Trump sows uncertainty - and Xi Jinping sees an opportunity

Trump Creates Uncertainty – Xi Jinping Seizes the Opportunity

Amid the rising tension over trade tariffs, China has kept its response measured and calm, despite U.S. President Donald Trump imposing a 10% tariff on all Chinese goods. Rather than reacting angrily, China called for negotiations, acknowledging the detrimental effects of a trade war. However, as soon as the U.S. tariffs came into effect, China announced its own retaliatory tariffs, ranging from 10-15%, starting February 10, targeting U.S. imports such as coal, crude oil, and large cars.

China's restraint suggests a hope for a resolution with the U.S. to prevent escalating trade tensions. Notably, Trump had granted reprieves to Canada and Mexico just hours before tariffs were to be enforced on them, and Trump and Chinese President Xi Jinping are expected to discuss the matter soon. The new U.S. tariff will likely impact China, adding to the hefty trade barriers already imposed during Trump’s first term, and this comes at a time when China is grappling with a sluggish economy.

While the two nations have been locked in trade disputes before, significant changes have occurred since Trump’s first term. China is less dependent on U.S. markets, having diversified its trade relationships, especially across Africa, South America, and Southeast Asia, becoming the largest trading partner for over 120 countries.

A potential trade deal remains a possibility, but experts like Chong Ja Ian from Carnegie China suggest that the additional tariffs may not provide the leverage Trump hopes for.

President Xi Jinping may find a bigger opportunity amid America's retreat.

With Trump sowing division at home and even threatening tariffs on the European Union in his first month in office, his actions may have other US allies questioning their future.

In contrast, China is likely to position itself as a calm, stable, and potentially more appealing global trade partner.

Yun Sun, director of the China programme at the Stimson Center, notes, "Trump's America-first policy will present challenges and threats to almost every country in the world."

From the perspective of US-China strategic competition, the erosion of US leadership and credibility could work to China's advantage. While the bilateral relationship may not improve, Beijing will likely seize the opportunity to turn the situation to its benefit.

As the leader of the world's second-largest economy, Xi Jinping has openly expressed his ambition for China to lead an alternative global order.

Since the end of the COVID-19 pandemic, he has traveled extensively, championing major international institutions like the World Bank and supporting agreements such as the Paris climate accords.

Chinese state media has framed this as a commitment to embracing nations worldwide and strengthening diplomatic relations.

In 2020, when Trump halted US funding to the WHO, China pledged additional financial support. With the US now distancing itself from the organization, many expect Beijing to step in once again to fill the void left by Washington's exit.

The same approach is anticipated regarding the aid freeze that has caused disruption in countries and organizations reliant on US assistance—despite facing an economic slowdown, China may seek to step in and bridge the gap.

Trump's tariffs previously impacted China, but this time, it's prepared to face the challenge head-on. Meanwhile, turmoil intensifies as Trump and Musk target top US aid agencies.

On his first day back in office, Trump froze all foreign assistance provided by the US, which is the world's largest aid donor. Hundreds of foreign aid programs managed by USAID came to a halt. While some have resumed, aid contractors report ongoing chaos as the agency’s future remains uncertain.

John Delury, a historian of modern China and professor at Yonsei University in Seoul, argues that Trump’s "America First" doctrine could further undermine Washington’s role as a global leader.

"The combination of tariffs on major trade partners and the freezing of foreign aid sends a clear message to both the Global South and OECD countries that the US is not interested in international collaboration," he tells the BBC.

“President Xi's consistent message of 'win-win' globalization takes on new significance as America retreats from the world.”

In its quest for global governance, Beijing has sought an opportunity to challenge the American-led world order of the past five decades, and the uncertainty surrounding Trump's presidency might be just the opening it needs.

New alliances
"Whether this truly gives Beijing a significant advantage is less certain," says Mr. Chong.

"Many US allies, especially in the Pacific, have reasons to engage with Beijing, but they also remain cautious. This is why we’ve seen Japan, South Korea, the Philippines, and Australia strengthen their ties, partly due to concerns over China."

There is "gathering momentum" for a potential trilateral relationship among Australia, Japan, and South Korea, driven by "the impact of a second Trump administration," according to The Australian Institute of International Affairs.

Trump Sows Uncertainty, and Xi Jinping Sees an Opportunity

If China was angered by the United States' decision to impose an additional 10% tariff on all Chinese goods, it concealed its frustration well.

Beijing urged Washington to restart talks after repeatedly warning of the futility of a trade war. It bided its time until just before midnight in Washington, when the tariffs took effect, announcing retaliatory measures of 10-15% on various U.S. imports such as coal, crude oil, and large cars, effective February 10.

China's measured response likely stemmed from a desire to avoid escalating tensions with the U.S. and to seek a deal that would prevent further tariffs. After all, President Trump had negotiated reprieves with Canada and Mexico just hours before the tariffs were due to hit them, and Trump and China's President Xi Jinping were expected to hold talks in the coming days.

