Donald Trump’s approach to international trade, particularly concerning China, presents a perplexing paradox. While aiming to curtail Chinese influence and secure US supply chains, his administration simultaneously seeks greater access to China’s vast markets.
This dual strategy, driven by a mix of tariffs, export controls and diplomatic overtures has created a ‘blurred line’ that leaves allies and adversaries alike questioning the true direction of US policy.
The central question now is whether this seemingly contradictory approach represents a calculated balancing act or if it will ultimately prove to be a double-edged sword, cutting both ways for global trade and potentially accelerating the very economic fragmentation Trump seeks to avoid.”
Despite tough rhetoric, concessions achieved so far have been modest, and upcoming negotiations involve countries for whom the stark “US vs. China” narrative is less clear-cut. Domestically, pressure is mounting and even within the administration, appetite for escalating trade conflicts appears limited.
Michael Strain, Director of Economic Policy Studies at the American Enterprise Institute sums up the confusion: “I don’t see a well-defined strategy, I don’t see a clear goal or set of goals. I see a desire to import fewer products from China.”
Early trade cases reflect this ambiguity. The UK swiftly negotiated a deal with the US, securing tariff reductions with limited concessions, while China responded to US tariffs with increased countermeasures before agreeing to a temporary truce that eased tariff burdens. European leaders, familiar with the situation, interpret these moves less as a strategy blueprint and more as efforts to avoid deeper escalation.
The UK deal highlights U.S. efforts to redirect global trade flows away from China. Steel and aluminum tariff reductions were contingent on the U.K. freezing out Chinese involvement, a move that angered Beijing. The U.S. is pushing for stringent rules of origin and ownership criteria, effectively excluding China from supply chains, likely triggering Beijing’s counter-pressure on London. An EU official described this as a U.S. attempt to permanently tilt global trade relations in its favor through higher tariffs and security requirements, compelling partners to sever ties with China.
An EU official commented on these efforts, saying the US clearly wants to tilt global trade relations in its favor by demanding higher tariffs and security rules from partners willing to purge China from their supply chains.
In response, President Xi Jinping’s visits to Southeast Asia, coupled with invitations to Latin American leaders in Beijing, and planned engagements with European and African leaders, underscore this effort. “Let me stress that cooperation between countries should not target or harm any third party,” stated Chinese Foreign Ministry spokesman Lin Jian. China also warned against deals “at the expense of China’s interests,” vowing “resolutely take reciprocal countermeasures,” as reported by the Financial Times.
Chinese Foreign Ministry spokesman Lin Jian emphasised last week, “Cooperation between countries should not target or harm any third party,” a clear reference to the UK-US agreement. China has warned that it “opposes any party reaching a deal at the expense of China’s interests” and will take “reciprocal countermeasures” if necessary.
Tariffs remain a significant sticking point. While Trump suggests 10% tariffs are as low as he will go, combined rates on Chinese goods remain at 30%, compared with a prior rate of 145%, according to EU Economy Commissioner Valdis Dombrovskis.
Dombrovskis highlighted the economic risks, stating, “We don’t see these tariffs as justified and consider them harmful to both the EU and US economies, and ultimately to the global economy.” He also stressed the need for Europe to bolster strategic autonomy, especially in defense and advanced technologies, learning from the war in Ukraine.
Despite these tensions, markets have responded positively to recent de-escalation moves. Trump’s promise of new sectoral tariffs still looms, but the administration’s trade actions remain uneven. His recent Middle East trip included deals on semiconductors and AI that have raised concerns among China hawks in the US government.
Scott Lincicome, Vice President of General Economics at the Cato Institute, describes the administration’s stance as nuanced. “On certain products like steel, it’s clear they’re trying to isolate China and limit the import of Chinese materials via third countries. But overall, I don’t think they’re trying to do that,” he was quoted as saying by Bloomberg.
The White House frames its trade policy as addressing long-standing unfair trade practices. “President Trump and his economic team have repeatedly made it clear that the administration is focused on ending our country’s historic and persistent trade deficits by negotiating the removal of unfair tariff and non-monetary trade barriers by other countries that have decimated American industries and undermined American workers,” said White House spokesman Kush Desai.
The US is also pressing for preferential access to European procurement and aiming to relocate key pharmaceutical supply chains domestically. Commerce Secretary Howard Lutnick outlined a vision for allies to invest in US semiconductor manufacturing in exchange for preferential access to chip supplies, targeting 50% of advanced chip production within the US.
However, such sweeping demands risk alienating partners. China has denounced US export controls on technology like Huawei’s AI chips as “unilateral protectionism,” according to He Yongqian, a spokeswoman for China’s Commerce Ministry.
As the US pushes for partners to align more closely with its trade and security policies, only a handful of economies appear deeply intertwined enough with the US to consider such realignments. Scott Lincicome cautions, “Other governments are surely aware of the pressures on the Trump administration to make deals and avert market turmoil. They’re inevitably going to drive a very hard bargain.”
In sum, Trump’s China trade strategy is a double-edged sword, aiming to weaken Beijing’s economic influence while courting risks that trading partners may opt for pragmatism over alignment, blurring the lines of global trade alliances and raising questions about the long-term coherence of US policy.
