Yvette Tan, Annabelle Liang and Kelly Nggetty images
Xi Jinping has shown no sign that he will first flash in the price with the United States
The trade war between the two largest economies in the world has not shown any signs of slowdown – Beijing has promised to “fight until the end” a few hours after US President Donald Trump threatened to almost double the tariffs in China.
This could leave most Chinese imports faced with an amazing 104% tax – a strong escalation between the two parties.
With a deadline that is looming in Washington while Trump threatens to introduce Wednesday’s additional rates, which will flash first?
“It would be a mistake to think that China will decrease and unilaterally delete the prices,” explains Alfredo Montufar-Helu, principal advisor to the China Center of the Directors’ Reflection Group.
“Not only would it make China weak, but it would also give a lever effect in the United States to ask more. We have now reached a dead end that will likely cause long-term economic pain.”
The global markets have dropped since last week when Trump’s prices, which target almost all countries, have started to come into force. Asian actions, which saw their worst decline for decades on Monday after the Trump administration did not hesitate, recovered slightly on Tuesday.
Meanwhile, China retaliated with Tit -For -Tat samples – 34% – and Trump warned that it would retaliate with an additional 50% price if Beijing did not retreat.
The uncertainty is high, with more prices, ranging to more than 40%, which takes place on Wednesday. Many of them would reach Asian savings: prices on China would drop to 54%, and those in Vietnam and Cambodia closed 46%and 49%respectively.
Experts are concerned about the speed at which this happens, leaving governments, businesses and investors shortly to adapt or prepare for a remarkably different global economy.
How does China react to prices?
China had responded to the first cycle of Trump prices with tit-form samples on certain American imports, export controls on rare metals and an anti-monopoly survey on American companies, including Google.
This time too, he announced reprisal rates, but he also seems to compete for pain with stronger measures. It allowed its currency, the yuan, to weaken, which makes Chinese exports more attractive. And state -related companies have bought shares in what seems to be a decision to stabilize the market.
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China exports a variety of goods to the United States, from silk to smartphones
The prospect of negotiations between the United States and Japan seemed to invite investors who were fighting to recover some of the losses of the last days.
But the confrontation between China and the United States – the largest exporter in the world and its most important market – remains a major concern.
“What we see is a game of who can endure more pain. We have stopped talking about any feeling of gain,” said Mary Lovely, an American-Chinese commercial expert at the Washington DC Peterson Institute, on the BBC Newshour program.
Despite its slowdown in the economy, China can “very well be willing to endure the pain to avoid capitulating what they believe to be an American aggression,” she added.
Shaken by a prolonged crisis in the real estate market and an increase in unemployment, the Chinese simply do not spend enough. Local indebted governments also find it difficult to increase investments or extend the social security net.
“Prices exacerbate this problem,” Andrew Collier, principal researcher at Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School, said Andrew.
If China exports take a hit, it harms a crucial source of income. Exports have long been a key factor in explosive growth in China. And they remain an important engine, although the country is trying to diversify its economy with high -end technological manufacturing and greater interior consumption.
It is difficult to say exactly when the prices “bite but probably soon,” said Mr. Collier, adding that “(President XI) faces an increasingly difficult choice due to a slowing economy and a decrease in resources”.
It’s going in both directions
But it is not only China that will feel the impact.
According to the US trade representatives’ office, the United States imported $ 438 billion (342 billion pounds Sterling) goods in 2024, with US exports to China worth $ 143 billion, leaving a trade deficit of $ 295 billion.
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China is the world’s largest exporter – and that has played a big role in its rapid economic growth
Smartphones, computers, lithium-ion batteries, toys and video game consoles constitute the majority of Chinese exports to the United States. But there are so many other things, from the screws to the boilers.
And it is not clear how the United States will find an alternative offer for all these goods in such a short time.
Taxes on physical goods apart, the two countries are “economically linked to many respects – there is a massive amount of investment in both directions, many flows of digital trade and data”, explains Deborah Elms, head of commercial policy at the Hinrich Foundation in Singapore.
“You cannot price as long as so long. But there are other ways that the two countries can hit. So you might say that it cannot get worse, but there are many ways to do it.”
The rest of the world is also looking at, to see where Chinese imports go to the American market.
They will find themselves on other markets such as those of Southeast Asia, adds Ms. Elms, and “these places (treat) their own prices and had to think where our products can sell?”
“So we are in a very different universe, the one that is really troubled.”
How does it end?
Unlike the trade war with China during Trump’s first term, which was aimed at negotiating with Beijing, “we do not know what motivates these prices and it is very difficult to predict where things could go by,” said Roland Rajah, economist at the Lowy Institute.
China has a “wide toolbox” for reprisals, he adds, such as the depreciation of their currency or the tightening of American companies.
“I think the question is how much they will be selected?
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The composite of Shanghai fell by more than 7% on Monday while Asian actions plunged
Some experts believe that the United States and China can engage in private talks. Trump has not yet spoken to Xi since his return to the White House, although Beijing has repeatedly pointed out his desire to speak.
But others have less hope.
“I think the United States survives his hand,” said Ms. Elms. It is skeptical about Trump’s conviction that the American market is so lucrative that China, or any country, will end up complaining.
“How will it end? No one knows,” she said. “I am really concerned about speed and climbing. The future is much more difficult and the risks are so high.”
