Sean Collins

So Miles, we’re in a trade war with China right now. What’s going on?

Miles Bryan

Things really took a turn on April 2, when President Trump announced his 10 percent baseline tariffs on every country, with higher so-called reciprocal tariffs on many countries on top of that.

That led to days of chaos, stock market swings, bond market problems, and to Trump deciding to pause those reciprocal tariffs. 

However, he left big tariffs on China. As of Tuesday, they’re at 145 percent for most items, which is a massive blow to trade between the United States and China. 

In the last couple of days, the administration’s walked the scope of its tariffs on China back a bit, putting a pause on a lot of consumer electronics though Trump says tariffs on those goods are coming back down the line.

China's taken some counter measures. Tuesday, it announced it was halting delivery of some orders it had with Boeing, the jet company. It's halted some rare earth mineral exports to the United States. And it has a pretty broad 125 percent tariff on most US goods.

Sean Collins

Why is China taking an aggressive, even antagonistic stance in response to the tariffs?

Miles Bryan

One, China’s been preparing for this for years. 

Trump put tariffs on China during his first administration, and the experts and journalists I talked to said China wasn’t particularly well prepared for that. Since then, they have been preparing, hardening their markets, and building relationships with other countries. 

Two, they feel like this is an existential question for China and for the legitimacy of China's Communist Party. They both want to show China’s strength and believe there is no upside to trying to work with Trump. 

They see how Trump treats countries that acquiesce. They look at how Trump treats America’s allies. And they say, That kind of belittling is unacceptable. 

Three, Chinese leadership thinks that they can tolerate pain to a much higher degree than the United States can. Over the last decade, China has really made a concerted effort to develop its economy and its industrial base around the technologies of the future. There aren’t really free and fair elections in China. Dissenting media and voices are suppressed very effectively. 

They just have the capacity to ride this out in a way that they think the United States doesn’t, and there are pieces of evidence that support that belief: Trump walked back the reciprocal tariffs when the bond market looked shaky, he paused tariffs that would affect big American companies like Apple. He’s been signaling that he wants President Xi Jinping to call him. They have good reasons to think that they're going to be the one that can grin and bear it for longer.

Sean Collins

Does China then stand to gain anything from this way that the US doesn’t?

Miles Bryan

China’s leadership says, and the experts I talked to agree, that nobody wins a trade war. This is going to hurt Chinese exporters. It’s going to hurt the Chinese economy, which has been suffering for the last couple of years due to a property crisis, and because Chinese consumers haven’t been spending enough money. 

That said, a trade war is also going to cost American consumers a lot of money, and it’s going to hurt American manufacturers who end up sourcing parts from China, even if they put them together here.

In the medium to long term, China could come out of this looking like the more stable partner. Chinese President Xi Jinping has been in Vietnam and making overtures to the European Union. That outreach could really boost their standing and boost their trading relationships outside of the United States. 

When I went into reporting this story, I thought the trade war would put China in position to dominate the world, and the war was going to be good for China. But I heard over and over again that this is going to make the whole world not just poorer, but more dangerous. 

I learned that trade between the United States and China is a stabilizing force in our relationship. And the experts I talked to mentioned issues like the sovereignty of Taiwan as things that could become a lot more uncertain if there isn't trade binding the United States and mainland China together. Without trade, China has less of a reason to not act unilaterally and invade or blockade, or do other stuff that we don’t want to see happen.

Sean Collins

So we’re not necessarily looking at a future where China is in charge?

Miles Bryan

My reporting suggested that the trade war might have sped up the movement towards a more multipolar world, one where China doesn’t replace the United States as the global cultural and economic hegemon, but maybe the US loses that position. China and the United States may both have their spheres of influence and spheres of trade, coexisting, but in a fraught — potentially explosive — way.