• The Daily Hints
• 21 Apr, 2025

China has issued a strong warning to countries making trade agreements with the United States that hurt Beijing’s interests, escalating tensions in the ongoing US-China trade war. As President Donald Trump pressures nations to curb trade with China for tariff exemptions, Beijing vows to retaliate, pulling other countries into the economic crossfire.

Details & Context

·      China’s Stance: Beijing’s Commerce Ministry condemned deals that sacrifice China’s interests, promising “resolute countermeasures” against nations aligning with US trade restrictions.

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·      US Tariff Strategy: Since January 2025, Trump has slapped 145% tariffs on Chinese imports while other nations face a 10% blanket tariff until July, with reports suggesting the US is pushing 70+ countries to limit China trade for tariff relief.

·      Global Negotiations: Japan began trade talks with the US last week, led by negotiator Ryosei Akazawa. South Korea starts discussions this week and US Vice President JD Vance is set to meet India’s Prime Minister Narendra Modi to negotiate, with India facing a 26% tariff if no deal is reached.

·      Trade War Escalation: China retaliated with 125% tariffs on US goods, vowing to “fight to the end.” Some Chinese goods face up to 245% US tariffs when combined with existing levies, shaking global markets.

·      China’s Outreach: President Xi Jinping visited Vietnam, Malaysia and Cambodia in April 2025, strengthening trade ties with Southeast Asia, now China’s largest trading partner, to counter US pressure.

Quotes

·      Chinese Commerce Ministry: “Giving in to the US won’t bring peace and compromise won’t earn respect. Nations chasing short-term gains at China’s expense are making a dangerous mistake.”

·      Jesper Koll, Monex Group: “Japan’s profits rely 20% on the US and 15% on China. No one wants to pick sides in this trade war.”

Additional Information

·      Market Impact: The US-China trade war caused global market turmoil in April 2025, with fears of recession as tariffs disrupt supply chains. Trump’s 90-day tariff pause for most countries (except China) calmed markets temporarily.

·      China’s Leverage: As the world’s top supplier of rare earth minerals, China restricted exports of materials like gallium and germanium, impacting US industries like defence and tech.

·      Diplomatic Moves: China’s new trade negotiator, Li Chenggang, filed a World Trade Organisation lawsuit against US tariffs, accusing Washington of violating trade rules.

·      US Goals: Trump claims tariffs will boost American manufacturing increase tax revenue and attract investment but critics argue rebuilding US industry could take decades and harm consumers.

·      Other Nations’ Dilemma: Countries like Japan and South Korea face pressure to balance US demands with their economic ties to China, while the UK explores a potential trade deal with the US.

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Impact Analysis

·      Global Trade Disruption: High tariffs risk slashing US-China trade by 80%, threatening $466 billion in goods and destabilising the global economy, per World Trade Organisation forecasts.

·      Economic Strain: Consumers in both nations face higher prices—US goods in China and Chinese imports in the US—while businesses like Temu and Shein warn of price hikes.

·      Southeast Asia’s Role: ASEAN nations, hit by US tariffs of 32-49% before the pause, may see increased Chinese goods flooding their markets, undercutting local industries.

·      Diplomatic Tensions: China’s warnings and Xi’s Southeast Asia tour signal a push to build an anti-US trade coalition, complicating negotiations for countries like India and the EU.

·      US Challenges: Trump’s tariff pause shows political and market pushback but his focus on isolating China could backfire if allies like Japan resist choosing sides.

China’s bold warning to nations aligning with US trade policies marks a new phase in the US-China trade war, with global economies caught in the middle. As Trump pushes to isolate Beijing, China’s countermeasures and diplomatic outreach signal a fierce response. The world braces for economic ripples but a resolution remains uncertain. Stay informed as this trade battle unfolds.

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