{"id":50038,"date":"2025-04-15T14:32:40","date_gmt":"2025-04-15T14:32:40","guid":{"rendered":"https:\/\/www.premium-partners.net\/?p=50038"},"modified":"2025-04-15T14:45:59","modified_gmt":"2025-04-15T14:45:59","slug":"how-should-china-respond-to-trumps-tariffs","status":"publish","type":"post","link":"https:\/\/www.premium-partners.net\/fr\/builder\/how-should-china-respond-to-trumps-tariffs\/","title":{"rendered":"How should China respond to Trump\u2019s tariffs?"},"content":{"rendered":"

This post<\/a> was originally published on this site<\/a><\/p>

<\/p>\n

US President Donald Trump\u2019s \u201cLiberation Day\u201d announcement of sweeping new tariffs on imports from more than 180 countries will be remembered as a man-made economic tsunami. Many are already <\/span>comparing<\/a> it to President Herbert Hoover\u2019s 1930 Smoot-Hawley Tariff Act, which slashed global trade by <\/span>66%<\/a> in five years and deepened the Great Depression. Trump\u2019s tariffs \u2013 most of which have been <\/span>abruptly paused<\/a> for 90 days \u2013 have rattled financial markets, prompting analysts to <\/span>warn<\/a> that the United States could enter a recession in 2025.<\/p>\n

The global implications can hardly be underestimated. As the world\u2019s largest economy, the US has an outsize impact on other countries\u2019 exports and growth. Adding to the uncertainty is Trump\u2019s erratic approach to policymaking, which is nurturing doubts about the US dollar\u2019s viability as a global reserve currency.<\/p>\n

Even more alarmingly, as the US withdraws from its international commitments, the world risks falling into the \u201cKindleberger trap<\/a>\u201d \u2013 a scenario <\/span>reminiscent of the 1930s<\/a>, when no major power was able or willing to provide the global public goods necessary to sustain the world economy. If current trends persist, the international economic architecture the US helped build 80 years ago could unravel.<\/p>\n

How should other economies respond to Trump\u2019s tariffs? China, Canada, and the European Union have already announced retaliatory measures, while others have signaled a willingness to negotiate. For many, the US is not just a major export market but also a critical security partner and geopolitical ally.<\/p>\n

Given its status as the world\u2019s second-largest economy and the largest trading country, China\u2019s response is especially consequential. While Trump has imposed new tariffs on nearly every country, China is clearly his primary target. During his first term, he launched an <\/span>investigation<\/a> into China\u2019s trade practices and imposed sweeping tariffs on a broad range of Chinese goods \u2013 many of which were later retained by <\/span>Joe Biden<\/a>\u2019s administration.<\/p>\n

The same tit-for-tat dynamic that characterised Trump\u2019s first trade war is playing out again. Within 48 hours of the US announcing a 34% tariff on Chinese imports \u2013 on top of a previous 20% increase \u2013 China\u2019s government responded by matching Trump\u2019s tariffs and introducing a set of more targeted measures. In turn, Trump <\/span>raised<\/a> tariffs on Chinese goods to 104%, prompting China to <\/span>hike<\/a> its own tariffs on US imports to 84%. Trump then escalated further, <\/span>raising<\/a> the rate on Chinese goods to 125% even as he put Liberation Day on hold.<\/p>\n

China’s national flag flutters at a business district in Beijing.<\/figcaption><\/figure>\n

While Chinese experts hold differing views about how to respond to Trump\u2019s tariffs, many believe that offering concessions would only invite further US aggression, and the decision to <\/span>raise its tariff<\/a> on imports from the US to 125% reflects this view. Nonetheless, one hopes the two sides will be able to find ways to de-escalate through dialogue.<\/p>\n

Beyond tariffs, Chinese policymakers should focus on more strategic responses in three key policy areas. First, they must do more to boost economic growth. After two years of relatively weak performance, the government finally adopted more aggressive macroeconomic stimulus policies in September, leading to a <\/span>significant acceleration<\/a> in growth during the final quarter of 2024.<\/p>\n

But the newly announced US tariffs could make it difficult for China to achieve its targets of 5% GDP growth and 2% inflation, as a decline in exports may reduce aggregate demand, exacerbate industrial overcapacity, and intensify deflationary pressures. Given the potential impact of the new US tariffs, Chinese policymakers will need to implement bold and well-targeted macroeconomic policies. The People\u2019s Bank of China should consider further monetary easing, including cutting its policy interest rate and the banks\u2019 reserve ratio.<\/p>\n

