Experts like Andrew KP Leung, Chairman of ALIC and an independent China strategist, and Dov Zakheim, Senior Advisor at CSIS, believe both nations are adjusting strategies in anticipation of escalating economic confrontations.
Leung asserted that China has long anticipated a return to hostile trade relations with the US. Beijing, he noted, has actively been preparing by pivoting toward self-sufficiency in technology, stimulating domestic consumption, and expanding its influence within the Global South.
“Beijing sees an existential conflict between the two countries,” Leung explained, underscoring that China perceives US trade policies as part of a broader strategy to contain its rise.
Recognising this, China has worked to insulate itself from such measures by making itself indispensable to global markets—currently, it is the largest trading partner to 128 countries, compared to the US’s 58.
Meanwhile, Trump’s proposed tariffs could have significant repercussions domestically as well. Zakheim pointed out that a 60% tariff on Chinese goods could lead to higher prices for American consumers, worsening inflation.
“It’s definitely going to cause inflation,” he said, noting that replacing Chinese manufacturing with alternative suppliers is not an immediate solution due to China’s entrenchment in the supply chain. While some supply chain diversification is possible, a complete decoupling from Chinese imports is impractical in the short term, Zakheim added.
According to Zakheim, Trump remembers well that China did not uphold its commitment to buy $200 billion worth of American goods, a condition negotiated in the prior trade agreement.
Combined with accusations around intellectual property theft and the belief among many Republicans that China was responsible for the COVID-19 pandemic, Zakheim noted that Trump’s administration will likely remain inflexible unless Beijing shows willingness to meet US demands.
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