U.S. Trade War With China Escalates

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I thought it was drums initially. Hey there.
It's the NPR Politics Podcast. I'm Asma Khalid.
I cover the White House. I'm Tamara Keith.
I also cover the White House. And today on the show, we're joined by NPR's China correspondent, John Ruich.
Hey there, John. Hey, hey.
So you have graciously agreed to stay up super late to join us from Beijing. What time is it, by the way? It's about 20 minutes till 1 a.m.
Oh, my gosh. Well, thank you for your service.
True dedication. It's a rare opportunity to be on the show.
I love it. Well, today is tariff day yet again.
It feels a bit like deja vu. Earlier this week, President Trump threatened to make the steep tariffs on China even steeper if China did not withdraw its retaliatory measures.
and well today President Trump threatened to make the steep tariffs on China even steeper if China did not withdraw its retaliatory measures. And well, today, President Trump kept his promise.
There are now tariffs of 104% on Chinese goods. That went into effect at midnight.
China responded by implementing a 50% tariff on U.S. imports, bringing its total tariff rate to 84%.
And John, it seems like this trade war between the U.S. and China is escalating and escalating.
It's escalating, definitely. I mean, the magnitude is crazy.
It's like nothing we've ever seen before. And these are crippling rates going in both directions.
China had been retaliating to previous tariffs from the first Trump administration during the Biden administration, even at the beginning of this Trump administration with slightly smaller moves. But, you know, the past few days, it's decided to just go toe to toe with the U.S.
and it's spiraling through the roof. Yeah.
And the U.S. does import a lot of goods, a lot of components that go into even things that are manufactured here in the U.S.
China is one of the United States' largest trading partners. And John, I do want to ask if you have a sense of what effect this new tariff rate could have on U.S.
consumers. So I can answer that from a sort of point of origin of these products and these inputs type of perspective, you know, from businesses here in China are reeling, it seems.
You know, we talked with a freight forwarder today who said the people in his sort of orbit are talking about putting on hold their shipments to the U.S., just not shipping anything to the U.S. because it's unclear how the tariffs are going to be paid at this point.
These tariffs go way beyond the average profit margin of Chinese products in the U.S. So exporters can't just absorb the tariffs.
Capital Economics, this research firm, put out a note earlier today that struck me. It said, if the tariffs stay in place, Chinese shipments to the U.S.
could drop by 70%. What about the effects there in China during President Trump's first term? And we keep hearing this even now from Trump administration officials, this belief that China needs the United States

market. Look, the U.S.
and China are the number one and number two economies in the world. They need each other, right? The U.S.
is important to China. China imports a lot of important things from the U.S., machinery, electronics.
But China has been diversifying, right? Also, these trade frictions over the past six, seven years have been taking a toll. So the U.S.
share of Chinese imports overall has been falling.

It fell from about 20% a few years ago to 15 percent, roughly. Oh, that's interesting.
And so they've just been exporting their things to other countries over the last few years, over the U.S.? Yes. Europe's a huge market.
They've been diversifying into global south markets. Right.
They've been expanding everywhere. U.S.
officials, and that includes Scott Besant, who was on the Fox Business Network this morning. They are making the case that this is way worse for China than it is for the United States.
They are the surplus country that their exports to the U.S. are five times our exports to China.
So they can raise their tariffs, but so what? There are a couple of so what's that I think are important to get to. One, the U.S.
tariffs on Chinese goods and exports that come into the United States, that is going to be paid at least in some part by American consumers. Things are going to get more expensive.

It's a tax. And then on the other side of it,

China imposing tariffs on things like soybeans

coming out of the United States

could have sort of a disproportionate impact

on American farmers or specific industries

that in particular count on exporting to China.

Mm-hmm. All right, well, on that note, let's take a quick break and we have lots more in just a moment.
that in particular count on exporting to China.

All right. Well, on that note, let's take a quick break.

And we have lots more in just a moment.

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And we're back. And Tam, I just want to get a status update from you on the tariffs on all these other countries.
We mentioned a whole bunch of countries. What is the status of those tariffs and any potential for a trade deal?

There's definitely potential. And what I would say is, whereas last week, the overriding message coming from the White House was this is about restructuring the United States economy, bringing manufacturing back to America.
This is a national emergency. This isn't a negotiation.
This week, after the markets have fallen multiple days, the bond markets are now going haywire and people that run banks are talking about recessions. Now the message is, oh, no, this is a negotiation.
President Trump is negotiating. Let's give him a chance.
That's the message coming from Trump allies, Republicans in Congress and others. Besant on the Fox Business Network this morning talked about the negotiating.
He says he's not going anywhere for spring break because he's going to be negotiating these deals. We have opened this process of negotiations country by country.
It's going to be a bespoke, tailored process for each country. And as we strike these trade deals, I think that we will see greater and greater certainty.
What's interesting to me about that is bespoke and tailored means they are and apparently at least 70 countries have reached out. They are attempting to negotiate bilateral trade deals, new trade deals with 70 different countries.
That's the kind of thing that doesn't happen quickly or overnight. Right.
And so the question is, like, how long are these current tariffs going to be in place?

