Has Trump Softened His Stand With China, Possibly Extending A ‘Green Leaf’? Trump’s Talk On Tariffs Helped Chinese Exports?

In a surprising yet calculated shift, U.S. President Donald Trump hinted at a softer stance towards China during his virtual address at the World Economic Forum (WEF) in Davos. The former president, known for his often hardline rhetoric on China, spoke of the potential for a “very good relationship” with the Asian giant under his administration, while reiterating the importance of establishing a “level-playing field” in trade.

Trump, who has consistently criticized the trade imbalances between the U.S. and China, attributed the deficits to what he described as policy missteps by his predecessor, Joe Biden. “The U.S. has been facing massive deficits with China,” he said. “Biden allowed it to get out of hand. It is just an unfair relationship. We have to make it fair.”

The Trade Deficit and the Push for Fairness

Trump emphasized that his administration’s focus would not be on taking advantage of China but on ensuring equity in bilateral trade. He noted the broader issue of deficits with several Asian nations, describing them as unsustainable. This renewed push for fairness in trade comes against the backdrop of Trump’s historical stance on tariffs and trade wars, which were aimed at reducing the U.S.’s dependency on Chinese goods while pressuring Beijing to adopt more equitable trade practices.

Trump’s Personal Rapport with Xi Jinping

Despite the tensions between the two nations, Trump spoke warmly of his personal relationship with Chinese President Xi Jinping. “I like President Xi very much,” he remarked. “We always had a very good relationship.” He acknowledged that the outbreak of COVID-19 in Wuhan had strained relations but maintained optimism about future collaboration.

Trump also suggested that China could play a critical role in global peace efforts, particularly in resolving the Russia-Ukraine conflict hinting at Beijing’s influence as a potential mediator.

Trump 2.0. A Fresh Start for China?

Donald Trump’s second term in office is off to an unexpected start for China, and it seems Beijing might be breathing a little easier these days.

So far, Trump has held back on his threats to slap heavy tariffs on Chinese goods. He also reportedly showed interest in visiting China in the near future, which is a far cry from the tough stance of his first term. On top of that, Trump granted a 75-day reprieve to TikTok, the Chinese-owned app that had been facing the axe. He hinted that he might be willing to ease off the law that requires TikTok to sell its U.S. business or face a ban.

This all adds up to a strong message- Trump is open to talks and, perhaps more importantly, ready to strike deals with China. For now, at least.

This shift is certainly a win for Beijing, which had been preparing for more turbulence in U.S.-China relations after Trump filled his cabinet with China hawks and campaigned on imposing steep tariffs on Chinese imports.

“China sees this as an opportunity to negotiate with Trump,” said Liu Dongshu, a political scholar at the City University of Hong Kong. “A better U.S.-China relationship is more important to China than to the U.S. … so China is eager to engage.”

The bets are high for China. Another trade war like the one during Trump’s first term would be a huge blow to its already struggling export-driven economy. With this in mind, Chinese leaders have been keen to find a way to soften Trump’s aggressive stance.

Just before Trump’s inauguration, Chinese President Xi Jinping called for a “new starting point” in U.S.-China relations and sent Vice President Han Zheng to Washington for the ceremony – the highest-ranking Chinese official to attend such an event.

At Davos this week, Vice Premier Ding Xuexiang echoed Xi’s sentiment, saying that China wants to “promote balanced trade” rather than focus on a “surplus,” directly addressing one of Trump’s main complaints about the trade relationship between the two countries.

That said, Chinese policymakers aren’t under any illusions. They know the U.S.-China dynamic can shift quickly, and they’re likely calculating how best to use this moment of relative calm to strike deals with the “art of the deal” president in the months ahead.

Containing the Tariff Threat?

A key factor hanging over the current phase of U.S.-China relations is the “phase one” trade deal brokered during Trump’s first term. The 2020 deal was supposed to mark a truce in the ongoing trade war, which saw Trump impose or raise tariffs on hundreds of billions of dollars worth of Chinese imports to the U.S. His goal? To level the playing field with China. And for the most part, those tariffs have remained in place ever since.

However, the deal, which many analysts argue Beijing never fully honored, is now part of a larger investigation into U.S.-China economic and trade relations. This review was launched by Trump on his first day back in office, and it will help decide whether or not the White House will slap new duties on China. The process is expected to take months, which gives China some breathing room to build a relationship with the new Trump administration, potentially even entertaining him in Beijing, or perhaps securing a deal to avoid harsher economic penalties.

