For President Xi Jinping, the stage was set for an explosive start to Donald Trump’s presidency, after he campaigned on a promise to punish China with tariffs. Instead, the American leader’s first day back in office bought Beijing some unexpected breathing room.
On the campaign trail, Trump floated tariffs on China around the 60% mark and pledged to impose a 10% levy for Beijing’s alleged failure to stop drugs “pouring into” the US. But at an impromptu press briefing in the Oval Office on Monday in Washington, the Republican leader avoided committing to a plan for Chinese tariffs, as he signed a flurry of executive orders on camera.
“We’re going to have meetings and calls with President Xi,” Trump said, adding that he’d been invited to China — without confirming whether he planned to make such a trip. The US leader signed an order for his administration to address unfair trade practices globally and investigate China’s compliance with a deal struck during his first term.
Contrasting with that slower approach on China, Trump within hours of being sworn into office declared he intended to enact previously threatened tariffs of as much as 25% on Mexico and Canada by Feb 1, citing border lapses.
“Trump’s a wrecking ball and it’s impossible to predict what direction he’ll swing in,” said Dominic Meagher, deputy director and chief economist of Australian think tank the John Curtin Research Centre. “He hasn’t swung in the direction of China yet, which means they still have time to influence him.”
Chinese stocks advanced as the US president stopped short of announcing immediate action against Beijing, gaining the most in Asia after concern over trade tensions had pressured the market for months. The Chinese yuan (CNY) held the bulk of its overnight gains.
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Trump’s decision delays any immediate reckoning with Beijing over the Asian nation’s record global trade surplus and its increasing reliance on exports to compensate for its weak domestic consumption. He also threw China-owned company ByteDance a lifeline, dismissing claims it poses a national security risk as not “the biggest problem,” and giving it 75 days to find a US partner. Such a deal would save video app TikTok, which Trump used to reach young voters, from going dark in America.
The president’s olive branch takes the pressure off Xi to fire back with an immediate policy response, keeping some guardrails on the world’s most important bilateral relationship. But many in Beijing, who remember the Republican’s warmer tone at the start of his first presidency, will be bracing for stronger action in the months ahead.
Already, signs the reprieve would be short-lived were on display. Trump warned he could impose a tariff of as much as 100% on China if it rejected halving ownership of TikTok with the US, branding such a move an act of “hostility.” The 78-year-old also vowed to take back control of the Panama Canal from a Hong Kong firm, and signed an order to withdraw from the World Health Organization (WHO), complaining China contributes nearly 90% less than America to the group despite have a larger population.
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China’s Foreign Ministry didn’t respond to a request for comment on the trade investigation and Trump’s claims of an invite to Beijing. Chinese state media highlighted the new president’s isolationist instructions for America to exit the Paris Accord on cutting carbon emissions and the WHO, refraining from commentary on his China moves.
Trump is famous for his unpredictability and it’s unclear how his China policy will be shaped in the coming months by his new cabinet. Secretary of State Marco Rubio- who Beijing has twice sanctioned- recently claimed the world’s no two economy had “cheated” its way to superpower status, while Treasury Chief Scott Bessent has accused the Communist Party of presiding over the world’s most imbalanced economy.
Tensions between Beijing and Washington extend beyond trade and investment, with disputes rumbling on Xi’s territorial claims over self-ruled Taiwan, China’s growing aggression in the South China Sea and national security concerns that led former President Joe Biden to impose sweeping export controls to block Beijing’s access to cutting-edge chips that are critical to its military advancement.
One reason for Trump’s measured start to his second term could be purely procedural, according to Elena Patel, non-resident senior fellow at the Urban-Brookings Tax Policy Center.
“There are rules and regulations in place for imposing tariffs that prevent President Trump from imposing tariffs on day one,” she told Bloomberg Television, adding that other emergency measures at his disposal are rarely employed. “I would have thought that to be a very strong move- and one that would’ve been challenged almost immediately.”
The investigation by the United States Trade Representative into China’s compliance with the Phase One Trade Deal could take months to publish its initial findings, she added. Trump has set a deadline of Apr 1 for that report. It’s unclear how the timing of the official appointment of nominee for US Trade Representative, Jamieson Greer, would affect the deadline, with that post typically taking several months to be confirmed.
The executive order to re-examine trade policy could upend US-China economic relations. The administration will assess bills from Congress that aim to revoke China’s permanent normal trade relations with the US and examine the “de minimis” tariff loophole under which Chinese firms likely exported more than US$20 billion ($27.1 billion) of goods to the US last year.
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Trump’s call back to the outcome of his first trade war with Xi suggests he’s still focused — to a certain extent, at least — on the original goal of that campaign: reducing the trade deficit and getting China to buy more goods from America.
“Beijing will be relieved to avoid tariffs on day one but won’t be resting on its laurels,” said Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute’s Center for China Analysis.
“Xi is experienced enough to know Trump can quickly change his mind,” he added. “Trump is more experienced and his administration more organised, meaning Xi may need to make more concessions this time.”