And in the end, what do these deals look like?

John, Tam just mentioned there that 70 some countries have reached out to the Trump administration to try to negotiate a trade deal to lower the tariff rates. Has China at all reached out? It doesn't look like they're blinking yet, but are they open to a deal? Yeah, they definitely are.
The leadership has repeatedly said they're open to talking about it, but they're not going to do it under duress. Xi Jinping, the leader of China, has domestic political considerations.
He doesn't want to be seen as bowing down to Trump, especially, you know, they're calling these tariffs blackmail, right? So under those conditions, he's not going to step back. China doesn't, you know, interestingly, they don't see these tariffs as a discrete issue.
It's related to everything. It's related to the ports in Panama, which has been an issue that everybody's been talking about lately.
It's related to the TikTok deal. It's all in play as far as China's concerned.
But the foreign ministry today demanded that the U.S. adopt an attitude of, quote, equality, mutual benefit and respect if it wants to start to talk about a deal.
And from the Trump side of things, they are saying, you know, China made a huge mistake by retaliating. President Trump said, everybody else is coming to me and begging for a deal.
They should be doing the same, more or less. That wasn't an exact quote, but that's the sentiment.
So where's the off ramp for these two major economies? Because these are huge amounts of tariffs, unprecedented levels that we didn't even see during President Trump's first term. The people I'm speaking with here in China say that there's two things.
One, China does not want a projected trade war. It's going

to be painful. It's going to be damaging.
They might think they're in a good position to be able to weather it for a few months, half a year, a year. Ultimately, they would like to do a deal and they're looking for an appropriate off ramp.
But point number two is that they don't want to blink. They're not going to blink first.
Conditions have to be right. The problem is that if escalation continues, a really big concern is that China might start to target more U.S.
companies. And we've already seen investigations launched into Google, NVIDIA, DuPont, these big American companies.
Are these going to turn into court cases next? Do they start to target other companies? Are executives going to start to get detained or exit banned? We don't know. We've heard the Trump administration talk about wanting to bring some manufacturing jobs back to the United States, right? And we've also heard the Trump administration talk about wanting to level the playing field with China.
In fact, this is something we heard even from the Biden administration, that they felt like China wasn't always a fair trading partner. But it strikes me that these tariffs in this moment across the board are kind of contradictory because it's not just China that the Trump administration is hitting.
They have all these tariffs in all these other Asian countries. And so, you know, I was talking to a manufacturer here in Minnesota the other day, and he said to me in the first Trump term, he knew, OK, fine, they want me to move some of our manufacturing outside of China.
So he moved, you know, some of his supply chain to Vietnam and to Indonesia. But this time around, he's like, I don't know where to go.
Where do we go? Because Vietnam's getting hit by tariffs. Indonesia's getting hit by tariffs.
And so I don't understand what the big strategy is for this White House, Well, what the president would say and has said on Truth Social is bring your factory to America, bring the jobs to America, make your stuff in America. But some of the stuff isn't made here.
No, I know it is not actually an end game. But that is the rhetoric coming out of the White House is if you have a problem, just bring it to America.
Now, that does not get into the issue of cost. And, you know, President Trump ran and won on bringing down costs for Americans because Americans were upset about inflation.
If all of this causes prices to go up and we will see that relatively soon, then then that's going to be a political problem. But we have to remember that President Trump has believed that trade deficits are a negative, are the American people being ripped off.
And he also firmly believes that the experts are wrong and he is right. So he has a different pain threshold than I think a lot of other people in politics might have.
And this game of chicken with the inflation rate is something that experts I've talked to think Xi Jinping is looking at and he says, well, I'm actually in a better political position than Donald Trump is because of the controls of society here, because of the way the Chinese political system works. All right.
Well, we are going to leave it there for today's podcast. John, thank you so much for being here.
You're welcome. I'm Asma Khalid.
I cover the White House. And I'm Tamara Keith.
I also cover the White House. And thank you all, as always, for listening to the NPR Politics Podcast.
So a quick note here. After we taped this conversation, President Trump announced via social media a 90-day pause on the tariffs for most countries, except China.

Most countries will be left with a 10% tariff rate, while China will immediately face a hike in tariffs to 125%.

There is a lot more to discuss about this, and we are going to dig into all of that tomorrow.

So come back for more.

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