Trump’s Second Term: The View from Beijing
Following Donald Trump’s victory in the 2024 US presidential election, Chinese officials are bracing for another turbulent chapter in China-US relations.
Beijing reportedly spent the months leading up to the election developing contingency plans for either a Trump or Harris victory, determined to avoid being caught off guard by either outcome. Trump’s unpredictability and mercurial decision-making style, however, create significant challenges in anticipating what approach he will take to the core issues in Sino-American relations.
In this note, we discuss several key questions that will shape bilateral ties in Trump’s second term and examine their implications for multinationals.
What lies ahead for China’s trade relationship with the US?
During his first term, Trump launched a bruising trade war with China, implementing a raft of tariffs that his successor, Joe Biden, largely maintained. During his 2024 campaign, Trump signaled a return to protectionism, pledging to impose tariffs of 60% or more on all Chinese exports to the US, a move that would be highly damaging to bilateral trade and disruptive to global supply chains.
Assuming Trump follows through on this threat, Chinese strategists will need to carefully craft their response. In recent years, China has largely refrained from responding to US tariffs with direct retaliation, opting instead for a more symbolic approach. Since the start of the trade war, however, Beijing has developed a range of anti-coercion mechanisms that it could use if it concludes that strategic patience has failed, with potentially serious consequences for US and other multinational companies. Indeed, China has already demonstrated its readiness to retaliate more aggressively against perceived US economic coercion. Most notably, Chinese officials recently launched an investigation under its Unreliable Entity List framework into American clothing company PVH following its decision to cut Xinjiang cotton from its supply chain to comply with US law.
However, certain aspects of Trump’s protectionist streak may work in China’s favor. Trump has also pledged to impose tariffs of at least 10% on all imports to the US. Should other major economies begin to view the US as an unreliable trade partner, they could seek to cultivate deeper trade ties with China in search of more favorable export markets.
What to watch
MNCs should closely monitor statements from Trump and his transition team concerning trade and economic policy, especially those related to China. Although trade issues were a major talking point on the campaign trail, they will not necessarily be an immediate priority for Trump and his team upon reassuming office, and there may be a delay before he follows through on his tariff threats, if he does so at all. MNCs should also monitor how aggressively China uses its anti-coercion toolkit in response to American economic pressure, as well as the reactions of third countries to Washington’s protectionist turn.
Will Trump maintain, expand, or roll back Biden-era tech and export controls?
The Biden administration’s approach to China has been characterized by an expansive regime of damaging tech and export controls targeting a large swath of Chinese industry. These have been a major catalyst for China’s drive toward supply chain security and technological self-reliance. However, it’s unclear whether Trump will maintain Biden’s systematic and targeted approach or return to the broader, more haphazard tariff-focused strategy he employed in his first term.
Under some circumstances, Trump might even consider lifting some existing export controls. During Trump’s first term, Xi Jinping used personal diplomacy to persuade Trump to roll back restrictions on ZTE and Huawei. Xi may attempt a similar approach this time, again appealing to Trump’s “dealmaker” instincts through highly placed intermediaries like Elon Musk.
Additionally, if Trump alienates other major chip-producing countries, they may scale back or even cease compliance with US restrictions, allowing a trickle of high-end chips back into the Chinese market and softening the impact of the Biden-era bans.
What to watch
It is unlikely we will know Trump’s approach to Biden-era tech and export controls until well after he is inaugurated. MNCs should monitor Trump’s appointments to key executive branch positions that oversee sanctions and export control lists, including in the Commerce Department, Treasury Department, Department of Homeland Security, and the Office of the US Trade Representative. These appointees will ultimately control export and tech restrictions.
What does a second Trump presidency mean for stability in the Taiwan Strait?
Trump’s potential approach to Taiwan is uncertain. When asked in a recent interview if he would defend Taiwan in a conflict with the mainland, Trump dodged the question. Instead, he remarked that Taiwan had “taken away” US semiconductor business and suggested that Taiwan should pay for US defense. This indicates that Trump views US security commitments to Taiwan in highly transactional terms, potentially making him open to persuasion from either Beijing or Taipei to adjust the level of American commitment on a quid-pro-quo basis.
