"Donald Trump Signals Shift in China Policy, Opens Door for Negotiations Over Tariffs and Trade
On his first day back in the White House, Donald Trump surprised observers by holding off on implementing new tariffs against China, refraining from labeling the country as a direct threat. His actions signaled a potential thaw in U.S.-China relations, suggesting both nations might now seek mutual gains rather than intensifying adversarial conflict.
In his inaugural speech, Trump emphasized the economic benefits of tariffs but notably avoided mentioning China, his former trade war opponent. His rhetoric left open the possibility of renewed talks with Beijing, the world’s second-largest economy. Additionally, Trump delayed a ban on the China-owned app TikTok, floating an unprecedented proposal for the U.S. government to take a partial ownership stake in the platform, which he claimed could be worth hundreds of billions of dollars.
As Trump begins his second term, analysts believe Washington and Beijing must chart a new path to protect their interests. Lingering issues, including unresolved aspects of the 2020 trade deal, remain potential flashpoints. In his first term, Trump developed a rapport with Chinese President Xi Jinping, exchanging lavish state visits. However, relations later deteriorated into a bruising trade war that disrupted global supply chains and triggered tit-for-tat tariffs.
This time, both sides appear more inclined toward negotiation than confrontation. "Trump wants a deal. Otherwise, he would have targeted China on day one," noted Alicia Garcia Herrero, chief economist for the Asia Pacific at Natixis. She added that China is likely to offer key concessions, including financial market access and currency adjustments, to secure a trade truce.
China now faces economic vulnerabilities that make it less resilient than in 2018, including a property sector crisis, weak consumer demand, and soaring youth unemployment. Chinese stock markets fluctuated as investors sought clarity on Trump’s next moves.
Last week, Trump and Xi agreed to establish a direct communication channel for strategic issues, with Trump expressing willingness to visit China later this year.
Challenges from Within
While Trump’s pragmatic, business-minded approach could favor diplomacy, resistance may arise from his administration. Marco Rubio, a vocal China critic, has been confirmed as Secretary of State. Meanwhile, Elon Musk, appointed to lead a government advisory body, maintains extensive business interests in China through Tesla and could push for a more cooperative stance.
"Trump will act as his own top diplomat," said Bo Zhengyuan, a partner at consultancy Plenum in Shanghai, highlighting Trump's unparalleled centralization of decision-making power. However, Zhengyuan warned that navigating Washington’s institutional consensus, which frames China as America’s primary adversary, could limit Trump’s flexibility.
Analysts believe Trump’s pragmatism may open dialogue on rolling back export controls imposed under the Biden administration, particularly in technology sectors like semiconductors. Wang Dong, an international relations expert at Peking University, noted that Trump’s focus on trade over ideology might create space for renewed cooperation. "Geopolitical concerns, including Taiwan, appear secondary for Trump," he said, referencing the island that Beijing claims as part of its territory but which went unmentioned in Trump's address.
If a recalibration in U.S.-China ties succeeds, some experts envision parallels to Nixon’s historic 1972 visit to China, which marked a turning point in bilateral relations during the Cold War. "We could witness a 'Nixon 2.0' moment," Wang concluded, pointing to the potential for a pragmatic reset that enhances stability and growth for both nations."