Across China – from gritty factory floors to warehouses and shipping docks – the flow of exports screeched to a halt last Friday, as 145% U.S. tariffs took hold, and Beijing announced countermeasures.
Two-way trade was essentially dead. But in his first public comments on President Donald Trump’s tariff war, Chinese leader Xi Jinping did not betray any concern.
“China will stay confident, composed, and focused,” he said, speaking in the quiet elegance of a formal Beijing meeting hall.
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By singling out China for especially high tariffs, President Donald Trump has set the stage for an epic showdown with his opposite number, Xi Jinping. Their leadership styles are vastly different. Who will blink first?
By singling out China for commercial warfare, Mr. Trump has set the stage for an epic showdown with Mr. Xi. It will likely end only when one of them finds the political and economic cost too great to bear. So far, experts say, Mr. Trump’s vacillating is boosting Mr. Xi’s confidence that Washington will buckle first.
The Trump administration failed to anticipate Mr. Xi’s resolve, the experts add.
The U.S. leader’s ambitious plan to upend the multilateral trading system represents “a huge challenge to China,” the world’s foremost trading power, explains Scott Kennedy, a senior adviser at the Center for Strategic and International Studies (CSIS), a think tank in Washington.
“The trade fight with the United States is existential for Xi Jinping,” he says. Beyond reshaping international trade, Beijing considers Mr. Trump’s actions an attack on “the [Communist] Party’s hold on power and … ability to shape China’s trajectory,” he says.
“Xi Jinping and the Chinese do not want to be bullied to make major concessions to the United States. So they decided they had to stand their ground and fight this out.”
“Strongman” leadership styles
To be sure, China is no stranger to economic coercion; Beijing has often wielded it in recent years against other countries in Asia and against Australia. Indeed, to many eyes Mr. Xi and Mr. Trump are similar leaders in some regards.
Both are “personalistic strongman-type figures,” says Susan Shirk, a research professor at the University of California, San Diego.
Messrs. Xi and Trump each justify their strong grip on power as necessary to carry out their grand goal of restoring their nations’ past greatness. Both surround themselves with loyalist underlings who do little to challenge their decisions.
Controlling and uncompromising, the two men share a predilection for doubling down.
Yet while Mr. Trump, by his own account, tends to act on impulse, Mr. Xi, who has led China’s ruling Communist Party since 2012, favors the steady pursuit of long-term, strategic goals – a difference on display in the trade war.
“What has been really striking to me … is the discipline with which China has acted,” says Dr. Shirk, co-chair of an Asia Society Task Force on U.S.-China Policy. “Xi Jinping is incorporating … [expert] advice in his retaliation during the trade war.”
In contrast, she says, “Donald Trump … seems to take very little advice from anybody and acts … from his own gut instinct.”
Seizing opportunity in Southeast Asia
Waving as he stepped out of an Air China jet in Hanoi, Mr. Xi’s long game was on full display Monday as he arrived for a state visit to Vietnam. It was the first leg of a swing through Southeast Asia to promote China as a reliable champion of free trade – in contrast with the United States.
With stops also planned in Malaysia and Cambodia, Mr. Xi is seizing the opportunity created by the global opposition to Mr. Trump’s norm-breaking trade policy and attacks on longtime U.S. allies. His goal: to bolster China’s influence in Asia and beyond.
Fuad Abdullah/ Department of Information Malaysia/Reuters
China and Vietnam should join forces to “oppose unilateralism and bullying,” Mr. Xi told Vietnamese Communist Party General Secretary To Lam, on whose country Mr. Trump had slapped tariffs of up to 46%.
During Mr. Xi’s visit, the two countries inked some 45 agreements, including deals to enhance supply chains and rail links. Lashing out from the White House, Mr. Trump used a vulgarity to accuse Mr. Xi and Mr. Lam of plotting to exploit the United States.
Beijing is promoting the same pro-trade message with Europe, and Mr. Xi is reportedly scheduled to hold a summit with European Union officials in July.
“Going against the world will only lead to self-isolation,” Mr. Xi stressed during a meeting Friday with Spanish Prime Minister Pedro Sánchez, who traveled to Beijing despite Washington’s warning to the European Union not to pivot to China.
China’s ongoing efforts to boost domestic consumption will “provide strong momentum for the world economy,” Mr. Xi said.
Trade war’s mounting costs
Ultimately, Mr. Xi and Mr. Trump are likely to seek a face-saving way to end the current trade conflict, which threatens to slow growth in both countries. Today’s sky-high tariffs act as a virtual trade embargo against the 14% of Chinese exports that flow to the United States, and the 6% of U.S. exports that go to China.
For now, though, both leaders seem to be digging in – even while signaling they remain open to negotiations. On Monday, Mr. Trump suggested he could soon impose new tariffs on Chinese semiconductors and pharmaceuticals. On Tuesday, Bloomberg reported that China ordered a pause in deliveries of Boeing jets.
As the costs of the trade war mount in both countries – expected to increase inflation in the U.S. and unemployment in China – the outcome will likely depend on which leader has the greater tolerance for the political costs of decoupling.
Gu Wenjun, an analyst at ICWise, a semiconductor research firm in Shanghai, thinks the trade war will last as long as Americans and Chinese can tolerate paying the economic price.
“Our generation is fated to witness the century-defining reshaping of the global order,” he wrote on the ICWise website. “The days ahead may be hard. All we can do is face the oncoming storm with calm resolve.”
