Importance Score: 62 / 100 🔴
Donald Trump will use his controversial global tariffs policy to persuade other nations to decouple from China, according to sources in his administration. US officials plan to use negotiations with more than 70 nations to ask them to disallow China from shipping goods through their countries and prevent Chinese firms from being located in their territories to avoid US tariffs, the Wall Street Journal has reported. The revelations follow China’s decision to abandon its stake in British Steel – described as an ‘act of hybrid warfare” by experts in the US.
But the move seems to represent a recalculation of Trump’s so-called “Liberation Day” policy, which was originally billed as a vital measure to correct the balance of trade with the US and was not up for negotiation. It is also unclear how Europe, which now regards the Trump administration as an unreliable partner, will react.
Trump hinted at the strategy on Tuesday, telling Fox Noticias he would consider making countries choose between the US and China in response to a question about Panama deciding not to renew its role in the Belt and Road Initiative, China’s global infrastructure program for developing nations.
The move would involve cutting China off from the US economy with tariffs and potentially even cutting Chinese stocks out of US exchanges.
But since, Scott Bessent, the US Secretary of the Treasury, has also confirmed there is still scope for talks on a potential trade deal between the US and China, making it unclear whether the threat of leveraging tariffs is just another pressure tactic to secure good terms for Washington.
Beijing, which has retaliated with 125% levies for US goods entering China, has warned of tariff shocks to its already sluggish economy, even as it grew by 5.4% in the first quarter year-on-year.
In the meantime, XI Jinping is conducting his own trade diplomacy by courting nations that have been hit hard by Trump’s tariffs.
They include Vietnam, a major US trading partner hard-hit by Trump’s tariffs, and Malaysia.
Beijing is also accelerating a plan to reduce its dependency on imports and to focus on self-sufficiency.