With mere hours left before a 10% tariff on Chinese imports was set to take effect, President Donald Trump revealed on Monday that his administration is planning to engage in discussions with Beijing, raising the possibility of a last-minute reprieve. This announcement came shortly after Trump struck deals to delay levies on goods from Canada and Mexico, contingent on stricter measures addressing migration and drug trafficking.
Trump addressed reporters at the White House, stating that talks with China could occur “probably over the next 24 hours.” He reiterated his administration’s firm stance on the matter, warning, “If we can’t make a deal with China, then the tariffs will be very, very substantial.”
The looming tariffs come at a sensitive time for global markets. The Hang Seng China Enterprises Index, which monitors Chinese stocks traded in Hong Kong, surged by as much as 3.6% on Tuesday. The offshore yuan rebounded nearly 1% from Monday’s lows, trading at approximately 7.31 per dollar. Chinese onshore markets remained closed for the Lunar New Year holiday but were set to reopen on Wednesday.
White House Press Secretary Karoline Leavitt indicated that one key issue for the upcoming talks would be China’s role in the fentanyl crisis, which has ravaged communities across the United States.
Speaking to Fox News, Leavitt said, “There’s a plan for President Trump to speak with Chinese President Xi Jinping about illegal Chinese fentanyl that is killing tens of thousands of Americans every single year.”
She emphasized the administration’s hardline stance, adding, “The president has made it very clear to China that we are not going to tolerate that.”
Leavitt also noted that many of the tariffs imposed during Trump’s first term remain in effect, highlighting ongoing tensions over trade and national security.
Another topic likely to surface during any potential talks is the fate of TikTok, the popular social media app owned by China’s ByteDance Ltd. Trump has flagged the app as a national security concern, giving the company 75 days to secure a partnership with a U.S. firm to continue operations in the country.
Trump took to his Truth Social platform on Tuesday, declaring, “GREAT INTEREST IN TIKTOK! Would be wonderful for China, and all concerned.”
The potential resolution of TikTok’s uncertain status could play a crucial role in thawing tensions between the world’s two largest economies.
China’s initial response to the tariff announcement was relatively subdued. The Commerce Ministry issued a statement expressing strong “dissatisfaction” and pledged “corresponding countermeasures” while announcing plans to file a complaint with the World Trade Organization.
Such a cautious response was not unusual for Beijing, which typically refrained from immediate retaliation during the first trade war with the U.S. However, this time around, the situation may be different. China’s economy is in a more precarious position, and the country exports fewer goods directly to the U.S., reducing the impact of tariffs on its trade surplus.
Moreover, Beijing has an expanded arsenal of tools at its disposal, including laws passed since Trump’s first term that grant the government greater control over domestic business deals in the name of national security.
Trump’s executive order over the weekend called on China to use its vast surveillance network to combat criminal organizations responsible for the flow of illicit drugs, including fentanyl, into the United States. However, the specifics of how China is expected to comply were not spelled out, leaving President Xi Jinping with limited options to avert the tariffs.
This presents a significant challenge for China, which has already vowed to crack down on chemical companies involved in the production of synthetic opioids.
Trump and Xi last spoke before the U.S. president’s second inauguration. During that call, they discussed trade, fentanyl, and TikTok. Trump described the conversation as “very good,” but he proceeded with his threats to impose tariffs on China just days later.
Chinese state media has been openly critical of the U.S. president’s attempt to link trade and fentanyl issues. China Central Television published a scathing piece on Monday, questioning the logic behind such a connection.
“What’s the logical relationship between fentanyl and tariffs?” the article queried. “The world can’t solve this ridiculous question.”
The re-emergence of trade tensions between the U.S. and China has significant implications for the global economy. While markets showed some optimism in response to the possibility of talks, prolonged uncertainty could lead to volatility and hinder economic recovery efforts post-pandemic.
A senior trade analyst, Marcus Harrington, cautioned that “the markets are holding their breath. Any misstep in these talks could trigger a severe reaction.”
For American businesses and consumers, the prospect of increased tariffs looms large. Higher import duties could drive up prices on a wide range of goods, from electronics to everyday household items.
As the 12:01 a.m. Tuesday deadline approaches, all eyes are on Washington and Beijing. Will the two sides manage to reach an eleventh-hour compromise, or will this latest round of tariffs further escalate the ongoing economic conflict?
The stakes are high, not only for trade and the economy but also for the broader geopolitical relationship between the two global superpowers.
Trump’s willingness to bring a range of issues — from fentanyl to TikTok — into the negotiations underscores the complexity of the challenges ahead. Whether these moves will yield a breakthrough or further entrench divisions remains to be seen.
