China’s stronger-than-expected counterpunch to US President Donald Trump’s latest tariff barrage was the tactical result of intensive planning for this scenario amid worsening trade tensions, and of China being less dependent on the American market than when Trump ignited the trade war in 2018, according to analysts.
“A new trade war does not come as a big surprise to China,” said Larry Hu, chief China economist at investment bank Macquarie, adding that China’s swift retaliation, rather than de-escalation, pointed to both Beijing’s preparedness and the likelihood that it does not intend to be rushed into negotiations with Washington.
“Trump had already expressed his intention [to hike tariffs] during his election campaign, and China still set its [economic] growth goal for this year at around 5 per cent, meaning it is prepared,” Hu said.
Now, just two days away from Trump’s new tariffs going into effect on Wednesday, “there remains much uncertainty, and both sides may need to play it by ear”, Hu said.
“China’s door to negotiations is not closed,” Hu assessed. “But, on the other hand, it will also focus on expanding domestic demand to offset the trade war’s influence on external demand.”
And for now, the uppercut that Beijing just threw at Washington – coming in the form of a vow to impose 34 per cent tariffs on all American goods from Thursday, in addition to existing duties in response to similar moves by the US – has further escalated tit-for-tat trade salvoes between the world’s two biggest economies.
