Trump's silent economic war on China: How he's cornering Xi Jinping one nation at a time

Economic Times

2 days ago

Donald Trump is reportedly broadening his trade war with China by imposing tariffs on Asian nations like Japan and South Korea. Simultaneously, deals are being pursued with countries including Indonesia and Thailand. This strategy aims to isolate China by restricting access to crucial Asian markets that bolster its export-driven economy.
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Donald Trump Targeting Asia to Corner Beijing
Setting the Tone with Vietnam and the UK
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Donald Trump Cracking Down on Transshipments
More Asian Countries on Trump's Notice
China's Growth Model Hinges on Exports
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US president Donald Trump is quietly expanding his trade war with China by targeting the entire Asian region through a series of new tariff deals, as per a report.Even though the US reached a recent pact with Beijing, Trump is imposing fresh tariffs on countries like Japan and South Korea while pushing for agreements with Indonesia, Thailand, Cambodia, and others, according to The Telegraph report.If successful, this strategy would trap Xi Jinping's China by cutting off key Asian markets that support Beijing's export-driven economy , as per the report. Economist at Capital Economics, Neil Shearing, pointed out that 'What we are witnessing is no passing trade war,' and added that, 'Rather, it is the manifestation of a deeper, more durable superpower rivalry between the world's two largest economies,' as quoted in The Telegraph report.ALSO READ: Billionaires ditch Nvidia for this AI stock that's soared 2,000% since 2023 Trump's earlier deals with the UK and Vietnam set the tone for his plan to weaken Beijing's trading power, according to the report. The UK agreement allows the White House to 'veto' Chinese investment in Britain, while the Vietnam deal cracks down on China's tactic of sending goods through Vietnam to avoid US tariffs, as per The Telegraph report.For instance, Trump imposed a 40% tariff on 'transshipments', goods imported into Vietnam mostly from China, then exported to the US, which is double the 20% tariff on Vietnamese-made products. This sends a clear message to Hanoi that Vietnam is welcome to export to the US if it can cope with a 20% levy, Trump will come down on the country like a tonne of bricks if it replaces 'Made in Vietnam' stickers with 'Made in China,' as reported by The Telegraph.ALSO READ: Craving McDonald's snack wraps? They are back — with bold new flavors you need to try Trump is now threatening steep tariffs on Malaysia, Indonesia, Thailand, and Cambodia if they don't make trade deals soon, with levies as high as 36% on some countries, as these measures are expected to further squeeze China's export reach, according to the report.Vietnam was Trump's early candidate for this strategy because, since Trump first came to power in 2017, China's machinery and electrical goods shipments to Vietnam have increased from just 17% of its total exports to nearly half, as reported by The Telegraph. After Trump returned to the White House this year, Vietnam's imports of these goods from China rose by nearly a quarter, as per the report.ALSO READ: Linda Yaccarino resigns: What drove the X CEO to step down and what's her net worth? Xi's strategy is to keep China's economy increasing by at least 5% a year due to the exports to Asia, reported The Telegraph. Beijing increases its GDP by pumping subsidies and investments into manufacturing, as Chinese households simply don't spend enough to allow consumption to power the economy, as reported by The Telegraph.A senior research fellow at the think tank Chatham House, David Lubin explained that, 'Whenever Chinese domestic spending growth sags, export growth accelerates,' adding, 'And that's simply because Chinese companies can't sell stuff domestically, so they sell it abroad,' as quoted in the report.China's economic model has led to overcapacity and oversupply, which has forced businesses into damaging price wars, and if these companies are not able to export their surplus to Asia, supply gluts appear inevitable, as reported by The Telegraph.ALSO READ: New Mexico flooding: Emergency declared - track maps, road closures and all the details He's trying to block China from using Asian markets to fuel its export-heavy economy.He's penalizing Vietnam with 40% tariffs if it helps China dodge US tariffs by re-exporting Chinese goods.