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Why China seemed to shrug off Trump’s latest trade threat (for now)



President Trump threatened China with tariffs on $100 billion worth of goods. China barely blinked. 

Trump on Thursday evening ordered his chief trade negotiator to consider imposing additional tariffs on Chinese products, in what looked like a dramatic escalation of a dramatic tit-for-tat trade war.

But if the tariff warning was supposed to send Chinese officials, who are enjoying a holiday long weekend, scrambling — it seemed to have failed. 

In the hours after the announcement, markets across Asia Pacific, including Hong Kong, held steady, the Communist Party-controlled press said little, and top officials were mum.

Around midday, Asia time, China’s Ministry of Commerce published a short statement.

“We have taken note of the relevant U.S. statement,” it read. “On the issue of Sino-U.S. trade, the Chinese position has been made very clear. We do not want to fight, but we are not afraid to fight a trade war.”

The statement said China “will listen and observe” what the United States does next. “If the United States disregards the opposition of China and the international community, insisting on unilateralism and trade protectionism, the Chinese side will follow suit and fight at any cost.”

Fighting words, yes, but the same fighting words Chinese officials have been uttering for months. They have said repeatedly that they will match every U.S. move.  They key phrase is “listen and observe” — they are signaling they will respond when and how they please. 

Since late March, China and the United States have exchanged ever-escalating threats of tariffs.

In late March, the United States announced steel and aluminum tariffs that would hit China to the tune of about $3 billion a year. China responded by imposing similar measures on $3 billion worth of U.S. pork, fruit and other items. 

On Tuesday, the White House went ahead with tariffs that target manufacturing technology, arguing that Chinese trade practices have unfairly hurt U.S. business.

Not a day later, China fired back with its own threat of $50 billion in tariffs, including levies on soybeans, some aircraft and automobiles, prompting Trump’s next threat.

What’s been lost in some of the coverage is that these are still very much threats, not actions. Both sides are puffing up their chests, but both sides know they have much to lose.

Though China may have more to lose economically, it may be in a better political position when it comes to surviving a trade war.

China’s reciprocal tariffs irked Trump because they targeted soybeans and automobiles — goods that matter to red state voters. If China pressed ahead with planned 25 percent levies on those products, Trump could be hurt at the polls.

Many U.S. industry groups and even Republican lawmakers have called for the president to take a more cautious approach, warning that a full-on trade war could devastate agriculture and industry.

Chinese President Xi Jinping does not need to worry about upcoming elections. Since he largely controls the press, he can shape when and how Chinese citizens get worked up — or not — over trade. He also has the cash to subsidize Chinese businesses if he must.

In the short term, Trump’s latest salvo gives Beijing space to cast itself as victim, a rational actor caught in the crosshairs of an irrational and impetuous president.

“While the U.S. has legitimate complaints about China’s treatment of [intellectual property], by responding with trade sanctions it has allowed China to present the U.S. as the trade aggressor,” wrote  Simon Baptist, Asia managing director and chief economist at The Economist Intelligence Unit, in a note. “A better approach would have been to take action through investment and patent rules.”

In an editorial published Friday, the Global Times, a party-controlled newspaper known for its nationalist tone, dismissed Trump’s Thursday evening statement as a sort of presidential temper tantrum.

“It shows he wants to make explosive statements to let off steam,” the paper wrote. “As to whether these ideas can be put into practice and what the consequences will be, those are secondary concerns to him.”

The editorial went on to note that China “will never indulge the temper of Washington,” but will instead seek to “manage” it.

In a rare moment of agreement between the ultra-nationalist Chinese paper and a Republican lawmaker, Sen. Ben Sasse (R-Neb.) responded to Trump’s move using similar language.

“Hopefully the president is just blowing off steam again,” he wrote in a statement Thursday. “But if he’s even half-serious, this is nuts.”

Luna Lin contributed from Beijing.



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