Analysis: Trump’s trade war will lead to global containment of the CCP.

In an article posted on April 7, 2025 by Dajiyuan, it was reported that President Trump has imposed tariffs on various countries, leading to over fifty countries seeking trade negotiations, with the exception of China retaliating. Trump stated that China made a wrong move by not addressing the massive trade deficit, indicating he will not reach an agreement with Beijing. Analysis suggests that these tariffs mainly target China and other countries with significant export capacities, with the tariff war expected to lead to a global containment of the Chinese regime.

On Monday, the major stock indices in the A-share market witnessed significant declines. The Shanghai Composite fell by 245 points or 7.34% to 3096 points, marking the largest drop in five years; the Shenzhen Component Index dropped below 10,000 points, falling by 1001 points or 9.66% to 9364 points; the ChiNext Index reported a decrease of 258 points or 12.5% to 1807 points; and the CSI 300 Index went down by 272 points or 7.05% to 3589 points.

Hong Kong’s stock market experienced a “Black Monday,” with the Hang Seng Index plummeting by 3021 points or 13.22% to close at 19,828 points, marking the largest drop in history.

The sharp decline in the Chinese and Hong Kong stock markets at the opening was seen as a direct response to the escalating U.S.-China trade conflict.

Independent commentator Cai Shunkun expressed to Dajiyuan on April 7 that the significant drop in the Chinese stock market, besides market confidence, was mainly due to the retaliatory measures taken by the Chinese Communist Party. He mentioned that at this point, China has no choice but to respond; however, if they do, the situation could become severe, potentially resulting in severe damage to China’s economy, especially in terms of export economy, which he estimated to be in trouble.

Last Wednesday, on April 2, President Trump announced global baseline tariffs and imposed higher reciprocal tariffs on several countries, with China facing a 34% reciprocal tariff, and ending the duty-free entry of small goods from China into the United States.

According to Bloomberg, economists calculated that the latest reciprocal tariffs have raised the average tariff on all Chinese imports to the U.S. to 65%. This rate includes the tariffs implemented by Trump in his first term and maintained by the Biden administration.

Last Friday, on April 4, the Chinese Communist authorities officially announced a 34% tariff increase on all imports originating from the U.S. starting on April 10. They also put 16 U.S. entities on an export control list and prohibited six U.S. companies from engaging in import and export activities related to China, in addition to implementing export controls on seven rare earth-related products.

On the same day, Trump responded on his social media platform “Truth Social,” by saying “China (CCP) made a wrong move. They are in a panic – this (retaliatory tariffs) is something they can’t afford!” and vowed that his economic policy “will never change.”

On April 7, Trump issued a warning on “Truth Social,” stating that if China did not withdraw its 34% retaliatory tariffs against the U.S. by April 8, the U.S. would impose a 50% tariff on Chinese goods, effective from April 9. Additionally, all negotiations requested by the Chinese side would be terminated!

After Trump imposed tariffs, China was the only country to announce countermeasures, while other countries are seeking negotiations with the U.S.

Kevin Hassett, Director of the White House National Economic Council, stated on April 6 that over fifty countries have contacted President Trump regarding tariff issues to initiate trade negotiations.

Israeli Prime Minister Benjamin Netanyahu visited the White House on April 7 to discuss tariffs and Middle East issues with Trump.

On the 7th, Japanese Prime Minister Shigefumi Iishi held a telephone conversation with Trump to confirm that Japan would send a senior team to the U.S. for negotiations.

European Commission President Ursula von der Leyen stated on the 7th, “We are prepared to negotiate with the U.S. at any time. In fact, we have proposed zero tariffs on industrial products, as we have successfully done with many other trading partners.”

Earlier, European Union member countries Spain and Italy urged European governments to avoid confrontation with the U.S. on tariff issues and seek reconciliation through negotiations.

President of the Republic of China (Taiwan) Lai Ching-te proposed on April 6 to use zero tariffs as a basis for negotiations with the U.S. and pledged to remove trade barriers rather than take retaliatory measures. Lai also mentioned that Taiwanese businesses would increase their investment in the U.S.

Meanwhile, in the Southeast Asian region – one of the key areas for Chinese companies to export to the U.S. via detours – various countries have expressed their willingness to seek solutions with the U.S.

In a statement, Indonesian Chief Economic Minister Airlangga Hartarto indicated that Indonesia would seek mutually beneficial solutions through diplomacy and negotiations.

