-Analysis-
PARIS — Double standards. President Donald Trump issued an executive order Saturday that imposed 25% tariffs on America’s closest allies, Canada and Mexico, while those placed on China were just 10%. The great geopolitical and economic rival to the U.S. was therefore relatively spared. During the election campaign, Trump had promised that he would tax all Chinese imports at a minimum of 60%.
This decision is all the more surprising given that China is the trading partner with which the U.S. has the largest deficit – $280 billion in 2023, compared with $68 billion with Canada and $152 billion with Mexico. Yet it is precisely this “unfair” deficit that Trump has vowed to eliminate.
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China, for its part, loses nothing by waiting. As he announced to the world on Friday, the new president is only at the beginning of his protectionist offensive. In this instance, he is justifying the first burst with the need to force his trading partners to fight the influx of synthetic drugs into the country. China has not been hit because it subsidizes its industries, but because it exports fentanyl precursor chemicals. Beijing may therefore face further tariffs, for other reasons.
The difference in approach and dimension with the Trump tariffs of 2018 and 2019 is remarkable. Back then, the president targeted Chinese exports first and foremost, due to a huge bilateral deficit ($419 billion). He had targeted a long laundry list of items, from dishwasher to food to consumer electronics, for $280 billion worth of goods.
Conserving ammunition
In 2024, Joe Biden added a new wave of tariffs covering billion worth of strategic Chinese products for the industries of the future (solar panels, cars, etc.).
But we’re now talking about 0 billion in additional taxed goods across the board. Chinese-made iPhones are no longer spared. Perhaps some of these new tariffs will be waived in exchange for political compensation. In any case, Donald Trump is showing that he is making good on his threats.
It sends a signal to the rest of the world, while conserving ammunition for its upcoming battle with China, which is only overtaxed by 10%. This partner is far more powerful than the U.S.’s two North American neighbors, and power is a quality Donald Trump admires and respects.
With China, there is more still to negotiate.
Xi Jinping, the Chinese president, is a player in the great global diplomatic game. China is a military, industrial and technological rival, unlike Canada and Mexico. It won’t fall into recession tomorrow because of American tariffs, even while that is just the fate that likely awaits the neighbors to the north and south of the border.
TikTok factor
With Beijing, Washington is moving forward a bit like a bull in a china store, because there is much more to negotiate than with two dependent allies. In particular, Trump hopes to conclude the takeover of TikTok by an American company by March.
On the day of his inauguration, and with much drum-beating, the president suspended the ban of the social media platform controlled by China’s ByteDance. He suddenly fell in love with the video app that is so popular in the U.S., and gave himself 75 days to conclude a transaction before its shut down. For the time being, however, Beijing is sticking to its refusal to sell.
Donald Trump is showing that he is making good on his threats.
Many buyers are lined up, notably Elon Musk, Donald Trump’s close friend and advisor, who already owns X and has put it to work for the new powers that be. The billionaire entrepreneur has more than one reason to spare China. He has opened a gigantic car factory there and sells his electric Tesla cars, and Musk can be considered as a softer path to the Chinese authorities, and play a moderating role in the emerging trade war.
Donald Trump has probably not said his last words on China, but the leitmotif that prevailed during his first term — that of “punishing” Beijing for offshoring and the loss of industrial jobs — seems to have taken a back seat. The new tariffs are seen now as a way to first fill the coffers, then assert American hegemony through by dominating allies to the point that they cry for mercy. It’s a new era indeed.