The new U.S. levy will hurt, particularly as it adds to the heavy tariff burden Trump imposed during his first term. Meanwhile, China's economy is already grappling with slow growth, which has raised concerns domestically.

While the U.S. and China have clashed over tariffs before, the landscape has changed significantly since Trump’s first term.

China's economy is now less reliant on the U.S. than it was in 2020. Beijing has strengthened its trade relations across Africa, South America, and Southeast Asia and is now the largest trading partner of over 120 countries.

A potential deal could still be on the table, but Chong Ja Ian of Carnegie China suggests that the additional 10% tariff may not give Trump the leverage he hopes for.

Xi’s ‘Win-Win’ as America Retreats

President Xi Jinping may see a bigger opportunity in the unfolding situation.

Trump’s policies are sowing division at home, threatening even U.S. allies, such as the European Union, with tariffs in his first month back in office. These actions may have other U.S. allies questioning what the future holds for them.

In contrast, China is likely to present itself as a stable, reliable, and potentially more appealing global trade partner.

“Trump’s America-first policy will create challenges and threats for nearly all countries around the world,” says Yun Sun, director of the China program at the Stimson Center.

"From a U.S.-China strategic competition perspective, a decline in U.S. leadership and credibility will benefit China. While it may not improve things bilaterally, Beijing will certainly seek to capitalize on the situation."

Xi Jinping’s Ambition for Global Leadership

As leader of the world’s second-largest economy, Xi has been vocal about his ambition for China to take the lead in shaping an alternative global order.

Since the pandemic’s end, he has traveled extensively, supporting international institutions like the World Bank and agreements like the Paris climate accords. Chinese state media has portrayed this as an effort to embrace nations globally and deepen diplomatic ties.

When Trump halted U.S. funding to the World Health Organization (WHO) in 2020, China pledged additional support. With the U.S. now distancing itself from the WHO, expectations are high that Beijing may again step in to fill the gap left by Washington's absence.

The same scenario applies to the aid freeze that has disrupted countries and organizations long reliant on U.S. assistance—China may seek to bridge that gap, even amid its economic slowdown.

Trump's Tariffs Hit China Hard, but This Time, It’s Ready

On his first day back in office, Trump froze all foreign assistance, which had been provided by the U.S., the world’s largest aid donor. Hundreds of programs managed by USAID came to a halt. Though some have since resumed, aid contractors report ongoing chaos as the agency’s future remains uncertain.

John Delury, a historian at Yonsei University in Seoul, warns that Trump's “America First” doctrine could further weaken Washington’s role as a global leader.

"The combination of tariffs on major trade partners and the freeze on foreign aid sends a clear message to both the Global South and the OECD that the U.S. is no longer interested in international cooperation,” he tells the BBC.

"Xi's consistent message of ‘win-win’ globalization takes on new meaning as America retreats from the world."

New Alliances Forming in Response

While it's unclear if this shift will grant Beijing a decisive advantage, Mr. Chong suggests that many U.S. allies and partners, particularly in the Pacific, have reasons to engage with China but remain cautious. This dynamic has led to closer ties among Japan, South Korea, the Philippines, and Australia, partly driven by concerns over China.

According to The Australian Institute of International Affairs, there is growing momentum for a trilateral relationship between Australia, Japan, and South Korea, partly motivated by the impact of a second Trump administration.

Rising Tensions in the South China Sea

Concerns about China’s assertiveness in the South China Sea and its ongoing tensions over Taiwan are causing unease among Beijing’s neighbors. Countries such as Japan, South Korea, and the Philippines, long reliant on U.S. military alliances, are increasingly wary of China’s growing influence.

The situation has led some in the region to explore new alliances, separate from both of the world’s largest powers, as they seek to balance their economic interests with security concerns.

The Calm Before the Storm

Trump's decision to announce the new tariffs on the weekend coincided with China’s Lunar New Year, a time when families celebrate and many workers return to their hometowns.

Initially, China’s response was subdued, with officials indicating plans to take legal action via the World Trade Organization (WTO). However, this option holds little sway, as the WTO’s dispute settlement system has been effectively paralyzed since Trump blocked the appointment of judges in 2019.

Retaliatory tariffs followed soon after, as Chinese officials returned to Beijing after the holiday.

The U.S.-China relationship faces an uncertain future, with both leaders facing pressure from their domestic political landscapes. Trump's unpredictability and the growing presence of China hawks in his administration are likely to lead to significant shocks in the bilateral relationship, says Wu Xinbo, director at the Centre for American Studies at Fudan University.

Although China is concerned about the damage a trade war could inflict on its economy, it is also looking for ways to leverage the current instability to expand its global influence. With a volatile political climate in Washington, Xi Jinping may see this as a moment to push for a new order in global governance.

The U.S.-China relationship has soured, and whether it can be rebuilt amid rising tensions remains to be seen. Trump’s actions have already started to reshape the world’s geopolitical landscape, with China poised to capitalize on Washington’s retreat.