MNI INTERVIEW: China Preps For U.S. Tariffs, 10% Manageable
MNI (BEIJING) - China has already factored in a further 10% hike in U.S. tariffs, so any countermeasures may depend on negotiations given that it could maintain its export volumes by boosting sales via regional trading blocs, a policy advisor to the Ministry of Commerce told MNI.
“Beijing has prepared plans for different situations and will fight in a reasonable, forceful and moderated manner against any tariff hikes while following WTO principles,” said Zhang Jianping, director of Regional Economic Cooperation Research Center at the MOFCOM-affiliated Chinese Academy of International Trade and Economic Cooperation.
President Donald Trump said on Wednesday that his administration is considering a 10% tariff on China starting as early as Feb 1, Zhang believes 10% has been factored in and is manageable. "Related countermeasures may be followed in time," he added.
Americans will bear the cost of Trump’s tariffs, which will pressure U.S. inflation well before the president can implement the full scale of his threatened 60% additional tariffs, he said, pointing to a report by the Peterson Institute for International Economics that showed 92% of the 25% duties imposed during his first term were paid for by U.S. businesses and consumers.
TRADE PARTNERS
Chinese exporters will seek to diversify their trade with Association of Southeast Asian Nations (ASEAN) and Regional Comprehensive Economic Partnership (RCEP) members, Zhang noted.
Trade value with ASEAN countries, currently China’s largest trading partner, is expected to exceed USD1 trillion this year after growing 9% y/y in 2024, significantly higher than growth in commerce with the U.S. or Europe, while the proportion of Belt and Road countries in China's foreign trade has risen to about 48%, he added.
China’s shrinking proportion of trade with the U.S. will also lessen the tariffs’ impact, Zhang argued.
China-U.S. bilateral trade volume reached USD688.28 billion in 2024, with exports to the U.S. totalling USD524.66 billion, or 14.7% of China’s total exports, down from about 20% in 2018, according to data from China Customs.
However, Trump had also threatened tariffs against U.S. allies as well as limiting Beijing’s ability to reroute exports through third-party countries. “This could encourage EU, Japan and South Korea to seek closer cooperation with China to resist U.S. tariffs together,” said Zhang.
The U.S. will find it difficult to target trade rerouting given the popularity of Chinese intermediate goods which accounted for about 56% of China’s exports to Belt and Road countries, he noted.
Many other third-party countries also use Chinese raw materials and parts and enter the U.S. market after gaining high enough locally added value, he continued. “The U.S. has no way to deal with it.” (See MNI INTERVIEW: China Should Offer To Boost US Industry-Advisor)
EXPORT OUTLOOK
China’s goods trade competitiveness and relatively stable external demand amid an estimated 2.7% global economic growth rate will support the scale of foreign trade in 2025 while authorities are keen to ensure net exports’ contribution to the economy and employment, Zhang said.
Total imports and exports grew by 5% y/y in 2024 to hit a new high of CNY43.85 trillion.
Net exports contributed about one percentage point to 2024’s 5% economic growth, Zhang noted, with mechanical and electrical products currently accounting for nearly 65% of China's exports being one of the main drivers. Strong cost competitiveness, improved quality and services will continue to support their growth, he added.
China will also encourage new forms of foreign trade, such as cross-border e-commerce and procurement trade, and expand their proportion, Zhang added.