Trump tariffs offer opportunity for China
Asia's largest economy promptly slapped identical tariffs on the United States and said it would impose export controls on rare earth elements vital in consumer and medical technology.
But unlike during his first term, this time Trump is targeting not just China but the entire world -- including American allies that had increasingly joined Washington's firm line on Beijing.
Just days before Trump's "Liberation Day" tariffs announcement, China moved to revive stalled free-trade talks with Japan and South Korea, both treaty-bound US allies with deep-rooted skepticism about Beijing.
"If Trump's unilateralism continues, I expect Beijing to court these capitals more aggressively, positioning itself as the steadier economic anchor in the region," said Lizzi Lee, a fellow on the Chinese economy at the Asia Society Policy Institute's Center for China Analysis.
"And let's not forget the optics. China is very much framing Trump's tariffs as proof of US decline -- resorting to protectionism, bullying allies and retreating from global norms," she said.
Yun Sun, a senior fellow at the Stimson Center, said she had expected China to be "a little more chill" in response to Trump's tariffs but said Beijing did not appear as worried as during his first term.
"I think the Chinese see this more as opportunity and believe the US is actively undermining itself," she said.
"There are a number of aggrieved parties that had been solid and loyal allies of the US," she added. "Now their confidence in the approach that the US is taking around the world is -- I wouldn't say shattered -- but at least in doubt."
- Burying US opening to China -
To be sure, China will likely feel real pain from the US tariffs. It shipped more than $500 billion in goods to the United States last year, with the trade balance far in China's favor.
Critics of China hailed what they saw as a death knell for a former near-consensus in Washington on the value of integrating the Asian power into the global economy.
"The idea that Communist China could be a responsible member of an international trade regime -- the World Trade Organization -- which should be premised on equal and fair trade, is a joke," said Representative Chris Smith, a Republican who for decades has railed against Bill Clinton's 1994 delinking of China's trading privileges from human rights.
"Unlike previous presidents, President Trump fully understands the nature and scope of the problem -- and the existential threat posed by China -- and what needs to be done," Smith said.
Jacob Stokes, a senior fellow at the Center for a New American Security, noted that China still has a slew of issues with other countries, from territorial disputes with Japan, India and Southeast Asia to concerns in Europe over China's embrace of Russia in the Ukraine war.
"China has been adept at undermining its own positions, especially with its neighbors, through assertiveness and even aggression," Stokes said.
- Attention shifts from China -
But Stokes said that former president Joe Biden had been effective in forming coalitions with other countries to put pressure on China, on issues from access to fifth-generation internet networks to security.
"To the extent that Beijing was feeling a little bit isolated at the end of the Biden administration, I think that a lot of that pressure has come off as the locus of disruption is now clearly Washington," Stokes said.
While both Trump and Biden policymakers have identified China as the top US rival, Lee, of the Asia Society Policy Institute, said Trump fundamentally saw President Xi Jinping "not as a villain, but as a peer -- another strongman."
"For Trump, economic war isn't about economics or even the stock markets -- it's about the optics of domination and strength," Lee said.
"And that leaves just enough room for a pivot -- if Xi offers the kind of win Trump can brand."
sct/mlm
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
7 minutes ago
- Yahoo
Dollar drifts as investors ponder Fed independence ahead of Powell speech
By Ankur Banerjee SINGAPORE (Reuters) -The U.S. dollar drifted on Thursday as investors fretted about the Federal Reserve's independence after yet another attack from President Donald Trump ahead of remarks from Chair Jerome Powell later this week that could influence the outlook for rates. Trump called on Fed Governor Lisa Cook to resign on the basis of allegations made by one of his political allies about mortgages she holds in Michigan and Georgia, intensifying his effort to gain influence over the U.S. central bank. Cook said she had "no intention of being bullied to step down" from her position at the central bank. Trump has also told aides he is considering trying to fire Cook, the Wall Street Journal reported on Wednesday. "It has the potential to raise questions around the Fed's oversight and regulatory functions but it has little to no near-term monetary policy implications," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities. That explained the relatively muted reaction in the currency markets to the news as the dollar initially dipped on the news but was mostly calm into the Asian session. The Japanese yen held onto gains made in previous sessions and was little changed at 147.41 per dollar, while the euro was steady at $1.1642. Sterling last fetched $1.34535. That left the dollar index, which measures the U.S. currency against six other peers, steady at 98.301. Trump has repeatedly criticised Powell for being too slow to cut rates, stoking investor worries about the central bank's independence and its credibility. Investors expect Trump will replace Powell with a more dovish appointment when his term ends in May. Trump earlier this month said he would nominate Council of Economic Advisers Chairman Stephen Miran to serve out the final few months of a vacant Fed seat after Adriana Kugler unexpectedly resigned. Kristina Clifton, a senior economist at the Commonwealth Bank of Australia in Sydney, said if Cook resigns it would create another opening for Trump to appoint a Fed Governor who will vote to lower interest rates. "Perceived political interference in the Federal Reserve can undermine its independence, steepening the yield curve and denting the