As Europe and other parts of the world are bracing for a major shift in geopolitics and economy in the wake of Donald Trump’s victory in the November 5 US presidential election, China, in particular, appears to be highly apprehensive of its engagement with America under the next occupant of the White House, who has already indicated that he will slap 60% tariffs on Chinese goods.
Moreover, rubbing salt in Beijing’s wound, President-elect Trump has, as per multiple reports, decided to make Mike Waltz, a China hawk as his National Security Adviser (NSA), and Senator Marco Rubio, another anti-China hardliner as the next Secretary of State.
Regarding Marco Rubio, The New York Times, said the Florida Senator has been “more aggressive on China” who in 2020, while serving in Congress during the first term of the Trump administration, had sponsored a bill that tried to prevent the import of Chinese goods made with the use of forced labour by China’s Muslim Uighur minority.
The Biden administration had signed this bill into law in December 2021, causing China huge monetary loss as the US banned goods like cotton, tomatoes and polysilicon used in solar-panel manufacturing. Even at the end of his regime, President Biden, as per CNN, is not willing to give any relief to China. He has finalized imposing hefty tariff hikes on certain Chinese imports.
With this, tariff rate on electric vehicles will go up to 100%, solar cells 50%, electrical vehicle batteries, critical minerals, steel, aluminium, face masks and ship-to shore cranes 25%. Yet it is Trump who has vowed to give more pain to China after entering the White House on January 21.
During the presidential campaign, he had pledged to impose 60% tariffs on all Chinese goods, categorically signalling that Beijing will face more heat on the economic front in the next four years of the Trump presidency. In his first term in the White House, Trump had slapped tariffs which went as high as 25% on Chinese goods entering the American market.
Even Republican lawmakers are in no mood to be lenient on China and in this regard, a glimpse of it can be seen in their recent move to push a legislation in the House, which aims to divest China of its benefit of enjoying permanent normal trade relations (PNTR) status with the US. In September 2024, Republican Senators, including Marco Rubio had introduced a bill in the US Congress to end permanent normal trade relations with China.
Supporting his bill against PNTR status to China, Marco Rubio who has been reportedly nominated as Secretary of State by US President-elect Trump, had then argued that, “giving Communist China the same trade benefits that we give to our greatest allies was one of the most catastrophic decisions that our country has ever made.”
On November 14, another Republican Senator John Moolenaar introduced a similar bill to revoke PNTR status that the US administration-led by Bill Clinton had granted to Beijing in 2000, which led to a boost in US trade and investment in China. Chinese exports to the US increased manifold.
According to data from the US Department of Commerce, between 2001 and 2021, the value of goods imported from China jumped to over $500 billion. This created a considerable displacement in many US sectors, including manufacturing as American companies outsourced it to China. The US’s trade deficit with China more than quadrupled, along with exporting millions of American jobs to the East Asian country. Anti-PNTR experts argue that continuing with permanent normal trade relations with China is not a brainer.
It is said that once the bill is turned into a law, it would also strip ‘De Minimis’ treatment provided to lower-value goods reaching the US market from China. Under this treatment, shipment of packages coming under $800 is exempted from import duties, taxes and rigorous screening, South China Morning Post said. China described the move as an attempt to “turn back the wheel of history.”
China’s Foreign Ministry Spokesperson Lin Jian said, “Some US politicians are attempting to turn back the wheel of history and pull the China-US trade and economic relations back to the Cold War era. This violates WTO rules, and will only harm the common interests of both countries, and disrupt the global economy. We urge certain US Congress members to earnestly abide by WTO rules and stop saying or doing anything that does no one good.”
However, die is cast. Trump is going to be at the helm of American affairs and he has already let the world know about his plans for China. He would implement an agenda that he feels could work as a bulwark against “unusual and extraordinary threat” to the US economy or his country’s national security.
If The Wall Street Journal is to be believed, Robert Lighthizer who, as the former US Trade Representative, had played an instrumental role in Trump’s trade and commerce war with China, during his first presidential term, is going to be inducted into Trump’s cabinet again. He had helped Trump in imposing tariffs on $380 billion worth of Chinese goods, The Wall Street Journal said, giving a broad hint that coming days are not going to be propitious for China under the 47th US President.
There is already an apprehension of likelihood of American, European, and Japanese companies, busy diversifying their manufacturing base and bolstering their supply chains outside China since Covid epidemic, speeding up their flight from Chinese shores under the Trump administration, say experts.
This year, foreign companies that have withdrawn their operations from China include automakers Nissan Motor Co. and Volkswagen AG, along with Konica Minolta Inc and Nippon Steel Corp. America’s International Business Machines Corp (IBM) has announced pulling the shutter down on its research and development in China; it will affect about 1,000 employees.
Although there are several reasons for IBM’s decision to move out of China, it should not be forgotten that the US has increased scrutiny of American firms engaged in business in the world’s second largest economy, especially in strategic areas like artificial intelligence.
The sad part of the US’s de-risk strategy is that it will become sharper under the Trump regime as there are possibilities of Washington DC restricting the flow of technology from America, Europe or Japan into China, denting Beijing’s ambitions to become the global AI leader in 2030.
Above all, foreign companies are showing reluctance to make new investments in China and it can be seen in the continued slump in Foreign Direct Investment in the country. FDI was down around $13 billion in China for the first nine months of 2024, data from China’s State Administration of Foreign Exchange showed. Even Chinese companies are worried about their prospects. According to South China Morning Post, enquiries by Chinese companies for factory and office space in Malaysia and other Southeast Asian countries have increased ever since Donald Trump has been voted by the American electorate for the second presidential term.
