World News: China Responds to U.S. Tariffs

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Category: World News

Published on Tuesday, 08 April 2025 10:23

Written by Olivier Longhi

The reciprocal increase in customs duties undertaken by the United States and China borders on a confrontation between the two rival trading powers, with each digging deep on their positions, and promising new leverage in the trade wars escalate.

Triggering the trade war with the hope that it will result in regenerating the industrial fabric of the United States is Donald Trump's objective by raising customs duties as he did on April 2. In his sights, a jumble, all the trading partners accused of having plundered Uncle Sam for decades in a free trade system, designed by the United States in the aftermath of the Second World War.

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Among the defendants, China with its 1.4 billion inhabitants, the second largest economy in the world, has decided, a risky bet in view of the current fragility of its economy, to raise its customs duties on all products from the United States. The tug-of-war between the two giants has therefore begun and woe betide the vanquished.

Because if the increase in customs duties has the consequence of frightening the European Union, pushing it to negotiate rather than impose itself, like many other countries, China, led by Xi Jing Ping, has no intention of letting Washington hold itself high because it has the means to do so.

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Taiwan and Semiconductors

Why and how? Because by now owning 29% of the world's production capacity, compared to 9% in 2004, by owning nearly 9% of the American debt through the purchase of billions of dollars of North American Treasury Bonds (editor's note: 759 billion dollars are held by the Bank of China), by being industrially able to cover almost all fields of activity (except aeronautics and semiconductors, whose production is concentrated in Taiwan, which also explains the Beijing's desire to recover the island), by demonstrating a very high level of responsiveness combined with a powerful capacity for innovation backed by heavy public aid, China knows it can challenge the United States.

While the risk, as previously mentioned, remains real for the Middle Kingdom, it is however only punctual, as China knows that it can compensate, at least in part, for the potential losses generated by the closure of the North American market by the possible gains generated through relations with other global trading partners, namely the European Union and Africa.

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Audible Effects

To say that China has nothing to fear from the increase in U.S. tariffs is excessive, but to suggest that China is able to circumvent the decision in order to limit its effects remains audible. The question that now emerges is to know who, the United States or China, will give in first?

Donald Trump's volcanic obstinacy finds itself confronted with the disarming calm of the leading Asian power which has therefore objectively become the ally of the rest of the world. This is a considerable advantage in a trade world that has been turned upside down and threatened by growing fears of a major slowdown in the world economy that could propel China to the rank of the world's leading trading partner, with the increase in U.S. tariffs acting as a deterrent to the Middle Kingdom's benefit.

Quite the opposite of what was imagined by Donald Trump. Because if Donald Trump wants to tame the Middle Kingdom, it turns out that the undertaking will be less easy than imagined. Woe to the vanquished.

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Bio: Olivier Longhi has extensive experience in European history. A seasoned journalist with fifteen years of experience, he is currently a professor of history and geography in the Toulouse region of France. He has held a variety of publishing positions, including Head of Agency and Chief of Publishing. A journalist and recognized blogger, editor, and editorial project manager, he has trained and managed editorial teams, worked as a journalist for various local radio stations, was a press and publishing consultant, and was a communications consultant.