As U.S. President Donald Trump enacts new tariffs on China, Xi Jinping’s government has responded far more cautiously than it did during the trade war of Trump’s first term.
On today’s Big Take Asia Podcast, host K. Oanh Ha speaks with Bloomberg editor Jenni Marsh and Bloomberg Opinion columnist Shuli Ren to analyze China’s response to Trump’s tariffs and the potential risks for both nations if another trade war erupts.
K. Oanh Ha: Shortly after Trump launched his second trade war by imposing a 10% tariff on over $500 billion worth of Chinese goods, China retaliated with tariffs of its own.
Huang Feng (in Chinese): Starting from February 10, a 15% tariff...
Ha: Beijing imposed levies of 10-15% on $14 billion worth of American goods, including coal, crude oil, and large-engine vehicles from companies like GM and Ford. These tariffs took effect on Monday, February 10.
Rebecca Choong Wilkins: China’s retaliatory tariffs on $14 billion of U.S. goods also take effect today...
Ha: Within hours, Trump escalated the situation, slapping a 25% tariff on all steel and aluminum imports—industries dominated by China.
Donald Trump: If it's made in the United States, there is no tariff. All you have to do is make it in the United States. We don’t need it from another country…
Ha: Bloomberg’s Jenni Marsh, who oversees coverage of Greater China’s economy and politics, says Xi Jinping appears unfazed by Trump’s aggressive tariff strategy.
Jenni Marsh: You saw leaders like Trudeau and Mexico’s president scrambling to negotiate deals. But Xi Jinping is sending a calm, calculated signal—he’s not reacting in the same way. He sees China as a major player that will respond on its own terms.
Ha: Bloomberg Opinion columnist Shuli Ren notes that China’s reaction today is markedly different from 2018.
Shuli Ren: China is in a weaker position now than it was in 2018. Back then, it had stronger economic resilience and could absorb the shock by leaning on domestic consumption. Today, its economy is far more reliant on exports, and China doesn’t want to jeopardize the one bright spot in its economy.
Ha: Welcome to The Big Take Asia from Bloomberg News. I’m Oanh Ha. Today, we examine China’s response to Trump’s tariffs. Can China avoid a full-blown trade war with the U.S.? And what’s at stake for both nations?
Trump: We have one very big power over China—and that’s tariffs.
Ha: Over the past weeks, Trump has proposed—and delayed—25% tariffs on Canada and Mexico. Compared to those, the 10% tariffs on China might seem mild. But Trump warns that he’s just getting started.
Trump: That was just the opening salvo. If we can’t make a deal with China, the tariffs will be very, very substantial.
Ha: Jenni and Shuli—let’s dive in. In the first trade war, the U.S. and China engaged in rounds of tit-for-tat tariffs. Things calmed somewhat after the 2020 trade deal, in which China committed to buying more U.S. goods. What does Trump want from China this time? How is this trade war different from the last one?
Marsh: Last time, Trump’s goal was to get China to buy more from the U.S. This time, it’s broader—he wants to bring manufacturing back to American soil. The first trade war was focused on China, but now he’s targeting multiple trade partners to shift global supply chains back to the U.S. His approach this time is more ambitious and wide-ranging.
Ha: After the 10% tariffs took effect, China’s response seemed restrained. Shuli, can you walk us through Beijing’s reaction?
Ren: Compared to 2018, China’s response is relatively muted. Instead of broad retaliatory tariffs, it selectively targeted sectors like oil and natural gas. It also launched a weak antitrust probe into Google, which essentially left China over a decade ago. This response is much more measured than before.
Ha: Why such a restrained reaction?
Ren: China is in a weaker economic position than it was in 2018. The Covid-zero policy and the prolonged property downturn have left the economy struggling. Youth unemployment is high, and consumer confidence is low. Back in 2018, consumption drove two-thirds of economic growth. Now, it’s less than one-third. China can’t afford to alienate key export markets.
Ha: So in 2018, China could absorb the hit because of strong domestic demand. But in 2025, with a slowing economy and hesitant consumers, it must rely on exports to sustain production, right?
Ren: Exactly. China has been working on self-reliance, but its failure to strengthen domestic consumption has made it more vulnerable. Trump understands that America’s consumer market is its strongest weapon. By threatening tariffs, he can restrict China’s access to U.S. consumers—a crucial market that China no longer has the leverage to counter.
Ha: Jenni, what’s the biggest difference between Trump’s trade war strategy now versus in 2018?
Marsh: This time, Trump is moving much faster. In 2018, the process was slow and bureaucratic. Now, it’s immediate. China, however, has learned from experience. In the first trade war, it adopted an aggressive “Wolf Warrior” approach—responding to every provocation with strong rhetoric. That backfired. This time, China is taking a more cautious, strategic stance.
Ha: Can China avoid a full-blown trade war by playing it smart?
Ren: Instead of confrontation, China is employing a Tai Chi approach—soft, elusive, hoping Trump self-destructs.
Ha: Meanwhile, Trump is doubling down. On Monday, he imposed a 25% tariff on all steel and aluminum imports. While China doesn’t export much of these metals directly to the U.S., it dominates global steel and aluminum markets. The tariff will still hit China through its trading partners like Canada and Mexico.
After the break, we’ll discuss how Xi is handling Trump’s tariffs and China’s broader trade strategy.
Ha: Even in a weaker position, China has prepared for this. Since the first trade war, Chinese exporters have diversified their supply chains, setting up factories in Mexico, Vietnam, and beyond. Additionally, China has reduced its dependence on U.S. exports—from nearly 20% in 2018 to around 15% today.
Ren: And China has TikTok this time. Trump has talked about wanting to acquire TikTok cheaply. If Beijing allows TikTok to go public in New York, the U.S. could profit from it. That’s a potential bargaining chip.
Ha: In the coming months, what should we expect?
Ren: Intense negotiations and strategic maneuvering. China will try to weather the storm, while Trump will likely push for more tariffs and restrictions on Chinese tech and manufacturing.
Marsh: China’s goal is damage control. But it might also look for opportunities to strengthen ties with Europe and other allies, taking advantage of fractures in Trump’s global trade approach.
Ha: As tensions rise, the stakes go beyond trade. Could this trade war reshape global alliances and power dynamics? That remains to be seen.
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