Why China has not retaliated more in Donald Trump trade spat

Published

1 month ago

February 4, 2025

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China has, as expected, hit back at Donald Trump’s imposition of a 10% tariff on its exports to the United States.

Beijing has slapped levies of between 10-15% on a range of energy products that imports from the US.

But what has surprised observers – particularly when Mr Trump kicked off the trade war over the weekend – has been the president’s comparatively lenient treatment of China and, moreover, Beijing’s calm response.

While America’s two closest neighbours, Canada and Mexico, were hit with 25% tariffs (falling to 10% for Canadian energy exports) – since put on ice – China was merely hit with a 10% levy.

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That struck many observers as curious since China is regarded as a bigger trade adversary by the US than Mexico and Canada, with the latter traditionally seen as a close friend to the US, particularly through the pair’s involvement in the ‘Five Eyes’ security alliance along with Australia, New Zealand and the UK.

The big question raised by this is what motivated Mr Trump to do this.

The thinking is that the president was trying to bring China to the negotiating table and that, by initially hitting a close ally like Canada harder, he was trying to send a message to China’s leaders as to what they might face further down the line.

That impression was reinforced by Mr Trump’s overnight description of his 10% tariff on China as an “opening salvo”.

Why is China so calm?

That is not the only curiosity concerning this affair.

The other is the relatively calm response from Beijing. While Canada immediately responded with retaliatory measures and Mexico indicated that it would, China merely murmured in the first instance about taking “necessary countermeasures” and indicated that it would raise a complaint about the US with the World Trade Organisation.

Since then, Beijing has of course hit back with tariffs of its own on US energy imports, as well as launching an antitrust investigation into Google and adding the parent company of Tommy Hilfiger and Calvin Klein on a blacklist of “unreliable entities”.

That gives Chinese president Xi Jinping something to take back off the table if, as expected, he speaks to Mr Trump in coming days as the pair seek to de-escalate this row.

But it all feels relatively restrained and raises the question of why China has responded in this way.

There is certainly a view in Beijing that, with Mr Trump’s first moves, China got off rather lightly compared with the Canadians and Mexicans.

That sanguine response may also indicate that Beijing knows it has other weapons it can deploy other than retaliatory measures.

Cards in China’s back pocket

For a start, China owns $769bn worth of US Treasury bonds. Dumping some of those aggressively – while hurting the Chinese – would push up America’s implied borrowing costs.

Alternatively, Beijing could allow its currency, the renminbi, to weaken on the foreign exchange markets, just as it did during Mr Trump’s first term of office.

Either way, Mr Trump’s latest measures are unlikely to change the way Chinese businesses operate, particularly the country’s manufacturers.

They have become accustomed over several years, dating back to Mr Trump’s first term, to aggression from the US. They have adapted the way they do business accordingly, for example by shipping a lot of their exports to the US via third countries, most notably Vietnam.

Chinese businesses relieved

Even Chinese companies specifically targeted by Mr Trump – the e-commerce giants Temu and Shein – may not be too badly affected.

They were both singled out as the president closed the so-called “de minimis” loophole, dating back to 1938, which allows goods worth less than $800 to be sent directly to US consumers without incurring import duties or rigorous customs inspections.

This has been a constant thorn in the side of US retailers and its removal helps explain why, for example, shares of Walmart were on Monday spared the spanking meted out to other US stocks.

Yet Shein and Temu are said to be taking the news calmly.

They may even be calculating that this is a short-term squall that will soon blow over – or calculating that, such is the enormity of their buying power and supply chains, they can simply ship inventory elsewhere in the meantime or even just warehouse it.

It is also worth noting that Shein, having been banned by India in 2020, has just begun selling in the country again.

Overall, then, Chinese businesses have reacted with relief to what has happened. They know it could have been worse.

It explains why, even though the Chinese economy is presently misfiring, the authorities in Beijing have reacted relatively calmly to what Mr Trump has done.

US

Donald Trump says he thinks US will annex Greenland

Published

1 hour ago

March 13, 2025

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Donald Trump says he thinks US will annex Greenland

Donald Trump has said he thinks the US will annex Greenland, days after the country’s incoming prime minister said: “We don’t want to be Americans.”

During an Oval Office meeting with NATO secretary general Mark Rutte, the US president was asked about his hopes to annex Greenland.

“I think that will happen,” he said. “I didn’t give it much thought before, but I’m sitting with a man who could be very instrumental.

“You know Mark, we need that for international security. We have a lot of our favourite players cruising around the coast and we have to be careful.”

Mr Trump questioned Denmark’s claim to the autonomous territory, saying Denmark was “very far away” from Greenland despite being part of the country’s kingdom.

