Analysis: Beijing Misjudged as CCP Claims Communication with US, Trump Imposes More Taxes

The Chinese Ministry of Commerce recently claimed that there has been ongoing communication between China and the United States at the departmental level. However, just hours later, President Trump announced that an additional 10% tariff will be imposed on Chinese imports starting from March 4th. Economists point out that this is not just a simple misjudgment, but a structural misunderstanding by the Chinese government of the nature of international game theory.

On February 27th, the Chinese Ministry of Commerce held a regular press conference in Beijing. During the conference, a journalist asked whether there had been recent communication or discussions between the trade teams of both China and the U.S regarding issues such as tariffs given Trump’s remarks about the possibility of reaching a new trade agreement.

Chinese Ministry of Commerce spokesperson, Gao Yan, responded that they have been maintaining communication with the corresponding U.S. departments. He stated that China strongly opposes the U.S. tariff measures and is willing to resolve issues through dialogue and negotiation.

Just a few hours after the Chinese Ministry of Commerce press conference, President Trump announced that the 25% tariffs on imports from Mexico and Canada to the U.S., previously proposed by him, will come into effect on March 4th. Additionally, on top of the existing 10% tariffs on Chinese imports, another 10% will be added. Trump cited the continued influx of deadly drugs from these countries into the United States as the reason for these measures.

Back in early February, Trump announced a 10% tariff on Chinese imports and planned to impose a 25% tariff on goods from Canada and Mexico. However, after both countries promised to enhance border control, Trump agreed to delay the effective date of the tariffs to March 4th.

In response to Trump’s latest tariff actions against China, analysts believe that the Chinese Ministry of Commerce still appeared to be reacting to the initial phase of U.S. tariff measures and failed to anticipate Trump’s further actions. This indicates a misjudgment in communication between China and the U.S., ultimately leading to an escalation of U.S. tariffs.

Taiwanese economist Wu Jialong, in an interview with media, stated that strictly speaking, China did indeed make a misjudgment. Trump began addressing the U.S.-China trade imbalance during his first term, but China viewed it as political pressure and retaliated accordingly.

Wu further added that China has consistently failed to correctly understand the position of trade deficit countries and instead politicized the tariff issue in an attempt to defend its so-called “national dignity,” which in itself was a misjudgment. So, when China adamantly proclaimed “tit-for-tat” and vowed to stay the course, it had already fallen into a trap. As the U.S. realized that negotiations with Xi Jinping could not solve the problem, resorting to a hardline stance of continually increasing tariffs was the inevitable outcome.

American economist David Huang believes that this is not just a simple misjudgment but a structural misunderstanding by China of the essence of international strategic games.

Huang told reporters that China’s response seems to be caught in a pattern of trying to delay and alleviate U.S. pressure, hoping to trade time for space and avoid a thorough confrontation. However, Trump has seen through this tactic and adopted a rapid and intense pressure approach. China mistakenly believes that time is on its side. Trump’s actions demonstrate that the U.S. not only has the capability to continually escalate pressure but also leaves no breathing room for China.

Huang further stated that China may have miscalculated by assuming that Trump, needing economic stability for re-election, would refrain from intensifying the trade war. Additionally, based on global situations such as the Russia-Ukraine conflict, China might have thought that the U.S. would not take excessively tough measures against them, hence choosing delaying tactics. At the same time, China might have assumed that with Trump’s four-year term limit, future U.S. administrations might ease trade tensions. However, this judgment is fundamentally flawed.

He stated that Trump is seeking structural changes rather than settling for minor adjustments. However, China continues to employ delaying tactics while the U.S. shifts towards a comprehensive “de-risking” strategy, hoping to swiftly resolve the issues. This represents a significant misjudgment by China at a strategic level in dealing with Trump.

“This is not just about tariffs but about the U.S. reshaping its strategic layout globally, severing supply chains and financial influence that might pose a threat to global security from Beijing (China),” Huang said, “Therefore, this is not merely a negotiation tool issue but reflects Beijing’s (China) misunderstanding of the current international situation.”

Just days before Trump announced the 10% tariffs on China, on February 24th, marking the third anniversary of the Russia-Ukraine war outbreak, Chinese President Xi Jinping had a phone call with Russian President Putin. Both reaffirmed that their strategic cooperative relationship is not influenced by any third party.

According to Chinese state media Xinhua, during the call, Xi Jinping claimed, “China and Russia are inseparable good neighbors. They are true friends sharing weal and woe, mutual support, and common development.” He also emphasized that the China-Russia relationship possesses unique strategic value, is free from any third-party interference, and maintained that the development strategies and foreign policies of both nations are “long-term.”

The statement from China mentioned that the call was arranged at Putin’s request. Xinhua further claimed that Russia highly values its relationship with China, looking forward to “maintain high-level exchanges” and “deepen pragmatic cooperation.”

Three years ago, on the eve of launching a full-scale invasion of Ukraine, Putin visited Beijing and met with Xi. Following the meeting, bilateral agreements were signed, claiming cooperation with no limit. After the outbreak of the Russia-Ukraine war, Beijing declared neutrality, neither joining the Western countries’ sanctions against Moscow nor condemning Russia’s military actions but instead deepening political, economic, and military cooperation with Russia. Recently, Putin even referred to China as an “ally.”

In recent times, Trump has been actively pursuing peace talks with Russia. He not only had a “productive” phone call lasting one and a half hours with Putin but also called the Ukrainian President Zelensky a “dictator.” In late February, high-ranking U.S. diplomatic and national security officials held bilateral talks with Russian officials in Riyadh, the capital of Saudi Arabia, on how to end the Ukraine war, excluding Ukraine and U.S. European allies from the invitation.

The Wall Street Journal believes that Trump’s sudden embrace of Russia and Putin partly stems from strategic considerations to create barriers between China and Russia.

Regarding this, Huang stated that Xi Jinping’s call with Putin serves not only as an external display of the unity in China-Russia relations but also as a demonstration of alignment with Russia amid the background of potential financial and military pressure from the U.S, showing coordinated solidarity.

Huang analyzed that Trump is seeking a deeper cooperation with Putin to further isolate China, thereby putting pressure from the U.S., Europe, and Russia on China. Xi Jinping’s call with Putin at this time aims to preemptively counter potential strategic compromises between the U.S. and Russia, strengthen the China-Russia alliance, and reduce the room for U.S. pressure and division.

He further added that Xi Jinping is also attempting to prevent the possibility of the U.S. and Russia teaming up against China. He stated that if Trump and Putin reach some form of agreement or cooperate in strategic areas such as energy and military, it would put China in an extremely disadvantaged position.

Huang further stated that the dialogue between Trump and Putin may not be limited to just the Ukraine issue but may encompass broader global strategic adjustments. China is fearful that the U.S. and Russia might reach some geopolitical trade-offs or economic interest exchanges, pressuring Moscow to counter China in East Asia or reduce cooperation on critical issues, in exchange for U.S. concessions in Europe.

“In conclusion, Xi Jinping’s call with Putin is a strategic defensive move to ensure that Putin does not make decisions that are detrimental to Beijing’s interests in negotiations with Trump. However, at the same time, it exposes Beijing’s high anxiety about potential compromises or deals between the U.S. and Russia. Trump’s announcement of further tariff hikes at this time might just be leveraging this anxiety to further squeeze Beijing’s strategic maneuvering space.”