While the threat of tariffs still looms—particularly a potential 10% tariff on Chinese imports to the U.S. as early as next month over the role Chinese suppliers play in the fentanyl crisis—the situation is far from as extreme as Trump’s previous campaign promises of 60% duties. Observers of China’s foreign policy suggest that Beijing is likely viewing these threats as potential bargaining chips to keep Trump happy.

One way China could appease Trump is by fully implementing the “phase one” deal, opening up more of its massive market to foreign companies. Another possible move is taking more action to curb the export of precursor chemicals used to make fentanyl, a key concern for Trump’s administration.

Within China’s foreign policy circles, there’s growing support for dialogue and cooperation rather than sticking to hard-line stances. Jia Qingguo, former dean of Peking University’s School of International Studies, recently shared his view in an interview with Yicai, a state-linked financial publication: “Rather than adopting a blanket veto of all U.S. proposals, China should analyze which issues require opposition and which can be cooperated on based on our own interests.”

If Trump does visit Beijing in the coming months—a trip that sources close to him suggest is on the table—it could give China a key opportunity to woo the U.S. leader and further shift the tone of the relationship in its favor.

Have Trump’s Tariff Threats Helped China Boost Its Exports?

If the goal behind Trump’s proposed tariffs was to hurt Chinese exports and push for better trade terms, it seems the strategy may have backfired—at least for now.

Despite Trump’s threats, China’s exports, including to the U.S., have continued to rise in recent months. So why are Chinese exports still climbing, and what’s the real impact of Trump’s tariff talk?

Earlier this week, Trump doubled down on his accusations that China was behind the supply of fentanyl to the U.S., contributing to the nation’s deadly addiction crisis. Just a day before, he mentioned possibly imposing 25% tariffs on Mexico and Canada, alleging those countries were allowing the illegal flow of fentanyl into the U.S. He also announced plans for a new “external revenue service” to collect tariffs and other foreign revenues.

But despite all this, China’s exports to the U.S. grew by 4% between November 2023 and November 2024. More broadly, Trump has repeatedly accused China of unfair trade practices, citing the huge trade deficit between the two nations. For instance, in the first 11 months of 2024, Chinese exports to the U.S. totaled about $401 billion, while China imported only $131 billion from the U.S.

So, what gives? Have Trump’s tariff threats made any real difference?

In a sense, yes—but not in the way the U.S. might have hoped. As Trump’s inauguration neared and tariffs on Chinese imports loomed larger, U.S. companies rushed to stock up on Chinese goods, anticipating higher costs once the tariffs hit. As a result, Chinese exports to the U.S. surged. In November 2024, exports to the U.S. reached $47.3 billion, up from $43.8 billion the previous year—an 8% increase.

At the same time, U.S. imports from China fell by 11.2% from $14 billion to $12.4 billion in November 2024 compared to the same month in 2023. Simply put, while Trump’s tariff threats aimed to reduce the trade deficit, they ended up widening it.

Government data from the U.S. shows similar trends. Between July and November 2024, U.S. imports from China rose by 6.8% compared to the same period in 2023, reaching about $203 billion.

On a broader scale, China’s total exports have soared. In December 2024, Chinese exports hit record highs, rising by 10.7% compared to the previous year. Total exports for 2024 reached $3.58 trillion, up 5.9% from 2023, while China’s trade surplus reached a historic $992 billion, a 21% increase from the year before.

But there’s more bad news for the U.S. According to Carlos Lopes, an associate fellow at Chatham House, while this trade boom has temporarily fueled China’s surplus, U.S. policies are eroding the trade relationship. “The escalation of tariffs and unilateral measures could deepen the erosion of trust in the global trade system, pushing China to diversify its partners and reduce reliance on the U.S. market,” Lopes warned.

He also noted that the current surge in trade might offer short-term benefits for both countries but highlights the fragility of a system dominated by trade wars and unpredictability. In the long run, it’s clear that the global trade system is facing increasing uncertainty, and the U.S.-China trade relationship is no exception.

Not Getting Swayed

While there is a palpable sense of cautious optimism in Beijing over a potentially warmer relationship with Trump’s administration, China remains acutely aware of the limits to how much it can bend to meet U.S. demands.

In a recent call with Trump, Chinese President Xi Jinping emphasized the need for mutual respect, particularly over Taiwan—an issue Beijing insists the U.S. must handle with “prudence.” While Xi suggested there is “broad space for cooperation” on economic matters, he also made it clear that Taiwan, which China claims as its own, is a non-negotiable core interest.

Within China, there is significant debate over how to handle a potential increase in U.S. tariffs. Beijing has already signaled its readiness for a possible trade conflict. Last year, China revamped its export control regulations, enhancing its ability to restrict dual-use goods, which can be used for both civilian and military purposes. It has also limited the export of critical minerals and technologies that are essential for producing everything from military goods to semiconductors. These are tools China could use to counterbalance U.S. tariff moves.

