”
On the campaign trail, Trump sometimes talked up his personal connection with Xi, which started exuberantly during his first term but soured over disputes about trade and the origins of the COVID-19 pandemic.
But Trump has also said that Taiwan should pay the U.S. for defending it against China, likening the relationship to insurance. Taiwan spends about 2.5% of its GDP on defense, and purchased hundreds of millions of dollars’ worth of U.S. weapons this year.
Trump has purposely maintained a sense of uncertainty in his relationship with China, said Da Wei, director of the Center for International Security and Strategy at Tsinghua University in Beijing.
“We are clear about the challenges,” he said. “As for opportunities, we are yet to see them clearly.”
Disputes over chips
During his first term, Trump started going after Chinese tech companies because he was worried about security. He focused on big companies like Huawei, the telecoms giant.
Biden took another step in that direction by making it harder for China to get advanced semiconductors, which are needed to grow strategic industries like artificial intelligence.
But Trump has said bad things about Biden’s CHIPS and Science Act, a bill that had $53 billion set aside to boost semiconductor manufacturing in the United States. At the moment, Taiwan makes almost 90% of the world’s most advanced chips.
Shihoko Goto, director of the Indo-Pacific Program at the Wilson Center, said that TSMC, the biggest semiconductor maker on the island, increased production in Arizona in part in response to the CHIPS Act and to be ready for any other protectionist policies the U.S. might come up with.
Trump has said he will get rid of the CHIPS Act, but some people think that will hurt his plan to bring jobs back to the U.S. Also, the president-elect said that Taiwan “took” the U.S. chip business many years ago.
“Instead of protecting Taiwan with silicon, its dominance in the chip industry could actually make things worse between Taipei and Trump,” Goto said.
“Taiwan’s successes in the chip sector may be seen as having been made possible by taking advantage of the United States.”