To be sure, concerns about financial stability limit the scope for currency depreciation. There is broad consensus among Chinese analysts that fiscal policy \u2013 especially increased deficit spending by the central government \u2013 should play a greater role in supporting growth.<\/p>\n

Second, the new US tariffs underscore the need to rebalance China\u2019s economy by strengthening domestic consumption. Currently, consumption accounts for only about <\/span>56% of GDP <\/span><\/a>\u2013 nearly 20 percentage points below the global average \u2013 exacerbating China\u2019s overcapacity problem.<\/p>\n

Historically, China addressed this imbalance by relying heavily on export demand. But that strategy has become increasingly unsustainable since the 2008 financial crisis, as global demand has weakened. Consequently, Chinese policymakers have introduced the \u201cdual circulation\u201d strategy to boost domestic demand and reduce dependence on foreign markets.<\/p>\n

In March, the government unveiled a new series of \u201cspecial initiatives<\/a>\u201d aimed at boosting consumption. But this is inherently more difficult than stimulating investment, as household spending is largely driven by income and confidence, both of which take time to rise.<\/p>\n

Lastly, America\u2019s regrettable protectionist turn threatens to create a global leadership vacuum. Over the past few decades, many countries \u2013 particularly in Western Europe and East Asia \u2013 have benefited enormously from open markets. China must work together with these countries, both bilaterally and multilaterally, to preserve this system and bolster free trade and investment.<\/p>\n

Over the past year, the Chinese government has taken unilateral steps to facilitate international exchange, including <\/span>visa-free travel<\/a> for citizens of countries like Denmark, Norway, and South Korea. Similar measures could be extended to trade and investment.<\/p>\n

Encouragingly, Chinese policymakers have already made progress in each of these three areas. As the world enters a new phase of development, it is in China\u2019s best interest to get its own house in order first \u2013 and then take a proactive role in safeguarding the global economy.<\/p>\n

Huang Yiping, Dean of the National School of Development and Distinguished Professor at Peking University, is a member of the Monetary Policy Committee of the People\u2019s Bank of China.<\/figcaption><\/figure>\n

Huang Yiping, Dean of the National School of Development and Distinguished Professor at Peking University, is a member of the Monetary Policy Committee of the People\u2019s Bank of China.<\/i><\/b><\/p>\n

*** This article was supplied by Project Syndicate, 2025.<\/a><\/b><\/em><\/p>\n

BUSINESS REPORT<\/strong><\/p>","protected":false},"excerpt":{"rendered":"

