Trump 2.0: China Will Be Concerned About the Two Ts

Trade and Taiwan — both are highly sensitive to President Xi Jinping and China's national interests.

Image used for representation only.

(Photo: AP/PTI)

Donald Trump's stunning electoral victory has led to considerable conjecture about how this emphatic Republican consolidation of executive and legislative power would impact America’s foreign policy – particularly with China.

The China policy of Trump 2.0 is bound to affect, and even disrupt, the global and regional security and strategic framework. Therefore, two major elements of the US-China relationship merit scrutiny.

Beijing will be concerned about how the Trump presidency will deal with the two Ts, i.e., trade and Taiwan, both of which are highly sensitive to President Xi Jinping and China's national interests.

On trade, Trump has threatened to use tariffs as leverage to penalise China. He had bandied about in the campaign to slap a blanket 60 percent tariff on all Chinese exports to the US. This would prove to be very damaging to the Chinese economy, which is already reeling under sluggish growth, high unemployment, property crash and weak domestic demand.

Experts also suggest that if such a ban is indeed imposed, it could reduce China’s projected economic growth rate of five percent by almost half. This would be a major setback for President Xi, adding to the many domestic challenges he is currently dealing with.

However, such a move by Trump 2.0 would not be cost-free. If a bitter US-China trade war ensues, the US economy would also be impacted, albeit to a lesser degree in macro terms.

However, what will be immediately visible is the ‘felt’ or perceived economic impact on the average US consumer, who would be deprived of a wide range of inexpensive Chinese manufactured goods that currently flood the American market.

Bilateral trade in goods in 2023 was US $575 billion, and the deficit for the US is over $280 billion, testifying to the reality that China exports more goods to the US than it imports. These have been central in keeping prices low for the average American consumer, and any further price rise due to a tariff war would be corrosive to the voters who supported Trump for better economic conditions.

This negative sentiment would be undesirable for a new team in the White House that had used the economy card (i.e., inflation) in a high-octane manner to put Kamala Harris's campaign on the back foot.

So, despite the campaign rhetoric, it is more likely that Trump 2.0 will use tariffs (a word that Trump has described as his 'favourite') as leverage to compel Beijing to the negotiating table.

The tariff card had been used by Trump in his first term with limited success and there was a sense in Washington that Beijing had outwitted the US by reneging on certain commitments made at the time. To that extent, both sides will be wary of how to minimise the collateral damage triggered by the tariff arrow to their respective core interests.

The tariff threat could be used against India as well (already attempted during Trump 1.0).

The other T is a highly volatile issue for China. Beijing has accorded to it a high degree of sanctity, given the reunification commitment made by the Chinese Communist Party in 1949.

President Xi has made Taiwan one of his ‘core’ priorities and is very sensitive to what he perceives as American provocation and transgression on the inviolability of the One-China policy that Washington accepted in 1979.

In his first term, President Trump roiled the waters by accepting a call from the Taiwanese president, congratulating Tsai Ing-wen on her victory in 2016. This had incensed Beijing.

While a blow-hot, blow-cold approach adds to the uncertainty halo around Trump, this may not be a prudent long-term policy in dealing with a major power like China, as it will, without a doubt, engender regional instability.

The Republican security and strategic cluster comprising former officials, academics, and analysts is divided on how to deal with China during Trump 2.0. One (small) group wants regime change, i.e., removing the CCP from power, and the other advocates ‘containing’ China and the 'Axis' (with Russia, North Korea, and Iran) by substantively enhancing US techno-military capability.

In this regard, the choice of senior officials in the incoming administration will provide some cues about the likely contour of the US's policy towards China in 2025 and beyond.

Whether in relation to trade or Taiwan, any major disruption would alter the domain and open up both space and opportunities for India. However, apart from the mercurial and often contradictory traits associated with the US president-elect, New Delhi will also have to factor in the centrality of the transactional element in Trump's persona.

Against this emerging backdrop in US politics, of an unfettered Trump in his final term (?) as president, India will have to be deft and prudent about nurturing its core interests as the 2.0 churn begins.

(The writer is a leading expert on strategic affairs. He is currently Director, Society for Policy Studies. This is an opinion piece. All views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)