Beijing: The decision of US President Donald Trump to impose additional 10% prices on China left Beijing with several options to respond to Washington’s decision.
Analysts say that China has many options if it wants to respond to the fresh American samples, including reprisal prices on American products such as car parts and soybeans to controls on raw minerals essential for American manufacturing.
President Trump, during the weekend, announced additional prices on Chinese products, increasing the challenges of a commercial confrontation between the world superpowers that started eight years ago during his first mandate.
Beijing in response warned that there was “no winner” in a trade war and swore countermeasures not yet specified.
The news that Canada and Mexico had entered into an agreement with Trump to delay the 25% prices on their goods were followed by his announcement that he would hold talks with China “probably within 24 hours” to try a agreement.
But, while the threat of new measures continues to weigh on Beijing, the eyes are on what civil servants are aligned in response.
With its economy which always fights against slow consumption and slow growth, observers expect China to keep its powder in dry for the moment – at least to another cycle of tariffs that could be more damage.
“We expect China not jumping from immediate reprisals after the increase in tariffs of 10%, but will keep the doors of open negotiation and cooperation,” wrote UBS Bank analysts in a note.
“We do not expect China to follow the same strategy as during the first cycle of tariff hiking in 2018-2019.”
Bilateral trade has totaled more than $ 530 billion in 2024, according to American data, with exports of Chinese goods to the United States exceeding $ 400 billion. It was the second after Mexico.
But this clever commercial imbalance – $ 270.4 billion in January -November last year – has long risen from Hackles to Washington.
Fentanyl
The main American requests in the First Trade War were better access to Chinese markets, a large reform of the rules of the commercial game which strongly promotes Chinese companies and the relaxation of heavy state controls.
This time, Washington also called on China to repair exports to Mexico chemical components used to make synthetic fentanyl opioid, responsible for tens of thousands of deaths per overdose per year.
After long and heavy negotiations during Trump’s first mandate, the two agreed what has become known as “phase one” agreement-a ceasefire in the trade war of almost two years .
Beijing quickly retaliated throughout this dead end – imposing its own prices on everything, soy cars, designed to inflict damage at the Trump voting database in rural America.
It also floated restrictions on exports of rare land metals, of which China dominates world supplies and on which the United States remains highly dependent.
And if a new trade war is intensifying, “the measures could include prices, export controls on essential critical minerals for American manufacturing, limited access to the market for American companies operating in China or depreciation Du Yuan “, Harry Murphy Cruise, Chinese chief and economic Australia at Moody’s Analytics, told AFP.
But he added that Beijing may have learned his lesson from the first dead end.
“The Tit-For-Tat trade war during Trump’s first mandate did not benefit anyone; it made trade more expensive and embarrassed growth in both countries,” said Murphy Cruise.
No big shock
For the moment, analysts think that the latest measures are not biting too hard.
“The 10% price is not a big shock for the Chinese economy,” said Zhang Zhiwei at Pinpoint Asset Management in a note.
“It is unlikely that it will change the expectation of the market on China’s macro’s prospects this year, which has already taken into account the higher prices of the United States,” he added.
And this could allow China to keep its powder in the event of a first wave of Trump prices is the prelude to a greater confrontation.
The American president ordered an in -depth examination of Chinese business practices, the results of which are due on April 1.
This could serve as a “catalyst for more prices,” said Murphy Cruise, pushing Beijing to change tactics.
“This non-Représailles strategy can change if the United States imposes significant additional rates later,” said UBS economists.
“In such a case, we believe that China can retaliate on a targeted and sober basis, imposing prices on certain agricultural products, automotive parts, energy,” they said.
Experts added that China could also leave the value of its devalued currency, increasing the competitiveness of its exports.
Trump’s reported talks with Beijing offer both parties a chance to step back from the edge of a trade war that could strike hundreds of billions of goods.
“China seeks to broadcast tensions,” said Murphy Cruise.
“The Chinese economy is in a much lower position this time; it will be much more difficult to resist a tariff dam,” added Cruise.