China is preparing for new tensions with Trump over trade, technology and Taiwan

TAIPEI, Taiwan — The first time China faced Donald Trump in the White House, there was a trade war, a protocol breach involving Taiwan’s former leader and a bromance between presidents that turned sour.

As President-elect Trump prepares to begin his second term, China is bracing for unpredictability in its ties with the United States and renewed tensions over trade, technology and Taiwan.

A new tariff war is looming

Perhaps the biggest consequence for China – if Trump remains true to his campaign promises – is his threat to impose blanket tariffs of 60% on all Chinese exports to the US.

Such tariffs would be a blow to China’s already unstable economy, which suffers from high youth unemployment, a protracted real estate crisis and sovereign debt. According to an analysis published by UBS earlier this year, a 60% tariff on Chinese imports could take 2.5 percentage points, or about half, off China’s projected economic growth.

During Trump’s previous term, the US imposed tariffs on more than $360 billion worth of Chinese products. That brought Beijing to the negotiating table, and in 2020 the two sides signed a trade deal in which China committed to improving intellectual property rights and buying an additional $200 billion worth of American goods. A research group showed a few years later that China had purchased virtually none of the promised goods.

President Joe Biden kept most of those tariffs in place and this year added new duties on items including steel, solar cells and electric vehicles.

Like last time, tariffs could serve as a tool to force Beijing back to the negotiating table, said Henry Gao, a law professor at Singapore Management University who focuses on international trade.

“Given China’s weak economic position this time, I think there will be more willingness to talk,” he said. “So while the tariff could have some short-term effects on the Chinese economy, the situation could improve once they reach an agreement.”

The trade talks could include Trump’s call for Chinese President Xi Jinping to help negotiate a solution to the war in Ukraine, which Trump has boasted he will be able to do quickly, without saying how.

Trump previously sought Xi’s help in dealing with North Korea’s rogue leader Kim Jong-un. That dynamic could repeat itself, with Trump weighing trade grievances against seeking Chinese support in global crises, said Wang Huiyao, founder of the Beijing-based think tank Center for China and Globalization.

“China is the largest trading partner of both Russia and Ukraine,” Wang wrote in a recent commentary. “These close economic ties give China a unique opportunity to play a greater role in peace efforts.”

Willing to go ‘crazy’ about Taiwan

There is one scenario in which Trump has threatened to impose even higher tariffs — 150% to 200% — on Chinese goods: if China invades Taiwan, a self-governing democracy that Beijing claims as its own.

The US does not recognize Taiwan as a country, but it is the largest lender and largest arms supplier.

Trump angered Beijing in December 2016 by accepting a congratulatory call from then-Taiwan President Tsai Ing-wen, in violation of diplomatic protocol. Since Washington’s ties with Beijing began in 1979, no U.S. president had spoken directly to a Taiwanese leader.

Trump’s move caused unrest in China-watching circles, but ultimately he stuck to the status quo in Taipei-Beijing relations.

China expects him to continue to do so, said Zhu Feng, dean of the School of International Relations at Nanjing University.

“Will (he) want to turn to Taiwan’s independence? It’s unlikely,” he said.

As for China’s repeated threats to annex Taiwan, Trump told The Wall Street Journal last month that he would not have to use military force to prevent a blockade of Taiwan because Xi “respects me and he knows I’m crazy am.”

During his campaign, Trump sometimes spoke of his personal relationship with Xi, which started buoyantly during his first term but soured over disputes over trade and the origins of the COVID-19 pandemic.

But Trump has also said Taiwan should pay the US for its defense against China, likening the relationship to insurance. Taiwan spends about 2.5% of its GDP on defense and has purchased hundreds of millions of dollars in US weapons this year.

Trump has deliberately maintained a sense of uncertainty in his relationship with China, said Da Wei, director of the Center for International Security and Strategy at Tsinghua University in Beijing.

“We are clear about the challenges,” he said. “As far as the opportunities are concerned, we still have to see them clearly.”

Disputes over chips

During his first term, Trump began targeting Chinese tech companies over security concerns, targeting major corporations such as telecom giant Huawei. Biden went further in that direction by curbing China’s access to advanced semiconductors, which are needed to develop strategic industries such as artificial intelligence.

But Trump has criticized Biden’s CHIPS and Science Act, a bipartisan bill that set aside $53 billion to build domestic semiconductor manufacturing. Today, Taiwan produces nearly 90% of the world’s supply of the most advanced chips.

The island’s largest semiconductor manufacturer, TSMC, expanded production in Arizona, partly in response to the CHIPS Act, and to be prepared for any other protectionist policies in the U.S., said Shihoko Goto, director of the Indo-Pacific Program the Wilson Center. .

Trump has pledged to repeal the CHIPS Act, although critics say this would undermine his campaign to reindustrialize the US. The president-elect also accused Taiwan decades ago of “stealing” the U.S. chip industry.

“Rather than providing a silicon shield, Taiwan’s dominance in the chip industry may actually be the source of tension between Taipei and Trump, as Taiwan’s successes in the chip sector may only have been possible because of the United States’ takeover. benefit of,” Goto said.