How will the Trump tariffs impact China? Many people are asking this question. To get a better idea, I will first examine some recent historical context and then look at China’s official response to the 2025 U.S. tariffs.

I suggest that the following will result:

1. Some of China’s consumer products export business will be damaged in the short term because of loss of share in the U.S. market.
2. Chinese businesses will adjust with greater emphasis on China’s domestic market and the Global South.
3. The PRC government, experienced in handling the 2008–09 financial crisis, will likely manage the challenge successfully and neutralize the damage, maintaining overall GDP growth.
4. China’s reputation as a reliable business partner will be enhanced and China’s position strengthened in the multilateral trading system.
5. The trend against unilateralism and hegemony and for multilateralism and multipolarity will become stronger.

The Great Recession

The Great Recession of 2008–9, which originated in the United States, had a negative impact on many Chinese export-oriented companies. Overseas sales plummeted and millions of Chinese workers were laid off. The PRC’s socialist-oriented government responded to the crisis with nearly a trillion dollars of stimulus spending for infrastructure and other needs, employing many workers.

The government managed the challenging economic situation with socialist macroeconomic planning, including fiscal and monetary tools, and maintained overall rapid growth for the economy. This effective response was in stark contrast to the recession that hit the U.S. and other developed capitalist countries in the West.

The Global South witnessed China’s skillful handling of difficult circumstances, showing the success of a different and independent system. The U.S. ruling class became alarmed at the prospect of a “peer competitor” with economic clout and launched the “pivot to Asia” in 2011.

2018 Tariffs

In 2018, Trump unilaterally raised tariffs and launched an economic attack against China.

In 2019, U.S. monopoly capital targeted Huawei, China’s premier multinational technology company and even had Canada arrest its chief financial officer, Meng Wanzhou, on trumped-up charges. High-tech and cutting edge equipment sales to Huawei were stopped as the U.S. sanctioned the company and tried to destroy it. Major pressure was applied to stop Canada and European countries from signing large contracts and from installing Huawei’s popular 5G infrastructure on national security grounds. The Netherlands was pressured to block sales of advanced equipment for manufacturing silicon chips.

Huawei adjusted its marketing strategies, shifting to products with previous generation, high-performance, low-cost chips, and expanded sales of mobile phones both domestically and in the Global South. By 2024, Huawei was again setting record profits. A New York Times columnist raved about the impressive new 120-building, futuristic Huawei research campus in Shanghai. The U.S. attack on Huawei caused short-term problems but did not alter the trajectory of growth of the company.

The tariff question was seemingly resolved with a Jan. 2020 deal, but the COVID pandemic intervened. Trump, to blame others for his own mistakes, joked about “Kung Flu” and the China virus, and spread slurs against Chinese people. Racist incidents against Asian and Chinese Americans rose.

President Biden, instead of turning again to the policies of the previous Democratic president, Obama, doubled down on Trump’ s policies. For example, Speaker of the House Nancy Pelosi’s visit to Taiwan was a diplomatic insult, generated distrust, heightened war tensions, and soured the atmosphere. Biden pursued “fierce competition” in a perceived high-tech war against Chinese-based companies like Huawei and TikTok. Some academics were falsely accused of working with Chinese government and military agencies. More and more Chinese researchers and scholars working in the U.S. were investigated; they began returning to China.

2025 Tariffs

China was well-prepared for the April 2 tariffs: the response was immediate, well-thought out, and concrete. The PRC made it clear that China wants cooperation and not a “lose–lose” trade war and that it is open to bilateral discussions and negotiations on issues at any time. However, they said, unilateral and abusive U.S. actions should not be done and are contrary to the multilateral trading system. China’s leaders pointed out that huge tariff increases will not work and in the end will harm the U.S. economy.

Refusing to back down before a bully, China also announced its own tariff increases and restrictions on export of rare earths and other critical minerals. Observers suggested that Chinese companies would have an easier time finding new customers than the U.S. would have rebuilding its rare earth and other supply chains.

The White Paper

On April 9, the PRC State Council released a white paper entitled, “China’s Position on Some Issues Concerning China–U.S. Economic and Trade Relations.” This document is an official, high-level statement. Its arguments are buttressed by considerable economic analysis and presentation of data, clearly well-researched in advance. It begins by saying that China–U.S. trade is of mutual benefit. The economies are compatible and there is great potential for continued win–win cooperation.

The document outlines the complex interweaving of a broad economic range of factors; it takes a big picture view of the overall U.S.–China economic relationship, with trade being just one part of it. Trade in goods is heavily weighted towards China, but the U.S. leads in the export of services. U.S.–based multinational companies, such as Apple and Tesla, have major, profitable operations in China. Chinese companies are much less present in the U.S. The value-added system of measurement gives different results; many Chinese exports reflect final assembly and sales; the parts are made in other countries.

Overall, the paper argues, the China–U.S. economic relationship has been a partnership with good results, benefiting U.S. consumers and basically balanced. Bilateral dialogue can address issues or problems and make adjustments, while a unilateral “tariff war” is unjustified.

It also includes a detailed analysis of the Phase One Economic and Trade Agreement signed by the U.S. and China on Jan. 15, 2020, which was intended to resolve the trade issues raised by the U.S. in Jan. 2018. Regarding implementation, the paper says that China did abide by the 2020 agreement whereas the U.S. side constantly violated the agreement with unilateral actions that also violate the rules of the World Trade Organization.

China worked on issues such as intellectual property rights, technology transfer, currency exchange rates, and market access for financial services. The white paper says that China upholds the multilateral trading system and abides by World Trade Organization rules. Conversely, it argues, the U.S. policy of unilateralism and protectionism damages trade and violates previous commitments. Many U.S. tariffs are even contrary to economic law and, if persisted, will hurt the U.S. economy itself.

It concludes by calling for China and U.S. cooperation, saying, “China and the U.S. can increase the speed and quality of their response to technological advances, and achieve greater benefits in development by strengthening cooperation in areas such as innovation, manufacturing, services, and consumption.”

Summary

While the U.S. tariff wall will create problems for some export companies relying on the U.S. market, the Chinese government can manage the situation building on the economic tools used to manage the economic crisis of 2008–09. In addition, export markets to the Global South can be expanded, which Huawei has already succeeded in doing.

Overall, even a major decoupling of U.S.–China economic and trade relations, while making short-term problems, would be less of a challenge for China than the 2008–09 recession, and China is in a better position than the U.S. to manage the economic shock. In the short to medium term, such a decoupling could even support China’s position as a reliable trading partner in the multinational system.

The arbitrary U.S. actions, hurting many countries, are hugely unpopular in many places and gives momentum to the trend towards a multilateral and multipolar world opposing hegemony. U.S. trade barriers will hurt its own economy as well as others. The international reputation of the U.S. as a reliable business partner will suffer and China will look good in comparison. Directly or indirectly, some of the trade will shift to China. U.S. efforts will be counterproductive; China’s position will become stronger and the U.S. will not prosper behind tariff walls.

The white paper concludes by calling for cooperation, based on respect, peace, and mutual benefit: “China and the U.S. can increase the speed and quality of their response to technological advances, and achieve greater benefits in development by strengthening cooperation in areas such as innovation, manufacturing, services, and consumption.”

The opinions of the author do not necessarily reflect the positions of the CPUSA.