Is a 'Silver Lining' Emerging for China in Its Tariff Dispute With the U.S.?

Donald Trump's trade war It could pose a risk to China’s economy, yet simultaneously provide an opportunity to enhance ties with Europe and Asian neighbors, along with “repairing” its global reputation, analysts suggest.

Beijing has already begun efforts to enhance relationships with these nations and establish alternate trade accords and collaborations.

It has also frequently criticized the United States for its "intimidating" behavior and is apparently intends to bring up the trade war during an informal UN gathering scheduled for next week , where invitations have been extended to all member states to participate.

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The potential bright side of the growing tensions between China and the U.S. may be increased solidarity among the global community, with stronger relationships developing between Europe and China, as well as Japan, South Korea, and China, alongside enhanced connections between Southeast Asia and China, according to Tommy Wu, who serves as the senior China economist at Commerzbank.

So far this year, Washington has levied tariffs totaling 145 percent on Chinese goods, raising the overall tariff rate to approximately 156 percent. A factsheet from the White House on Tuesday stated that when pre-existing duties implemented during Trump’s first term are taken into account, China currently confronts tariffs as high as 245 percent.

At the same time, Beijing has increased its new duties on U.S. products to 125 percent, adding to previous tariff rates.

Characterizing the intensifying trade conflict as an effort to curb China’s progress, which poses risks to the nation's growth, Professor Zhu Feng from Nanjing University, who specializes in international relations, stated that Trump's confrontational stance towards China “presents an opportunity since there is a clear distinction between Trump's America and President Xi Jinping's China currently.”

"The United States is moving backward, eroding global governance and international norms, whereas China is enhancing its role in global governance and promoting an open, free, and collaborative international trading system along with supportive institutions," he stated.

Zhu suggested that this disparity could greatly enhance China's reputation, counteracting attempts to "denigrate" the nation.

He highlighted Joe Biden's focus on a rules-based global framework, contrasting this with what he characterized as China’s approach based on power dynamics. He stated, “With Donald Trump’s moves now, it appears the U.S. is moving toward a power-driven model, whereas China upholds the rules-based system.”

That change weakens decades of U.S. attempts to defame China, inadvertently improving China’s worldwide reputation — not due to actions taken by China itself, but because of the United States’ own shifts.

In its attempts to garner backing from nearby countries and global groups like the European Union, ASEAN, the G-20, and BRICS, China has positioned itself as a proponent of multilateral approaches and unrestricted commerce.

Last week, at the Communist Party’s initial central conference on neighborhood diplomacy since 2013, Xi pledged to place top importance on ties with countries bordering China.

While on his Southeast Asia trip earlier this week , he inked numerous cooperation accords and pacts with Vietnam, Malaysia, and Cambodia.

Beijing has hastened its moves to become part of both the Digital Economy Partnership Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Additionally, they have worked towards establishing a fresh free trade pact with ASEAN and resolving an extended negotiation for an investment accord with the European Union.

In other regions, it has been bolstering relationships with Japan and South Korea, despite the US stating its ongoing commitment to its alliances with both nations.

Last month, Beijing, Seoul and Tokyo held their first ministerial-level economic dialogue in five years, stepping up efforts to secure a free-trade deal.

China has also stepped up efforts to engage with the European Union, with Xi telling visiting Spanish Prime Minister Pedro Sanchez last week that the bloc should join Beijing in opposing "unilateral bullying" and defending international "rules and order".

Prime Minister Li Qiang and European Commission President Ursula von der Leyen have held telephone discussions, with both parties agreeing to explore establishing a floor price for electric vehicles manufactured in China as a means of eliminating the tariffs imposed last year.

Xu Weijun, an assistant researcher at the Institute of Public Policy of South China University of Technology, stated that the trade war has led China to reconsider its diplomatic and trade approaches, thus undeniably creating a strategic opportunity.

He mentioned that the actions of the Trump administration—including how they dealt with Ukraine, their backing of extreme right-wing groups, and their remarks about Greenland—had resulted in escalating friction between Europe and the United States.

Signs of real alignment between China and the EU are evident," Xu stated. "The EU’s increasing dissatisfaction with US unilateral actions has presented a strategic chance for China to forge an alliance based on economic practicality and tactical balancing.

Despite their fundamental disagreements, Xu noted that both China and the European Union share common goals in opposing protectionism, combating climate change, and regulating the digital economy.

Sourabh Gupta, a senior policy specialist at the Institute for China-America Studies in Washington, noted that the European Commission appeared to exhibit "an newfound readiness to engage constructively" even though the relationship has been chilled primarily due to China's apparent support for Russia regarding the situation in Ukraine .

"The trade war initiated by Trump against various parties, including allies and partners, clearly serves as a boon to China. It’s like a ripe fruit that has fallen right into China's hands," he stated.

More generally, countries that are allies, adversaries, or somewhere in between are displaying a more accommodating stance in their geostrategic interactions with Beijing.

Zhao Zhijiang, a researcher at Anbound, a Beijing-based public policy advisory firm, noted that China is using the intensification of the trade war as an opportunity to strategically revamp its stance on global diplomacy and trade deals—accelerating initiatives aimed at achieving long-term objectives like broadening regional trading alliances outside of those involving the U.S.

Scott Kennedy, a China expert at the Center for Strategic and International Studies, highlighted Beijing’s increased focus on the CPTPP, noting: “They informed me that regardless of whether they join the CPTPP or not, they will adjust their internal rules to match those of the CPTPP anyway. This mirrors what they did when aligning themselves with WTO standards about two decades back.”

"While China does impose numerous trade and investment barriers, they also possess elements that can benefit others," he stated during an online discussion on Monday organized by the Centre for Asia Policy Studies at the Brookings Institution.

Pointing out China’s transition from relying on formal structures to adopting pragmatic collaboration in regions like the Middle East and Africa, Zhao noted that China seemed to have drawn lessons from the trade disputes during Trump's initial term and was now better equipped for future challenges.

He stated that this represents the ongoing efforts since 2018 aimed at developing a varied trading network spanning various channels and geographical areas.

However, as the US-China trade war shows no signs of abating soon, experts cautioned that Beijing encounters significant obstacles.

Zhu stated, "It is becoming more evident that the United States is leveraging this trade and tariff conflict to intensify suppression of China across multiple fronts, including technology, industry, resources, finance, and information."

He mentioned that Trump was additionally aiming to "bolster and expand American dominance" and advised all stakeholders to "stay composed and levelheaded."

He cautioned that Beijing’s recent diplomatic and trade efforts will likely yield only limited short-term effects. He further stated, “Currently, both China and the U.S. should focus on restarting talks and dialogues, reaching agreements via negotiation, turning over a new leaf regarding the trade conflict, and steering clear of economic segregation or wider disputes.”

Zhu also cautioned that the prevailing nationalist sentiment online in China, which rejoices over America’s decline and China’s ascendancy through self-assured assertions about China’s moment having arrived, is probably unsustainable.

Gupta similarly mentioned that a trade war would be a "no-win situation for both parties." He added that it was premature to forecast a shift in favor of China, yet he noted that Washington would face more significant damage to its reputation due to this "war of choice."

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Is a 'Silver Lining' Emerging for China in Its Tariff Dispute With the U.S.?