Since 2018, imports of goods from China to the United States have remained stagnant. Economists largely attribute this to the series of escalating tariffs that former President Trump imposed during his first term.
The trade standoff finally came to a head in 2020 when both countries reached a deal. As part of this agreement, Trump rolled back some tariffs in exchange for commitments from China to purchase more American products, particularly agricultural goods.
However, US officials have stated that China has not fully adhered to these commitments. In a recent Congressional testimony, Scott Bessent, whose confirmation as Treasury Secretary passed a significant hurdle, mentioned that he would push for the enforcement of these agreements. He also raised the possibility of demanding that China “catch up” on its promised purchases.
Trump had previously criticized the trade imbalance between the US and China, noting that China exports far more to the US than it imports in return.
China’s Response at Davos
Speaking at the World Economic Forum in Davos, Ding Xuexiang, Vice Premier of China, addressed concerns about trade tensions. Without directly naming the US, Ding emphasized that China was not seeking a trade surplus but rather aimed to boost imports of competitive, high-quality products and services to foster a more balanced trade relationship.
Ding acknowledged that economic globalization could cause disagreements over distribution but reiterated that it is not a “zero-sum game.” He argued that globalization benefits all nations, with no “winners” in a trade war. “Protectionism leads nowhere,” Ding remarked, stressing the need for win-win solutions. He added that the goal should be to not only expand the global economic pie but to distribute it more equitably.
Potential Impact of Future Tariffs
The International Monetary Fund (IMF) recently warned that a new wave of tariffs, as threatened by Trump, could exacerbate trade tensions, reduce investment, and disrupt global supply chains.
Ding’s comments highlight China’s ongoing efforts to navigate trade tensions while avoiding a full-scale trade war, especially as Trump’s return to political prominence brings concerns of renewed tariffs.
