US Tariffs: China taking advantage of Donald Trump's policy, creates problems for India

New Delhi: US President Donald Trump has put pressure on several countries around the world with his policy of imposing tariffs on friends and foes alike. The US may have set the stage for this, but China is playing the real game. The biggest twist is that China is seeing tariffs as an unexpected opportunity. It is using them to reshape global trade and protect its massive economy from future US pressure. Beijing wants to deepen economic ties with key global blocs such as the European Union, Gulf countries, and members of the Trans-Pacific Trade Agreement.

To this end, it is taking advantage of the uncertainty created by Trump's trade policies. China is trying to finalize approximately 20 trade deals, many of which have been under discussion for years. This is a concern for India. Beijing's excessive influence could harm its interests and lead to India losing opportunities.

Chinese policymakers are carefully studying US trade strategy to understand Washington's containment tactics and design ways to counter them. Now China is putting those ideas into practice.

Has China signed agreement with Canada?

During Canadian Prime Minister Mark Carney's visit to Beijing, China signed an agreement with Canada. It reduced tariffs on Chinese electric vehicles. This agreement is seen as the first of several agreements aimed at reducing US influence.

Referring to Trump's disruptive trade agenda, a Chinese official said, "Don't disrupt your opponent if they make a mistake."

Chinese policy insiders are willing to accept short-term economic pain if it helps secure long-term dominance in global trade.

Two Western diplomats said that if China succeeds, it could reverse more than a decade of US trade policy and establish itself at the center of a new China-led multilateral system.

"The Chinese people now have a golden opportunity," said Alicia Garcia Herrero, a senior fellow at the Bruegel think tank.

Has China's approach shifted?

China's approach has shifted over the past year. Previously, Beijing used strong nationalist language. Now, Chinese diplomats are actively reaching out to global partners to defend multilateralism and open trade.

In January, China sent its top diplomat to Lesotho, a small African country that Trump had imposed a 50% tariff on. China pledged development cooperation. State media later reported that China would lift tariffs on imports from 53 African countries.

At the same time, Beijing is promoting AI-powered customs systems in neighboring countries and is engaged in upgrading digital trade infrastructure. These steps, mentioned in Chinese policy papers, reflect its goals. The goal is to integrate China so deeply into global trade that other countries cannot break ties under US pressure.

Ni Feng of the Institute for American Studies at CASS wrote in 2024, "Anti-decoupling should be Beijing's focus in countering US strategic competition with China."

China is also accelerating trade talks with countries like Honduras, Panama, Peru, South Korea, and Switzerland. "We are willing to negotiate bilateral and regional trade and investment agreements with interested countries and regions," Ministry of Commerce spokesperson He Yongqian told the media.

How is China promoting relations with Europe and Gulf countries?

Foreign Minister Wang Yi has also promoted deeper trade ties with Europe and the Gulf Cooperation Council. China is prioritizing joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), an agreement originally designed to counter China before the US withdrew in 2017.

However, China's large trade surplus remains a major concern. Its $1.2 trillion trade surplus has raised fears that Chinese manufacturers could flood foreign markets with cheap goods. Domestic demand in China also remains weak.

Wendy Kuttler, who helped negotiate the Trans-Pacific Partnership under former US President Barack Obama, said China must prove its commitment through action. "And given its huge trade imbalance, and the coercive measures it's now taking against countries like Japan, it's difficult to see how they're following through on their promises," she told Reuters.

A senior European trade diplomat dismissed Beijing's outreach as "pure Chinese propaganda" and said Brussels has no plans for a free trade agreement (FTA).

Yet Chinese advisers remain confident. One adviser said China and the EU negotiated a major investment deal in 2020 during Trump's first term. However, it was later suspended.

Chinese scholars argue that Beijing should learn from how Washington has used global institutions to pressure China. Some recommend taking advantage of Trump's skepticism toward multilateral organizations like the World Trade Organization.

Others suggest that China should be encouraged to use the Belt and Road Initiative and the China-China Trade Agreement.

Initiatives such as its role in the Regional Comprehensive Economic Partnership should influence global standards in areas such as intellectual property, which covers approximately 30% of global gross domestic product (GDP).

Why are many countries, including India, worried?

China has already begun implementing these ideas. Recent upgrades to its trade deals with Southeast Asian countries place a heavy focus on digital trade and artificial intelligence (AI).

State media at China's "Friendship Port" on the Vietnam border claim that AI systems have reduced waiting times by 20%. Reuters could not independently verify this claim.

China's growing exports have caused concern in many countries, including India. Former WTO Director-General and EU Trade Commissioner Pascal Lamy said that Europe is struggling to absorb the volume of Chinese goods.

Some analysts say that closer ties with China will reduce dependence on the United States. Stephen Nagy of the Macdonald-Laurier Institute said Canada's agreement with China may be aimed at gaining leverage before negotiations on the US-Mexico-Canada Agreement (USMCA) begin.

Nagy predicted, "I think his bet is wrong. Trump won't change his stance."

Mexico has also expressed caution. A Mexican trade official said, "We don't see any need for a free trade agreement with China right now. We're already in the CPTPP. It covers 60% of global GDP."

Experts say China's trading partners expect Beijing to boost domestic consumption to reduce the trade imbalance. Fred Newman, HSBC's chief economist for Asia Pacific, said that China needs to revive consumption to stabilize global trade.

Commerce Minister Wang Wentao has said that increasing imports will be a priority in China's next five-year plan. Nevertheless, economic rebalancing will take time. Trump has three years left in his term, but a future US administration could return to building alliances against China.