“A boat landed there 200 years ago or something. They say they have rights to it,” Mr Trump said. “I don’t know if that’s true. I don’t think it is, actually.”

He said the US already has a military presence in Greenland and added: “Maybe you’ll see more and more soldiers going there.”

It comes after Greenland’s centre-right party won an election in a result seen as a rejection of Mr Trump’s interference in the island’s politics.

The Demokraatit party favours a slow move towards independence from Denmark – with its leader Jens-Frederik Nielsen telling Sky News on the eve of the election “we want to build our own country by ourselves”.

In his White House news briefing Mr Trump claimed the election result was very good for the US and said “the person who did the best is a very good person as far as we’re concerned.”

Mr Trump also reacted to Vladimir Putin’s remarks about Russia agreeing to an end in fighting in Ukraine, but adding “lots of questions” remain over proposals for a 30-day ceasefire.

The US president said his Russian counterpart’s statement was not complete and reiterated his willingness to talk to him, adding: “Hopefully Russia will do the right thing.”

US

Ukraine war: Zelenskyy warns partners not to let Putin ‘deceive’ them on ceasefire

Published

16 hours ago

March 13, 2025

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Ukraine war: Zelenskyy warns partners not to let Putin 'deceive' them on ceasefire

Volodymyr Zelenskyy has called on Ukraine’s partners to make sure Russia doesn’t “deceive” them over a ceasefire.

After breakthrough talks between Ukrainian and US officials in Saudi Arabia, Kyiv said it was ready to accept a proposed 30-day ceasefire with Russia.

But his nightly address on Wednesday evening, a day after the Jeddah summit, President Zelenskyy said, “we must move toward peace” – but issued a warning to allies.

“The key factor is our partners’ ability to ensure Russia’s readiness not to deceive but to genuinely end the war,” the Ukrainian leader said. “Because right now, Russian strikes have not stopped.”

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The focus has now switched to Vladimir Putin’s response to the proposed ceasefire. President Trump said the US had received “some positive messages” adding: “We have people going to Russia right now”.

However, he warned Moscow: “In a financial sense, yeah we could do things very bad for Russia, would be devastating for Russia.”

European defence ministers, meeting in Paris, said now was the time for Moscow to show it was serious about ending the war.

UK Defence Secretary John Healey was among those attending, and had a direct message for Russia’s president: “I say to president Putin, over to you, you want to talk, prove it.”

Mr Healey called on Russia to accept the ceasefire and end the war, adding, “the pressure is now on Putin”.

For his part, President Putin has been playing to his domestic audience with a visit to Kursk, where Russian troops finally seem to be gaining the upper hand against Ukrainian forces who seized territory in the Russian region last year.

Dressed in camouflage, the Russian president called for his forces to defeat the enemy and completely liberate Kursk, in remarks reported by the Interfax news agency.

He also said enemy troops captured in the region will be treated as terrorists, as Russia’s chief of the general staff told Mr Putin that Ukrainian forces in the region are surrounded.

US

Trump fights trade war on multiple fronts as Canada and EU retaliate

Published

22 hours ago

March 12, 2025

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Trump fights trade war on multiple fronts as Canada and EU retaliate

Donald Trump has launched a fresh attack on the EU during a meeting with Irish premier Micheal Martin in the Oval Office.

The US president said he did not want “to do anything to hurt Ireland” but added that the trade relationship between the countries should be focused on “fairness”.

It comes after the president imposed 25% tariffs on global steel and aluminium imports to the US – prompting Canada to announce retaliatory tariffs on US goods worth $29.8bn (£16bn) from tomorrow and the EU to impose counter tariffs on €26bn (£22bn) of US goods from 1 April.

Meanwhile, Sir Keir Starmer said he was “disappointed” to see the president impose global tariffs on steel and aluminium and promised to “keep all options on the table” in how the UK would respond.

During Mr Trump’s meeting with Mr Martin, the president raised the “massive” trade imbalance between the two countries and said Ireland was “of course” taking advantage of the US.

He said the EU was “set up in order to take advantage of the United States”.

Asked by Sky News’ Ireland correspondent Stephen Murphy if Ireland was also taking advantage, Mr Trump replied: “Of course they are.”

He added: “I have great respect for Ireland, for what they did and they should have done just what they did. But the United States shouldn’t have let that happen. We had stupid leaders, we had leaders who didn’t have a clue.

“All of a sudden Ireland has our pharmaceutical companies, this beautiful island of five million people has got the entire US pharmaceutical industry in its grasp.”

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Mr Trump said he loves Ireland, where he has a golf course – but said he wishes the US had “not been so stupid for so many years, not just with Ireland, with everybody”.