However, any deal-making between Beijing and Washington will be complicated by broader tensions between the two nations. Issues such as China’s human rights record, its growing technological and military power, and its territorial disputes in the South China Sea and over Taiwan remain significant points of contention.

China’s efforts to modernize and expand its military are unlikely to slow, nor is its aggressive stance on territorial claims. This stance only deepens the skepticism in the U.S., where lawmakers on both sides of the political spectrum view China as the primary threat to America’s global dominance.

In fact, just last week, a bipartisan bill was introduced in Congress aimed at revoking China’s preferential trade status, phasing in steep tariffs, and ending a duty exemption for low-value Chinese imports. Such legislative moves highlight the deepening divide between the two nations, particularly when it comes to their rivalry for global influence.

For China, maintaining a strong and unified front is critical—not only to its own population but also to its growing influence in the Global South, where Beijing seeks to project leadership. Chinese leaders know that any concessions to the U.S. must be carefully weighed, ensuring they appear strong both at home and abroad.

As Trump begins his presidency with a more conciliatory tone toward China, the underlying skepticism in Beijing remains. “This does not mean that the China-U.S. relationship is any easier; it’s just that the U.S. approach has changed,” said Jin Canrong, a prominent Chinese scholar, in a video on the social media platform Weibo. “We must not let our guard down … the U.S. still views China as a strategic rival.”

Despite the overtures of cooperation, China is prepared for the long game, understanding that while Trump may offer a different tone, the U.S. will continue to treat China as a formidable rival on the global stage.

What Will US-China Relations Look Like During Trump 2.0?

As the world’s two largest economies, the relationship between the United States and China is critical, and with Trump returning to the White House, the future of that relationship is highly uncertain. The U.S. economy, with a GDP of $27.36 trillion in 2023, dwarfs China’s $17.79 trillion. Yet, despite this economic gap, the global dynamics between the two are far more complex than mere GDP numbers.

One of the biggest questions is what will happen to tariffs under Trump 2.0. While it’s unclear if Trump will follow through on his previous threats of imposing 60 percent tariffs, trade experts like Kewalramani suggest that the future of these tariffs is unpredictable.

During his inauguration, Trump signed 26 executive orders, including one delaying the enforcement of a ban on TikTok—owned by the Chinese company ByteDance—by 75 days. This sets the stage for further negotiations, with Trump hinting at potential tariffs on China if a deal with TikTok is not approved.

Despite the uncertainties surrounding tariffs, the engagement between Trump and Chinese President Xi Jinping is expected to continue.

Much like President Biden, Trump is likely to maintain regular interactions with Xi, though the broader geopolitical environment is markedly different under Trump’s leadership. As the Biden administration imposed restrictions on China across various sectors, Trump’s approach could swing between aggressive trade measures and strategic diplomacy, depending on the context.

China, for its part, has already demonstrated remarkable resilience. It has diversified its trade partnerships and made significant strides in domestic innovation.

Experts like Lopes predict that China will double down on its Belt and Road Initiative (BRI), a massive infrastructure project that aims to connect Asia with Africa, Europe, and Latin America. This will help sustain China’s export competitiveness even if the U.S. continues its aggressive stance. Additionally, China is expected to heavily invest in green energy and advanced technology sectors, strengthening its position in global markets.

Interestingly, China may actually benefit from the U.S.’s unilateral approach to global trade. As the U.S. positions itself as a defender of multilateralism, China can step into the vacuum left by the U.S. and lead in alternative economic networks. By resisting isolation, China could further integrate itself into these global networks, weakening the very leverage the U.S. seeks to maintain.

For U.S. consumers, the potential increase in tariffs could be significant. Kewalramani predicts an increase in tariffs, though not necessarily as high as 60 percent. However, even modest tariff hikes would lead to higher prices for American consumers.

According to the Congressional Budget Office (CBO), Trump’s tariff policies could result in a 1 percentage point rise in inflation by 2026, which would cost American families an average of $1,560 per year. This increase in consumer costs could exacerbate economic pressures, leading to higher prices on a wide range of goods, from electronics to clothing.

Ultimately, the trade war with China under Trump 2.0 will be shaped by a delicate balance of aggression and diplomacy. While Trump may push for higher tariffs and assertive economic policies, China’s strategic resilience and efforts to integrate itself into global trade systems could counterbalance these pressures. For consumers, the effects will likely be felt in higher prices, with inflation increasing as a result of the tariffs.