Cambodian Prime Minister Hun Manet wrote to Trump, hoping to start trade negotiations promptly.

Vietnamese Communist Party General Secretary To Lam had a phone call with Trump on the 4th. Trump stated that he received a commitment from Lam that if an agreement is reached between the two countries, Vietnam plans to reduce their tariffs to zero on their goods exported to the U.S. The Vietnamese government announced that the leaders of both countries agreed to continue discussions “to sign a bilateral tariff agreement as soon as possible.”

Cai Shunkun commented that Trump’s tariff war, based on the level of sanctions or lists, “You will find that it mainly targets China and those countries with significant export capabilities in recent years. Therefore, the tariff list released by the U.S. this time is very targeted.”

He pointed out that China is the biggest obstacle to the reshoring of U.S. manufacturing. “In recent years, China has made careful arrangements by transferring a large number of low-end industries to Southeast Asian countries and South American countries. Therefore, Trump’s tariff war treats these countries in South America and Southeast Asia equally. As long as these small countries have significant exports to the U.S., he views them all as (economic) vassal states of China. If China wants to transfer exports through a third country, this route will be blocked.”

Taking Vietnam as an example, he analyzed that Vietnam is softening to the U.S., with exports to the U.S. accounting for 30% of its GDP. Vietnam certainly does not want the U.S. to close its trade door, but the U.S. now clearly sees the situation; while tariffs can be negotiated, Vietnam must significantly increase tariffs on raw materials and processing from China, or there is no room for negotiation.

He remarked, “So, this time, I can see that the whole world may increase tariffs on China in the next step. If tariffs are not increased, the U.S. will not relent, because if China’s exports and manufacturing industry are not completely blocked, the U.S.’ tariff war will be futile and have little effect.”

The new round of tariffs imposed by the U.S. still centers around the U.S.-China relationship as the core issue. However, Chinese officials have been excluded by the Trump team.

According to a report from The Wall Street Journal on April 7, during the first few months of Trump’s second presidential term, Beijing has been trying to understand the new U.S. government’s policy towards China, but without success. Chinese senior officials attempting to contact the U.S. government have been met with closed doors.

Sources communicating with Chinese officials revealed that the current Chinese Ambassador to the U.S. Xie Feng had attempted to contact Elon Musk, an advisor to Trump, but to no avail. China had hoped that Musk could help counter the influence of the hardliners within the Trump team towards China. Musk’s company Tesla produces half of its electric vehicles in China.

The report mentioned that other U.S. business leaders, such as Wall Street financiers that Chinese leaders often turn to in tough times, currently see no benefit in acting as intermediaries for China. “Who wants to play this role?” said a senior U.S. executive, “Nobody wants to.”

Trump’s latest tariffs have hit the nail on the head, causing hopes for dialogues from Beijing to go down the drain, replaced with disappointment and anger. The lack of communication between the sides shows no sign of easing, potentially leading to a cycle of retaliations, making it difficult even to initiate negotiations in the near term.

The report stated that a senior Chinese economist in Beijing likened Trump’s latest tariff policy to declaring a “strategic decoupling” from China. “In the context of such extreme pressure, can we still find a path to negotiation? The lack of communication between both sides may make negotiations challenging.”

Some policy advisors in Beijing described the shock reaction within the Chinese system to Trump’s latest tariff policy. They expressed doubts about Beijing’s ability to engage in effective negotiations with Trump to alleviate economic pressure on China and prevent further decoupling from the U.S.

Ryan Hass, former National Security official in the Obama administration and current head of the Brookings Institution’s China Center, noted that the Trump administration is driving the development of the situation, with Beijing being almost entirely in a passive stance.

On April 6, President Trump returned to the White House from Florida aboard Air Force One, where he responded to reporter questions. On the U.S.-China trade issue, Trump stated, “Our trade deficit with China is $1 trillion. We lose billions of dollars to China every year unless we solve this problem, I won’t reach an agreement.”

Cai Shunkun provided analysis saying that China’s current economic scale is entirely due to the U.S. opening its markets. The Biden administration continuously advises China to reduce its production capacity, which Beijing completely ignores, instead focusing on industrial relocations. The new tariffs will directly impact the entire industrial chain in China, likely affecting the global economy, with unavoidable pains, “The restructuring of the industrial chain is a rather lengthy process and comes with a cost.”