China braces for renewed tensions with Trump over trade, technology, and Taiwan

As Donald Trump prepares to return to the White House, China is bracing for another round of unpredictable challenges in its relationship with the US under Trump's first term, the two countries clashed over trade, technology, and Taiwan, and now, with his second term on the horizon, similar issues are expected to resurface with even greater intensity, as detailed in a report by Associated Press.

A looming tariff war

One of Trump’s key promises during his campaign is to impose sweeping tariffs on Chinese goods. His proposal to slap a blanket 60 per cent tariff on all Chinese exports could have devastating effects on China’s fragile economy, the Associated Press report detailed further.

Already grappling with high youth unemployment, a property market slump, and escalating government debt, China would face a sharp decline in economic growth. According to UBS, such tariffs could cut China’s projected economic growth by up to 2.5 percentage points.

During Trump’s first term, the US imposed tariffs on more than $360 billion worth of Chinese products, which led to a trade deal in 2020. However, China’s failure to fulfil its promises under that deal, such as buying additional American goods, has left many sceptics questioning whether another round of tariffs will have any lasting impact. With China’s economy in a weaker position now, analysts believe it may be more inclined to negotiate to avoid further damage.

A central aspect of Trump’s trade strategy could involve leveraging China’s influence on global issues. In his first term, he sought Xi Jinping’s help with North Korea, and now, Trump has suggested that he could press China to help resolve the Ukraine conflict. China’s position as a major trading partner of both Russia and Ukraine gives it a unique role in global diplomacy. However, it remains unclear whether Trump would prioritize trade grievances over fostering cooperation on global issues, a dilemma that could shape his second-term approach.

Taiwan remains a key flashpoint

Trump’s rhetoric on Taiwan has also raised concerns in Beijing. China views Taiwan as part of its territory, and any US support for Taiwanese independence is seen as a major provocation. Trump’s controversial 2016 phone call with Taiwan’s then-president, Tsai Ing-wen, set the stage for tensions. Although Trump has indicated a commitment to maintaining the status quo in Taiwan, he has also stated that China would not dare to blockade the island if he were in office, citing his personal rapport with Xi Jinping.

More troubling for China is Trump’s threat to impose even higher tariffs, ranging from 150 per cent to 200 per cent, if China were to invade Taiwan. While this stance may be aimed at deterring Beijing from military action, it risks escalating tensions further.

Disputes over semiconductor dominance

The ongoing trade war between the US and China also centres on technology, particularly semiconductors. Trump’s administration started targeting Chinese tech giants like Huawei over national security concerns, a trend that has continued under President Biden.

However, Trump has criticized the Biden administration’s CHIPS Act, which incentivizes domestic semiconductor production in the US. Further, one of the issues at the heart of this conflict is Taiwan’s dominance in chip manufacturing, with the island’s TSMC accounting for nearly 90 per cent of the world’s advanced chips.

While the US has tried to increase its domestic chip production, Trump has accused Taiwan of taking advantage of US investments in the sector, potentially creating a new point of friction between Washington and Taipei.

Hence, as Trump re-enters the political stage, the US-China relationship is set to be filled with challenges. The renewed trade conflict, coupled with heightened tensions over Taiwan and technological dominance, signals a turbulent period ahead. While Trump’s policies may cause short-term economic disruptions, his unpredictable approach could reshape the global landscape and reframe the dynamics of US-China relations.