While global markets have been dramatically disturbed by US President Donald Trump’s sweeping “reciprocal” tariffs on countries that have large trade surpluses with the US, a new trade war between the US and China — the two largest economies — has been ignited, which could lead to a reshaping of the global economic order and geopolitical landscape.
China has long been the US’ most unbalanced trading partner. Among the 185 countries facing US tariffs, China has been widely considered a major target of the policy.
According to Chinese custom statistics, the US-China trade in 2024 was US$688.28 billion, a year-on-year increase of 3.7%. China’s exports to the US were US$524.656 billion, an increase of 4.9% from previous year; but China’s imports from the US were US$163.624 billion, a decrease of 0.1% .
Since returning to the presidential office in January, Trump has raised the tariff on Chinese goods five times: starting with two rounds of 10 percent each, followed by an additional 34 percent last week, another 50 percent when China imposed counter-tariffs, and then raising the cumulative rate to 125 percent on Wednesday, while granting a 90-day pause on tariffs to other countries seeking negotiations based on a universal 10 percent as a starting point.
The Chinese government has declared that it would “fight to the end” in the renewed trade war with US. It has hit back by raising a retaliatory tariff on US products from 34 percent to 84 percent, as well as banning a dozen US companies from doing business in China.
Although the escalating trading conflict would further devastate its struggling economy, Chinese President Xi Jinping’s (習近平) reluctance to negotiate with the US on the issue stems from the country’s nationalism, which views the US as its ultimate rival that could threaten its global expansionism and even subvert the ruling Chinese Communist Party’s grip on power.
It could also be a move demonstrating China’s intention to win over anti-US forces to alter the global economic environment and supplant the US’ leading position, adding to growing international concern that Trump’s foreign policy, rooted in isolation and economic protectionism, could tilt the global balance of power in China’s favor and undermine the US’ global leadership. This concern is compounded by the US’ break with democratic allies and its own domestic risk of an economic slowdown and political upheaval.
The new US tariffs and the escalating Sino-US trade war would likely gravely impact Taiwan, not only economically, but also politically. While Taiwan’s export-driven economy could weather the US tariffs, the changing geopolitical situation could weaken the US’ “pivot to Asia.” A weakened US — and less support for Taiwan’s defense — could encourage China to attempt to take Taiwan by force.
Responding to the economic pressure, the government has announced a preliminary NT$88 billion (US$2.68 billion) in aid to assist businesses most affected by the US tariffs, President William Lai (賴清德) has pledged that Taiwan would not adopt retaliatory tariffs and are pursuing talks with the US, hoping that negotiations could eliminate tariffs on both sides and develop into a comprehensive cooperation in facing China.
More importantly, Taiwan should prioritize military procurement and the supply of material vital in the event of conflict, such as energy resources and defense technologies. This would not only reduce the Taiwan-US trade imbalance, but would also bolster the country’s defense and national security. In the long term, Taiwan must speed up industrial upgrades and market diversification to enhance its economic competitiveness and secure its role in global “non-red” supply chains.
Facing global unrest and the transformation into a multipolar world, Taiwan must deepen multilateral relations with countries that hold shared values and the potential to play leading roles in a divided global arena, such as the EU states, Japan, India and Australia.
As the world is living through Trumpian turbulence, Taiwan needs new strategies to seek the silver lining amid global and regional crises.
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