Although Trump remains non-committal, many of his advisors and political allies are China hawks who will attempt to push him to adopt a more supportive stance, potentially even an explicitly pro-independence position, drastically escalating tensions in the Taiwan Strait. Military-to-military dialogues with China, which broke down during Trump’s first term but were re-established under Biden, could be at risk of cancellation again, increasing the likelihood of dangerous misunderstandings.
What to watch
Both Taiwan and the mainland will likely seek to shape Trump’s stance on Taiwan through strategic incentives that appeal to his concerns. For Taiwan, this might involve making a significant early purchase of US weapons as a way of “paying” for US protection. Likewise, senior Chinese officials might seek to tie a reduction in US support for Taiwan to concessions on other issues of concern to Trump, such as trade. MNCs should monitor for indications either side has influenced Trump’s thinking on Taiwan, as well as statements from key Trump advisors.
What does the return of “America First” diplomacy mean for China’s foreign relations?
In terms of US security architecture, the outgoing Biden administration has adopted a traditional approach to cultivating US alliances and partnerships, assembling a strong anti-China coalition in the process. In contrast, Trump’s America First foreign policy will likely alienate US allies and partners, as it did during his first term. American diplomacy will take an inward turn, weakening the US security presence globally, including within NATO and in its commitments to Asian allies. This could give Beijing more room to drive a wedge between Washington and its traditional allies regarding their respective China policy. However, it could also prompt a security realignment, with countries like South Korea and Japan taking stronger steps toward self-defense, including developing their own nuclear weapons and forming new regional security alliances – something China would be keen to avoid. The return of America First diplomacy will also allow Beijing to cast itself as a responsible global power and a champion of free trade and multilateralism, in contrast to rising US protectionism and unilateralism. This message, coupled with a disengaged and commercially aggressive US, could greatly aid Beijing’s efforts to build and strengthen trade and security ties with third countries, particularly in the Global South.
What to watch
China’s diplomatic outreach in the coming months will give a clear indication of how it plans to capitalize on a likely US retreat from the global stage. Signs are already emerging that Beijing is working to mend strained relations with India and Japan, and this trend is likely to continue. As third countries adjust their diplomacy toward China in anticipation of a second Trump administration, MNCs will gain clearer insights into which countries and regions may seek closer ties with China or opt for greater self-reliance or regional solidarity – creating new risks and opportunities for MNCs.
Who will be in Trump’s inner circle?
Like all presidents, Trump will delegate a certain level of decision-making to his subordinates, who will play pivotal roles in shaping policy and implementing his administration’s agenda. While Trump’s picks may include familiar figures, such as former Secretary of State Mike Pompeo and former U.S. Trade Representative Robert Lighthizer, many newcomers will likely be appointed to important positions. Trump’s focus on personal loyalty suggests he may bring prominent campaign supporters into the fold, such as Tesla boss Elon Musk and political booster Robert F. Kennedy Jr.
During his first term, Trump was relatively slow to fill key positions. If this pattern repeats in his second term, it could limit his ability to implement policy early on and significantly delay basic business and trade processes at the federal level. Additionally, Trump’s pledge to drastically cut the federal bureaucracy and appoint loyalists to lower-level federal posts could slow government machinery to crawl.
What to watch
MNCs should monitor Trump’s selections for key roles and analyze their policy positions on issues like China, support for Taiwan, trade, and technology, and prepare for extended vacancies in key federal government positions.
The bottom line
While Trump’s return to the White House will prompt Chinese strategists to make tactical adjustments, it won’t lead to a change in China’s overall approach to its relations with the US. From Beijing’s perspective, Washington is a major threat to China’s economic and geopolitical interests, regardless of who occupies the Oval Office. As such, China will maintain its focus on economic security, technological self-reliance, and global multipolarity while seeking to mitigate the risks stemming from the US. Under Trump, MNCs operating in China will face increased uncertainty from the US side but can expect broad policy consistency from the Chinese side. It will be important to closely monitor the risks and opportunities arising from this evolving landscape.