Trump’s tariff war hurt the US-China relationship, but his pragmatism could help revive it

Days into the new US administration, much of the world is awaiting – or fearing – just how aggressive President Donald Trump’s trade policies may be. Stocks in China fell on Wednesday after Mr Trump said he was intending to impose a 10 per cent tariff on Chinese imports from the beginning of February, although there was also a degree of relief that this was nothing like the 60 per cent figure that he had aired during his election campaign.

How Mr Trump plans to approach the US’s relationship with Beijing is one of the key questions – and not just for those two countries, as the spillover effects on everything from international trade and supply chains to peace and security in the Asia Pacific and beyond would leave few countries untouched.

So far there have been mixed signals. On his first day in office, Mr Trump signed an executive order that allowed TikTok – seen as a Chinese company and as a national security threat by many in the US – to go back online. The app’s future in the US is still uncertain, as Mr Trump is insisting it be 50 per cent American-owned. But he spoke approvingly of the company on Tuesday, saying he thought it had won him young people’s votes in the election. “I have a warm spot in my heart for TikTok,” he said.

Mr Trump also had what he called a “good” phone call with Chinese President Xi Jinping last Friday. “It is my expectation that we will solve many problems together, and starting immediately,” he wrote in a social media post. “President Xi and I will do everything possible to make the world more peaceful and safe.”

Donald Trump vows to take control of the Panama Canal in inauguration speech

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In his inauguration speech, Mr Trump may have falsely accused China of operating the Panama Canal – “we didn't give it to China, we gave it to Panama, and we're taking it back”. But he also stated: “We will measure our success not only by the battles we win but also by the wars that we end. And, perhaps most importantly, the wars we never get into. My proudest legacy will be that of a peacemaker and unifier.” That does not sound like a man who is itching to get into a conflict over the future of Taiwan, the island where some American politicians have foolishly encouraged aspirations to independence, but which China regards as a renegade province whose reunification with the mainland is inevitable.

That’s on the positive side. On the other hand, his administration is going to be packed with China hawks, from Secretary of State Marco Rubio (who was actually sanctioned twice by Beijing over his vocal criticisms in 2020), to Mr Trump’s picks for defence secretary, Pete Hegseth, and national security adviser, Mike Waltz.

On Tuesday, his first full day in office, Mr Rubio convened a meeting of the foreign ministers of the Quadrilateral security dialogue states – the US, Japan, Australia and India. Chinese accusations that the “Quad”, as it is known, is an “Asian Nato” formed to prevent its rise will not be quelled by Mr Rubio calling China “the most potent, dangerous and near-peer adversary this nation has ever confronted” in his Senate confirmation hearing last week.

And lastly, no one can doubt how deeply attached Mr Trump is to the idea that tariffs can be easily deployed against any countries that have been “very, very bad to us”, as he put it on Tuesday. He was talking about the EU, but he has used far more incendiary language about China in the past.

However, Mr Xi reciprocated Mr Trump’s warm words about their phone conversation last week, calling for “a new starting point”, a sentiment reiterated by Chinese officials in the past days. And Mr Trump has reportedly said that he wants to meet the Chinese President in Beijing within his first 100 days in office. The indications are that both sides would like to strike a deal.

The ideological differences that so concern Mr Biden and hawks on both sides of the aisle in the US are less troubling to Mr Trump, who prizes his ability to negotiate and forge firm bonds with strong leaders far more. As one commentator put it: “Somewhere out there, the spirit of Richard Milhous Nixon is smiling.” Just as “only Nixon could go to China” during the Cold War, wouldn’t Mr Trump like to be the one world leader who could stop a new one heating up?

Quite apart from all it could (presumably) do to “Make America Great Again”, it could also help him gain the accolade he thinks he was wrongly denied for forging the Abraham Accords – the Nobel Peace Prize. And while Mr Trump may be surrounded by officials who urge extreme caution, the Tesla-owning “first buddy” Elon Musk sells one third of his cars in the Chinese market. So at least one person close to Mr Trump has reason to back up his faith in his own ability to reach a fabulous bargain with Mr Xi.

Some of the sticking points, however, may be of Mr Trump’s own making. It was he who initiated the trade war with China during his first term in the White House. Plenty of anti-Chinese legislation – not just tariffs – followed. The decoupling of the two economies has already begun, and it may take on a life of its own. And while the Republican Party may have been remade in Mr Trump’s image, both houses of Congress – even while controlled by the GOP – will be very sceptical of any deal, however the President spins it.

Most of us who live in South-East and East Asia will probably be hoping that the friendly words between the Chinese and US leaders, combined with Mr Trump’s non-ideological and transactional disposition, will provide us reasons for optimism. The alternatives don’t really bear thinking about.

I wouldn’t necessarily go so far as Singaporean Prime Minister Lawrence Wong, but he may have spoken for many in the region on Tuesday. When asked what would happen if there was a full decoupling between the two superpowers, he responded, “If such a scenario was to arise, frankly, God help us all,” he said. “Then we are truly at the brink of a third world war.”