Why China can and should go all out against Trump in his trade war

SCMP:

Opinion | Why China can and should go all out against Trump in his trade war

China has all the cards and the confidence; but for the US, the likely outcome is the bursting of the US financial bubble and the dollar’s demise



Andy Xie
Published: 6:30pm, 9 Apr 2025


China is going the whole hog in response to US President Donald Trump’s tariff war, showing it is prepared to completely cease trade with the United States. The European Union and Canada are stiffening their backs too.

Trump’s tariff salvo is clearly demented, in basing the rates on trade imbalances. If a country’s imports from the US are only 10 per cent of its US exports, Trump interprets it as a 90 per cent tariff – though in his magnanimity, he halves it, ending up with 45 per cent. The twisted logic is that, as long as the US tariff is high enough, trade with the US will be balanced.

But all this will do is reduce trade with the US. Perhaps balance will be achieved once there is no trade on either side. Maybe the road to balancing trade for the US is for its demand to collapse, rather than for its exports to increase.