Trump Tries To Isolate China

A White House strategy to strong-arm trade partners into joining its efforts to isolate China economically is far from assured of success, economic analysts said.

President Donald Trump's rollout of "reciprocal" tariffs—or taxes on imported goods—has roiled markets, raised the risk of recession at home and sowed uncertainty around the world. Trump says the move is necessary to end "unfair" duties on American products, narrow trade deficits, and bring manufacturing jobs back to the U.S.

Newsweek reached out to the White House and Chinese Foreign Ministry with emailed requests for comment.

Tariff Turmoil

The administration's tariff rollout has been inconsistent, with some tariffs walked back within hours and a 90-day window given to many countries for negotiations. China was the exception, hitting back with its own hefty tariffs and prompting Trump to announce a further tit-for-tat hike.

"In a fracturing global trade environment, America wants to check China's progress in creating a supply chain geography and trade arrangements that are more partial to China than the U.S.," George Magnus, an associate at the University of Oxford's China Centre and the former chief economist at UBS, told Newsweek.

Since Trump launched the trade war against China during his first term, the U.S. has sought to decrease its reliance on the manufacturing powerhouse, which has considerable control over key supply chains from pharmaceuticals to minerals critical to defense technologies as well as consumer goods.

Strategic Pressure

To further turn up the heat on China, Trump administration officials are pressuring over 70 U.S. trade partners to scale back trade with the world's second-largest economy and even introduce their own tariffs, The Wall Street Journal wrote last week, citing sources familiar with the discussions.

This strategy—reportedly backed by Treasury Secretary Scott Bessent—is meant to be a force multiplier that could further bite China's economy—which has been grappling with slowing growth, lackluster domestic demand, and a long-running housing market crunch. That could force Beijing to negotiate.

But rather than negotiating, Chinese President Xi Jinping is in the midst of a charm offensive, seeking to rally support from nearby Southeast Asia to Europe.

After years of aligning more closely with the United States on China over concerns about national security and over alleged Chinese industrial oversupply, some U.S. allies in Europe are pushing back against Washington and even signaling they're considering a relative thaw in trade relations with China.

"China is the second biggest economy in the world, and it would be, I think, very foolish to not engage. That's the approach of this government," U.K. finance chief Rachel Reeves told The Telegraph.

China Warns of "Countermeasures"

China's commerce ministry on Monday condemned Washington's "bullying" and warned: "Appeasement does not bring peace, and compromise is not respected."

"It should be pointed out that China firmly opposes any party reaching a deal at the expense of China's interests... If such a situation occurs, China will never accept it and will resolutely take reciprocal countermeasures," the spokesperson said.

"On the Fence"

Magnus pointed to a mixed response so far from major U.S. trade partners to efforts to isolate China.

He predicted they will adopt a "sit on the fence" approach—aiming to continue deepening ties into the China-centered trade and supply chain while at the same time retaining their access to the U.S., which accounts for nearly one-third of the world's consumer market.

"Trump is calling their bluff, in effect asking them to make their choices. Whether now or later, I suspect some, though not all, important countries from a trans-shipment and investment standpoint, will play along with Trump," Magnus said.

However, these nations have likely taken into account the risks of running afoul of both countries, he added.

Missed Opportunities

"The United States already missed a great chance to help form an anti-PRC [People's Republic of China] trade coalition when it left the Trans-Pacific Partnership in 2017," Sean King, Asia scholar and senior vice president at Park Strategies, told Newsweek, referring to a trade group Trump quit shortly after taking office.

While many countries friendly to the United States hope to reduce reliance on trade with China, they may not trust Trump not to reach his own bilateral deal with Beijing and leave them in the lurch "especially, as he so often reminds the world, how much he likes and respects Xi Jinping," King added.

"Until we stop picking needless fights with our friends and allies, I sadly think it's going to be every country for itself."

Independent economist Andy Xie believes China is better prepared to dig in for the long haul compared to during Trump's first term.

"Over the last six years, I think people have become more and more confident because there are all these tech sanctions. Most were broken through. And in terms of software, the substitutes for Android, for Windows...are all there," he told CNBC.

"[...] So that's why it's willing to negotiate, play hardball with the U.S. and it's willing to risk a complete decoupling with the U.S."