USD's safe haven status." POWELL SPEECH The main focus this week has been on whether Powell will push back against market expectations for a rate cut at the Fed's September 16-17 meeting when he speaks on Friday at the Jackson Hole meeting, following a weak jobs report for July. "Markets are adamant that recent labour market data necessitates some policy calibration and are expecting Chair Powell to tip his hat in that direction," TD's Newnaha said. Traders are pricing in an 82% chance of a 25-basis-point rate cut next month, CME FedWatch tool showed. While the odds have lowered from last week after hotter than expected producer price inflation tempered expectations, investors are still pricing in over 50 bps of easing this year. Some analysts cautioned that markets could end up being disappointed by Powell's speech, noting that the impact of Trump's tariffs on inflation remains uncertain. "It is not clear that Powell will deliver strong guidance," said Benoit Anne, managing director in the investment solutions group at MFS Investment Management. If the dovish signals elude us, there will be significant pricing out of the odds for a September cut." In other currencies, the New Zealand dollar was nursing steep overnight losses at $0.58205 after diving 1.2% to its lowest level since April. New Zealand's central bank cut interest rates on Wednesday as expected but left the door wide open to yet more easing if needed. The Australian dollar eased 0.13% to $0.64245, hovering near a two-week low. [AUD/] Sign in to access your portfolio
San Francisco Chronicle
9 minutes ago
- San Francisco Chronicle
California Supreme Court clears way for Newsom's redistricting plan
The state Supreme Court opened the door Wednesday to plans by Gov. Gavin Newsom and other Democrats to redraw California's congressional districts in a gerrymander designed to pick up five seats, rejecting a Republican legal challenge. A lawsuit Monday by legislative Republicans contended the hastily drafted ballot measure, scheduled for votes in both houses on Thursday, has not been published long enough to meet the public-notice requirements in the state Constitution. But the court dismissed the suit Wednesday in a brief order with little explanation. The Republican lawmakers 'have failed to meet their burden of establishing a basis for relief at this time under (the) California Constitution,' the court said. Six justices, all appointed by Democratic governors, endorsed the order, while Justice Carol Corrigan, the only Republican appointee, was absent and did not participate, the court said. Newsom proposed the ballot measure, titled the Election Rigging Response Act, after Texas Gov. Greg Abbott introduced legislation to redraw the state's House districts and enable Republicans to pick up five seats in next year's elections. Democrats currently hold 43 of California's 52 House seats. The governor's measure, if approved by two-thirds majorities in both the Assembly and state Senate — where Democrats hold more than two-thirds of the seats — would redesign California's House seats for the rest of this decade in response to changes in Texas or any other state. Ballot measures approved by the voters in 2008 and 2010 established a bipartisan, independent commission to draft congressional and legislative districts in California, a task previously left up to state legislators, who design districts in most states. Newsom's proposed state constitutional amendment, ACA8, would temporarily suspend that commission if approved by a majority of the voters in November. While California law does not allow legislative action on a proposed measure until 30 days after it has been introduced, Democrats apparently sidestepped that deadline with a longstanding practice known as 'gut and amend' — using other legislation that had been pending for more than 30 days, erasing the contents and replacing them with the redistricting language. That was apparently enough to defeat the Republicans' lawsuit. Other Republican lawmakers, and the National Republican Congressional Committee, have promised additional challenges under the California Constitution and federal election laws.
The Hill
9 minutes ago
- The Hill
Vance scoffs at ‘idea that Gavin Newsom is somehow going to mimic' Trump's social media style
Vice President JD Vance criticized California Gov. Gavin Newsom (D) on Wednesday for trying to 'mimic' President Trump's style on social media. In an interview on Fox News's 'The Ingraham Angle,' the vice president said Newsom's revamped approach to online messaging misses the 'fundamental genius' that has fueled Trump's appeal. 'This idea that Gavin Newsom is somehow going to mimic Donald Trump's style — I think that ignores the fundamental genius of President Trump's political success,' Vance said, 'which is that he's authentic.' 'He just is who he is,' Vance added. The comments came after Fox News host Laura Ingraham noted Democrats 'are still doing their 2024 autopsy' and seem to have concluded that they need to be tougher and 'be more like Trump in tone' to win future elections. Vance said that lesson is misguided. 'Look, the autopsy for the Democrats — some free political advice from the president of the United States — is stop sounding like crazy people,' Vance said. 'That really is all it is.' 'You've got to be yourself,' Vance added after criticizing Newsom's approach. 'You've actually got to talk to people honestly about the issues. I don't think it's that complicated: Don't be a crazy person. Be authentic.' Newsom, a potential 2028 presidential contender, in recent days has rolled out a revamped messaging strategy that mirrors Trump's signature social media style. The California governor has posted rants in all-caps letters, he's assigned nicknames to his political opponents, and he's referred to his legislative proposals and political rallies as 'beautiful.' While Newsom's approach has been embraced by many Democrats, who have struggled to find their footing since losing the 2024 election, the governor has faced criticism from some Republicans and Fox News hosts. 'FOX HATES THAT I AM AMERICA'S MOST FAVORITE GOVERNOR ('RATINGS KING') SAVING AMERICA,' Newsom's office posted earlier this week, responding to that criticism.
