Why China is worried about a second Trump presidency

Donald Trump will return to the White House having set out his foreign policy approach for the next four years.

US voters have chosen a leader who adheres to an “America first” principle, where US interests come first, and is expected to be more isolationist than the current president, Joe Biden.

While a second Trump presidency might be welcomed by some foreign leaders including Hungarian prime minister Viktor Orbán and India’s prime minister, Narendra Modi, the same cannot be said about Chinese president Xi Jinping. For China, which has experienced deteriorating relations with the US since Trump’s first presidency, having a Trump administration back in the White House is not likely to be good news for Beijing.

China’s economic challenges

Trump waged an unprecedented trade war against the world’s second-largest economy in July 2018 and imposed tariffs that went as high as 25% on Chinese imports coming into the US.

But during his 2024 campaign speeches, Trump suggested that US tariffs on Chinese goods could go as high as 60% or more.

China’s economy is in a downturn, with slumping property prices, high local government debt and high youth unemployment. Further tariffs might cripple China’s economic recovery strategy, which depends heavily on exports.

Unfortunately for Beijing, higher tariffs might not be the only thing that Beijing has to worry about under a second Trump presidency. A Trump-led US is likely to restrict the amount of technology flowing from the US or Europe into China, which would dent China’s ambitions of becoming the global AI leader in 2030.

The new US administration may also pursue an economic decoupling strategy to “derisk” itself from Chinese exposure. This would aim to diminish US dependency on China by moving its supply chain elsewhere, and may restrict US investment in China.

While Trump’s previous high tariffs (continued by Joe Biden) have undoubtedly soured ties between Washington and Beijing, another contributing factor that undermined Sino-US relations is the Russia-Ukraine war. The west has accused Beijing of supporting Moscow during the Russia-Ukraine war and has threatened to take action against China for its aid to Russia.

Elon Musk’s Tesla empire has significant interests in China.

Fortunately for Russia, a second Trump presidency may turn the tide in Moscow’s favour. A Trump-negotiated peace deal between Russian and Ukraine might include the handover of Ukranian land currently occupied by Russia. Trump might even lift or reduce sanctions against Russia as the new president-elect has “no love for sanctions”.

Beijing hopes for a strong ally in Russia to help counter a US-led world order and to avoid being the focus of the west if Russia somehow bungles in its conquest in Ukraine. But as the “dealmaker-in-chief” and top proponent of an “America first” agenda, what does Trump stand to gain from helping Russia?

First, Russia has become highly dependent on China, and helping Russia resolve its diplomatic and economic issues might undermine Beijing’s influence in Russia. Second, as a Russian-backed Iran undermines US interest in the Middle East, a new Trump administration might broker a Russian-Ukrainian peace accord that sees Russia withhold military support from Iran and the latter’s regional allies, such as Hezbollah.

As Iran’s influence in the region diminishes, Washington could free up more resources tied up in the Middle East and refocus its energies elsewhere, such as China, if Washington so wishes. And that may undermine China’s economic recovery further.

And what next for Taiwan?

Unlike Biden, Trump has been ambiguous on whether he would defend Taiwan in the event of a Chinese invasion. However, there are fears that Trump might cut a deal with China and use Taiwan as a bargaining chip or perhaps abandon the island altogether.

Trump seemed aggrieved by the fact that Taiwan has “stolen” the semiconductor industry away from the US and believes that the island should pay more for its defence. But his grievance against Taiwan isn’t the biggest issue.

Trump has indicated he could increase tariffs on Chinese goods up to 200% if Beijing were to invade Taiwan. Given China’s economic problems and President Xi’s need to prove his worth as a leader whose prestige and power is comparable to founder of the People’s Republic of China, Mao Zedong, Xi might find this a worthy trade.

How might China respond?

As China braces for uncertainties brought by a second Trump presidency, Beijing is likely to pursue alliances outside the western world. It might become increasingly engaged with the Association of Southeast Asian Nations) and the Gulf Cooperation Council) as China reduces its dependency on the west for exports and investment.

China may also engage with Iran if Russian support for the Middle Eastern regime reduces. After all, more US resources in the Middle East could mean less resource to deal with the “Chinese threat”.

One factor that might make Trump concerned about Taiwan coming under Beijing’s control, even if he does want the US to produce more, is that the island manufactures 60% of all semiconductors. This product is crucial for the use of electronics and AI around the world.

It remains unclear what role Elon Musk will play in the second Trump presidency. Trump had indicated that Musk would head a government efficiency commission if he wins a second term. However, since his Tesla electric cars are highly reliant on the Chinese market, and Tesla has a factory in Shanghai what role Musk would play in bridging the Washington-Beijing divide remains to be seen.