Name: Can Trump win a trade war with China? - BBC World Service
Uploaded: 2025-02-08T13:14:39.000Z
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From the BBC World Service, this is The Global Story.

This week, economic warfare broke out between the world's two biggest superpowers.

President Trump announced a new tariff, essentially a tax, on Chinese goods coming into the US.

And what will the impact be on the rest of the world?

With me today is Ritika Gupta, who is our North America business correspondent joining us from New York, and the BBC World Service Asia Pacific editor, Michael Bristow.

Well, if there's one thing we know about Donald Trump, it's that he loves tariffs.

The word tariff, properly used, is a beautiful word.

One of the most beautiful words I've ever heard.

I always say tariffs is the most beautiful word to me in the dictionary.

They are at the heart of his economic plan for the United States.

During his first term, and also throughout the presidential campaign, he was very clear.

He thinks tariffs are going to help make America and American people richer.

And he also thinks that they're a useful tool in helping to get other countries to do exactly what he wants.

Before we go any further, though, I think, Ritika, we need to cover some basics.

You see, a tariff is a tax on imported goods from foreign countries.

So Trump had proposed a 25% tax on Canada and Mexico, which have now been paused.

But as an example, say you had a product that was worth $4, that would result in a $1 additional charge.

So the total product costing some $5 or so.

President Trump repeatedly says that a tariff is a tax on a foreign country.

No, it's not necessarily the country that pays for the tariff.

It's the importing business that typically pays that extra charge.

However, many economists have warned that these costs will be passed on to the American consumer because your businesses, your Walmarts, your targets, for instance, may be facing margin pressure.

So ultimately, it'll be the consumer that pays.

And that shows up again on their receipts when they go into their big box chain stores.

So although there's been a lot of talk about the negative impacts of tariffs, for the Trump administration, there has been one big success already this week.

When Donald Trump threatened to impose tariffs on Canada and Mexico, he said it was largely because of concerns about border security.

Now, both Mexico and Canada have made big commitments to increase security at their borders.

So, Ritika, can this be seen as a big win for the use of tariffs?

He showed in some ways the kind of the art of negotiating a deal because, as you say, Canada and Mexico did cede to Trump's demands when it came to adding extra border security.

But there's also the U.S. trading off, too, in some ways.

And many experts have said that you didn't need necessarily the threat of tariffs to get some of those things done.

And it also does cause concern and uncertainty about tit for tat and the escalation of a global trade war as well.

And that's what many experts and economists have been warning are the dangers of this.

The biggest target of Trump's tariffs so far, though, has been China.

And economists are worried that we could be on the brink now of a real trade war between China and the U.S.

This isn't a new war, though, because President Trump began this economic war with China during his first term when he was in office.

Mickey, why does Donald Trump see China as such an economic threat?

And it's not necessarily obvious why China should be an economic threat.

I think first and foremost, it's just a very, very big economy, which does a lot of trade with the United States.

We're talking about half a trillion dollars.

Also, the United States is in deficit in that trade with China.

So essentially, the United States imports far more goods, hundreds of billions more goods than it exports to China.

So I think President Trump, what he does is he sees that he saw that big deficit.

It appears as though China's winning and the United States is losing.

Also, in his first term in office, there were some very specific things which President Trump complained about China for, which previous American officials have complained before, specifically stealing intellectual property, forcing American companies to transfer technology to Chinese firms if they wanted to set up operations in China.

They could only do it, say, with a joint venture.

Also, he accused China of currency manipulation, essentially keeping the currency at a particular level to make those exports cheaper.

Mickey, China has always said it doesn't want a trade war with the US.

And then we also, back in 2017, I remember Donald Trump speaking at the World Economic Forum.

He said, we don't want to start a trade war with China.

But we did then see China responding with tariffs of its own in the kind of tit for tat way.

The economy is based primarily on exports.

So if there's some barrier to those exports going to other countries, then it doesn't want them.

I had a look back at the list of reactions that China made when President Trump was in his first term in office.

And there's a whole series of them, raising tariffs by 10 percent, then 10 percent again, 25 percent in some cases.

They also reported the United States of the World Trade Organization.

They stopped buying some products, agricultural products, particularly outright, which really affected farmers in America.

So a range of tools which China used, which incidentally is the kind of tools which it's already using now with these latest tariffs imposed by President Trump.

Similar kind of tools, not just tariffs, but also non-tariff measures to try and harm the American economy.

Now, although this trade war has been simmering for several years, it really is hotting up now that Donald Trump has returned to the White House.

Ritika, can I ask you a bit more about these latest tariffs Donald Trump has introduced?

What are the new tariffs on Chinese goods that he's introduced this week?

So some of the biggest tariffs are going to be on electronics, toys and appliances.

Consumer electronics being one of the top goods imported from China to the U.S.

If you look at data, that includes cell phones, TVs, laptops, game consoles.

China is also a major supplier of home appliances as well.

You see a lot of footwear products also being imported into the U.S. from China.

And what new tariffs, Ritika, have China announced in return?

The tariffs from China are actually rather minimal.

They're seen as not such an aggressive approach as 10 to 15 percent levies on selected goods.

So part of China's countermeasures include an import taxes on U.S. coal and LNG.

That's 10 percent and a 15 percent charge on crude oil.

And as well as fuel, China has also slapped a 10 percent tariff on agricultural machinery, pickup trucks and some large cars.

And they've also announced some non-tariff measures as well.

One of which is a probe into Google and an anti-monopoly investigation into that tech giant.

And, Mikki, is there any indications yet as to how these U.S. tariffs are going to affect the Chinese economy?

Just at the moment, when the Chinese authorities need their economy, need people to be spending more money, it's going to hit those manufacturers that sell to the United States.

So it's definitely an unwelcome thing when it comes to China.

But because they've been through this before, because Trump did this to them in his last term, are they better prepared in a way?

Have they got a strategy of how to deal with it?

Decoupling from the U.S., but diversifying their markets as well.

I don't think decoupling is remotely possible.

We're talking about trade, hundreds of billions of two way trade between these two countries every year.

There has been some attempts by America, particularly President Biden, to try and not sell certain technology products, high end technology products to China.

But the two economies are so integrated that decoupling is is really impossible.