Sinica · China
TIER 4 Sun, 13 Apr 2025 08:58:24 +0000
Note: This was published before the Friday night tariff exemptions were announced
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Podcasts and Essays on China -- Free Version
| Apr 13| | | ∙| | Guest post
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I, for one, am glad it's over -- and to be honest, while we didn't exactly end up in a great place when it comes to US-China trade tensions, things could have been much worse.
Where we are: After multiple rounds of back-and-forth tariff increases, the US and China have each imposed 125% across-the-board tariffs on goods coming from the other county.
The effective US tariff rate on Chinese goods now actually stands at 145% when you add in the 20% fentanyl-related tariffs that were imposed in February and March.
And some US imports to China -- particularly in the ag space -- also appear to have another 10% to 15% tariffs imposed from the previous hikes implemented in the first three months of this year.
Not. Good. But still, this is unfortunately one of the better-case scenarios that we outlined in our podcast earlier this week.
At the very least, further tariff escalation seems to have been ruled out by both sides in the past few days, with US President Donald Trump saying he doesn't expect to raise tariffs further on China.
The big worry among our clients over the past few days has been that the tariff escalation would spill over into the financial and technological realms -- potentially seeing the US or China resort to even more disruptive actions such as:
The US moving to de-list Chinese tech company shares trading on US exchanges
Secondary sanctions on Chinese banks, potentially cutting them of from USD access
A major widening of US export controls
Wholesale dumping of US treasuries by Chinese financial entities
Enhanced export controls on key critical minerals by China
Thankfully, none of that has happened.
And as we 've been counseling for the past week, we so far haven't expected a significant widening of economic coercion beyond the tariff front.
For its part, China has been very careful to craft retaliatory measures that do not seek to escalate things further.
But despite that, both sides have found a way to hit the pause button on further escalation.
From here, I think it 's likely that the relative economic pain that both economies experience from the eye-wateringly-high tariffs will shape policymakers' decision-making going forward.
If the tariff fallout proves to be so devasting to China's exports that macroeconomic growth tumbles, China's leaders may feel compelled to pursue negotiations more proactively.
That said, I continue to think the macro impacts will be manageable -- and China can offset them with increased domestic stimulus.
For Trump, if the inflationary impacts of tariffs on US consumers and businesses start to hit home -- as seems inevitable -- he may be increasingly likely to climb down.
The upshot: While the sky-high tariffs will have a negative impact on both the US and Chinese economies in the short term, the potential for a positive turn in US-China relations still exists.
If we've learned anything over the past week, it's that policy dynamics can change quickly -- and so extrapolating current dynamics far into the future doesn't make sense.
Yes, US-China economic relations can undoubtedly take a turn for the worse.
Whatever happens from here will be shaped not only by each leader 's goals, but also by the economic realities that will soon set in.
Andrew Polk, Co-founder, Trivium China
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Trivium China has tons of great content coming out every week -- and this is the place to keep up to date.
The latest:
Check out our podcast! In this week's podcast,**** Trivium co-founders Andrew Polk and Trey McArver unpack the whirlwind tariff tit-for-tat between the US and China over the past week. The two discuss:
Possible off-ramps for de-escalation
How each side is misreading the other
The best- and worst-case scenarios from here
New episodes drop weekly onSpotify and Apple Podcasts.
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More provinces areacquiring land from property developers using special-purpose bond (SPB) proceeds, following Guangdong's lead in February.
On Tuesday, Hunan province issued RMB 9.4 billion worth of SPBs to purchase 126 idle land plots from property developers. This followed Sichuan province last week issuing RMB 300 million in SPBs to buy back two plots.
SPB-funded land buybacks could prove the most effective government intervention to boost developer liquidity to date.
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China is signaling faster rollout ofexport control rules.
On April 9-10, the Ministry of Commerce (MofCom) held its annual export control conference in Beijing, saying , "in the face of the current complex and challenging international landscape, MofCom will…accelerate the improvement of a modern national export control system and continuously enhance the effectiveness of export controls."
Our take: MofCom has significantly ramped up export controls on critical minerals in recent months. But the ministry has yet to refine its nascent regulatory framework.
On April 9, the cyberspace administration (CAC) issuedan official Q&A clarifying several issues related to China's data export regime.
The Q&A is intended to address confusion among foreign companies about cross-border data transfer compliance.
Our take: The CAC is making a genuine effort to reduce red tape for foreign companies on data exports.
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On Tuesday, four ministries -- led by the macro planner (NDRC) and energy regulator (NEA) -- unveiled China's first batch of large-scale vehicle-to-grid (V2G) pilot projects.
China's NEV fleet has expanded 260-fold since 2014 -- to a whopping 32 million units -- and the pace of growth will only accelerate. Left unregulated, soaring NEV charging demand and the uptake of superchargers could overwhelm local grids -- especially during peak-demand hours.
Deployed at scale, V2G will not only address the energy security risks associated with rising NEV adoption, but also significantly enhance grid flexibility, enabling the integration of unprecedented volumes of renewable energy at minimal cost.
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One of China 's most senior military officers has reportedly been removed from office.
According to the FT, "General He Weidong, the junior of two vice-chairs of the six-member Central Military Commission [CMC], which is led by Xi, was removed from his post in recent weeks, according to five people familiar with the matter."
He's ouster takes place against the backdrop of a larger anti-corruption campaign in the military.
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The EU and China areramping up bilateral engagement amidst Donald Trump's tariff storm.
On Friday, the SCMP reported that EU leaders are planning to visit Beijing in late July for the 25th EU-China Summit.
The question now is whether Brussels and Beijing can capitalize on the momentum -- or whether long-standing differences will derail talks once again.
In light of increasingly hostile relations with the US, Xi Jinping is seekingto shore up China's relations with its neighbors.
On Tuesday and Wednesday, Xi presided over a high-level work conference on regional diplomacy.
All of Xi's fellow Politburo Standing Committee colleagues attended, as did many of the country's top officials.
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On Wednesday, two Chinese ministriesissued warnings for tourists and students planning travel to the US.
The Ministry of Culture and Tourism told prospective tourists to "fully assess the risks" of US travel, and "travel with caution."
The education ministry (MoE) advised students to "conduct risk safety assessments" when considering study in the US.
The deterioration of US-China relations was destined to hit bilateral tourism and study abroad hard -- these warnings just add fuel to the fire.
As always, it was a busy week in China.
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