Four years after leaving the White House, Donald Trump returns to power with a disruptive economic strategy: the new American president intends to impose customs tariffs on most of his trading partners, first and foremost Xi Jinping's China. If the Republican had already imposed protectionist measures against Beijing during his first term, which had pushed some commentators to speak of a “trade war”, his new plan this time involves a real global trade war.
Exceptionally high customs tariffs
Donald Trump has in fact promised to impose customs tariffs of 25% on Canada and Mexico to push them to restrict the flow of drugs and migrants, 10% for the European Union, and 60% for the China. The American president also mentioned another customs tariff of 10%, supposed to specifically target other Chinese sectors, as pointed out by Reuters, casting doubt on the exact extent of the protectionist measures envisaged by Trump against Beijing.
The challenges of the Great Wall of China in the 21st century
Such proposals worry Washington's trading partners as well as American entrepreneurs. Many companies have therefore undertaken to import foreign products en masse to build up reserves before Trump returns to power.
This vast project aims to rebalance the heavily deficit American trade balance, by pushing the United States to produce itself goods whose import would be too expensive because of these tariffs.
-But Beijing could well escape this catastrophic scenario for a simple reason: the Chinese trade balance has never been so surplus, which in 2024 will show a surplus of some 962 billion euros, or almost a thousand billion dollars. The Chinese trade balance surplus, which exceeds its previous record of $838 billion in 2022 according to the New York Times, is thus higher than Swiss GDP.
A less vulnerable Chinese economy
Another figure deserves attention: the surplus of the Chinese trade balance with the United States was 360 billion dollars in 2024. Even in the event of a complete cessation of Chinese exports to Washington, China would therefore still show a balance heavily in surplus. The American policy of reducing the share of its imports from China, by turning to other partners such as Vietnam and Mexico, now makes China less vulnerable to a break with the United States.
This protectionist policy, however, does not work in Beijing's favor: Chinese exports are a vital issue for Xi Jinping, who has been facing moribund domestic demand for years. A sudden drop in Chinese exports would therefore deal a severe blow to the country's economy, which is highly dependent on its trade balance.