Many US pharmaceutical companies have set up their manufacturing facilities in Ireland due to its low 12.5% corporate tax rate.

Irish firms then pay a royalty fee to US parent companies so they can use formulas to make products – meaning Ireland could be the hardest hit EU member by Mr Trump’s 25% tariffs.

‘I would have imposed 200% tariffs’

Mr Trump said if he had been president when those companies started to move to Ireland, he would have imposed a 200% tariff on them so they could not sell anything into the US and they would have “stayed here”.

The president said he would like to see American pharmaceutical companies returning to the US, but expected Mr Martin to “fight on that issue”.

He also told Sky News he would “absolutely” place tariffs on cars from the EU.

Mr Trump accused previous presidents of having “lost big segments” of the US economy and said the EU “treats us very badly”, referencing a recent ruling against Apple.

“They have not been fair. They sue our companies and win massive amounts of money. They sued Apple, won 17 billion US dollars and they use that for other reasons, I guess, to run the European Union,” he said.

“So I’m not knocking it. They’re doing what they should be doing, perhaps for the European Union, but it does create ill will – and as you know, we’re going to be doing reciprocal tariffs so whatever they charge us with, we’re charging them. Nobody can complain about that.”

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Well, that went well.

An Oval Office meeting that in any other St Patrick’s week would have been regarded as almost unimaginably confrontational – this time around the Irish delegation will be floating on air.

Micheal Martin was in the lion’s den today, the first leader to step into the Oval Office since Volodymyr Zelenskyy’s verbal bloodbath, and you could forgive the Irish PM for being apprehensive.

This was always going to be the most important visit of a taoiseach to the White House in generations. What is usually a jovial green-tinged occasion was this year imbued with a new sense of gravity and nervousness.

The Irish government knew it was in the president’s crosshairs – any small country that boasts a huge trade surplus with the US was bound to be a target for this administration. American figures put that surplus in goods at around €80bn (£67bn) last year, although Irish statisticians insist it was a mere €50bn (£41.9bn) – still a record.

In the Oval, I managed to ask the president if Ireland was taking advantage of America. “Of course they are,” he replied. But Mr Trump is at heart a businessman, and it sounded more like a sneaking admiration.

“I have great respect for Ireland, and what they did,” he said. Ireland did exactly what they should have done, he continued, referencing the luring of lucrative US multinationals. But he placed the blame firmly on “stupid” American leaders who “allowed” it to happen. Mr Martin sat beside him, saying nothing.

The EU was set up to exploit America, Mr Trump said. It was “abuse”. Again and again, it was the Brussels bogeyman, not the Emerald Isle, that bore the brunt of his attack.

I asked if he would respond with more tariffs to the new EU tariffs. “Of course,” Mr Trump responded. After an anecdote about the lack of Chevrolets in Munich, I asked would he now consider tariffs on the crucial European car industry – he replied in the affirmative.

Mr Martin sat beside him, saying nothing.

When the taoiseach did speak, it was to hit the Irish talking points – the Ireland-US relationship was a “two-way street”, with the Irish currently the sixth-largest investor in the US.

“Just look how many Boeings Ryanair is purchasing” was the theme of Mr Martin’s argument.

The leaders joked about Mr Martin’s boxer father. Mr Trump spoke admiringly of Conor McGregor and Rory McIlroy. The minutes ticked away… Ireland unscathed.

They finished with a discussion about the president’s Irish resort at Doonbeg in County Clare. Mr Trump lauded the Irish efficiency at approving an expansion plan, and decried the subsequent EU approval period of several years. Once again – Ireland good, Brussels bad.

There was so much nervousness in Irish government circles. Now they must be wondering what the fuss was all about.

‘Great honour’ to meet Irish Taoiseach

Despite his criticism of Ireland, Mr Trump said it was a “great honour” to have the taoiseach at the White House.

He said the US has “tremendous” business relationships in Ireland “and that will only get stronger”.

The US leader said his personal relationship with Mr Martin was “very, very strong and very, very good” as he thanked him for coming to Washington DC to celebrate St Patrick’s Day.

He added that Mr Martin did not “look nervous” about the subject of tariffs during their meeting.

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The taoiseach praised Mr Trump’s work on “peace initiatives” and said the two countries have a “very good relationship, a historic one”.

But, hinting at the tariffs imposed by Mr Trump, Mr Martin said: “It’s a two-way street. We are investing a lot more in America.”

He said he understands where Mr Trump is coming from, but added that Irish companies Ryanair and aircraft leasing firm Aercap “buy more Boeing” planes than anybody else outside the US.