US President Donald Trump\u2019s \u201cLiberation Day\u201d announcement of sweeping new tariffs on imports from more than 180 countries will be remembered as a man-made economic tsunami. Many are already\u00a0comparing\u00a0it to President Herbert Hoover\u2019s 1930 Smoot-Hawley Tariff Act, which slashed global trade by\u00a066%\u00a0in five years and deepened the Great Depression. Trump\u2019s tariffs \u2013 most of which have been\u00a0abruptly paused\u00a0for 90 days \u2013 have rattled financial markets, prompting analysts to\u00a0warn\u00a0that the United States could enter a recession in 2025.The global implications can hardly be underestimated. As the world\u2019s largest economy, the US has an outsize impact on other countries\u2019 exports and growth. Adding to the uncertainty is Trump\u2019s erratic approach to policymaking, which is nurturing doubts about the US dollar\u2019s viability as a global reserve currency.Even more alarmingly, as the US withdraws from its international commitments, the world risks falling into the \u201cKindleberger trap\u201d \u2013 a scenario\u00a0reminiscent of the 1930s, when no major power was able or willing to provide the global public goods necessary to sustain the world economy. If current trends persist, the international economic architecture the US helped build 80 years ago could unravel.How should other economies respond to Trump\u2019s tariffs? China, Canada, and the European Union have already announced retaliatory measures, while others have signaled a willingness to negotiate. For many, the US is not just a major export market but also a critical security partner and geopolitical ally.Given its status as the world\u2019s second-largest economy and the largest trading country, China\u2019s response is especially consequential. While Trump has imposed new tariffs on nearly every country, China is clearly his primary target. During his first term, he launched an\u00a0investigation\u00a0into China\u2019s trade practices and imposed sweeping tariffs on a broad range of Chinese goods \u2013 many of which were later retained by\u00a0Joe Biden\u2019s administration.The same tit-for-tat dynamic that characterised Trump\u2019s first trade war is playing out again. Within 48 hours of the US announcing a 34% tariff on Chinese imports \u2013 on top of a previous 20% increase \u2013 China\u2019s government responded by matching Trump\u2019s tariffs and introducing a set of more targeted measures. In turn, Trump\u00a0raised\u00a0tariffs on Chinese goods to 104%, prompting China to\u00a0hike\u00a0its own tariffs on US imports to 84%. Trump then escalated further,\u00a0raising\u00a0the rate on Chinese goods to 125% even as he put Liberation Day on hold.China’s national flag flutters at a business district in Beijing.While Chinese experts hold differing views about how to respond to Trump\u2019s tariffs, many believe that offering concessions would only invite further US aggression, and the decision to\u00a0raise its tariff\u00a0on imports from the US to 125% reflects this view. Nonetheless, one hopes the two sides will be able to find ways to de-escalate through dialogue.Beyond tariffs, Chinese policymakers should focus on more strategic responses in three key policy areas. First, they must do more to boost economic growth. After two years of relatively weak performance, the government finally adopted more aggressive macroeconomic stimulus policies in September, leading to a\u00a0significant acceleration\u00a0in growth during the final quarter of 2024.But the newly announced US tariffs could make it difficult for China to achieve its targets of 5% GDP growth and 2% inflation, as a decline in exports may reduce aggregate demand, exacerbate industrial overcapacity, and intensify deflationary pressures. Given the potential impact of the new US tariffs, Chinese policymakers will need to implement bold and well-targeted macroeconomic policies. The People\u2019s Bank of China should consider further monetary easing, including cutting its policy interest rate and the banks\u2019 reserve ratio.To be sure, concerns about financial stability limit the scope for currency depreciation. There is broad consensus among Chinese analysts that fiscal policy \u2013 especially increased deficit spending by the central government \u2013 should play a greater role in supporting growth.Second, the new US tariffs underscore the need to rebalance China\u2019s economy by strengthening domestic consumption. Currently, consumption accounts for only about\u00a056% of GDP\u00a0\u2013 nearly 20 percentage points below the global average \u2013 exacerbating China\u2019s overcapacity problem.Historically, China addressed this imbalance by relying heavily on export demand. But that strategy has become increasingly unsustainable since the 2008 financial crisis, as global demand has weakened. Consequently, Chinese policymakers have introduced the \u201cdual circulation\u201d strategy to boost domestic demand and reduce dependence on foreign markets.In March, the government unveiled a new series of \u201cspecial initiatives\u201d aimed at boosting consumption. But this is inherently more difficult than stimulating investment, as household spending is largely driven by income and confidence, both of which take time to rise.Lastly, America\u2019s regrettable protectionist turn threatens to create a global leadership vacuum. Over the past few decades, many countries \u2013 particularly in Western Europe and East Asia \u2013 have benefited enormously from open markets. China must work together with these countries, both bilaterally and multilaterally, to preserve this system and bolster free trade and investment.Over the past year, the Chinese government has taken unilateral steps to facilitate international exchange, including\u00a0visa-free travel\u00a0for citizens of countries like Denmark, Norway, and South Korea. Similar measures could be extended to trade and investment.Encouragingly, Chinese policymakers have already made progress in each of these three areas. As the world enters a new phase of development, it is in China\u2019s best interest to get its own house in order first \u2013 and then take a proactive role in safeguarding the global economy.Huang Yiping, Dean of the National School of Development and Distinguished Professor at Peking University, is a member of the Monetary Policy Committee of the People\u2019s Bank of China.Huang Yiping, Dean of the National School of Development and Distinguished Professor at Peking University, is a member of the Monetary Policy Committee of the People\u2019s Bank of China.*** This article was supplied by Project Syndicate, 2025.BUSINESS REPORT<\/p>","protected":false},"author":1,"featured_media":50040,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-50038","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-builder"],"_links":{"self":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/50038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/comments?post=50038"}],"version-history":[{"count":2,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/50038\/revisions"}],"predecessor-version":[{"id":50043,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/50038\/revisions\/50043"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media\/50040"}],"wp:attachment":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media?parent=50038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/categories?post=50038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/tags?post=50038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}