Garvan Walshe: To get revenge for tariffs China could stoke tension between the US and its Asian allies.

Garvan Walshe is a former national and international security policy adviser to the Conservative Party. He runs Article7 – Intelligence for democrats.

All things considered, Trump’s weakening of the United States will be good for Beijing.

Before Trump took office, things had started to get a little tricky for China. Its economy was slowing, as China began to get too rich to compete with lower-wage manufacturers, but Chinese consumers remained reluctant to spend.  There was not much space for further domestic infrastructure investment, given China’s already high investment rate. It was having some success in high technology, particularly batteries and solar power, and taking a lead position in the mass electric car market.

But this success was causing anxiety in both Washington and Brussels who could, if they acted together make the world economy rather difficult for China. European manufacturing competes with the Chinese (though at a higher price point) while the two rich world blocs did huge services trade.  They were complaining increasingly bitterly about Chinese success in mass green technology and had begun a process of “reshoring.”  Though China could limit some of this by direct investment, as it does in Hungary, for example this is often less efficient than Chinese production could be, not least because of higher costs and labour laws.

The US had been rather successful at coralling Asian states into an anti-Chinese alliance, and forced Beijing to tone down its aggressive “wolf warrior” style diplomacy.  Trump’s arrival had the benefit, from the Chinese perspective, of blowing that uncomfortable consensus apart.

Some of Trump’s actions have been straightforwardly bad for China: tariffs, as of writing at 104%, make many Chinese exports to the US unaffordable in themselves. The knock-on effects on American growth will be felt more heavily.  But, Trump trade policy is a bit like a lighthouse, and Beijing finds itself as enemy of the week. Next week it might be someone else.

More serious is the  transformation of US foreign policy. The Administration seems divided between two courses of action, with wildly different effects on China. One strand, represented by newly appointed Undersecretary for Policy at the Department of Defense, Elbridge Colby, would see the US concentrate resources on containing, and if necessary defeating, China, while leaving Russia to the Europeans and the Middle East to deal with its problems on its own.

The other is a directly isolationist United States, represented by proposals to cut the US defence budget by 40% and concentrate on defending US territory (and possibly the rest of North America). The US would have its own sphere of influence and so would China.

It is too early to find out which faction will win out: a United States hostile to China in ways that go beyond trade policy, where Trump has a specific obsession with tariffs, or one merely indifferent to it.  The first would suggest China try to break the “anti-hegemonic” coalition that Colby proposed in his book Strategy of Denial, by improving ties with Japan, India and South Korea, and improving relations with Europe, which is divided on how to proceed towards Beijing.

A victory for the second would very much be in China’s interests, and allow it to dominate at the very least East Asia, and constrict Taiwan. Though China makes regular military threats against Taiwan, a war would be a risky proposition for a country whose last major military operation resulted in failure in Vietnam almost half a century ago.

The question then for Beijing ought to be how to push the United States towards the isolationist rather than the anti-Chinese direction. Emphasising US-China manufacturing entanglement, as Elon Musk does (in self-interested mode: he makes Teslas there) is likely to make things worse, because Trump sees every transaction as an opportunity for extortion, and wonders about what is going on: if he is not extorting the Chinese, what they are extorting from him?

Symbolic retaliation for American tariffs appears necessary for political reasons and for Xi’s own ego, but will not have very much effect because China doesn’t import much from the US. Support for Russia used to be away to irritate the US, but it’s less clear whether it does any more. China can step into vacuums left by Washington’s retreat, but that is not likely to affect the Administration’s calculus.  But perhaps stoking tension between the United States and its regional allies would help. If the Vance and Hegseth can start to think of Japan and Korea like they do Europe, China might stand a chance of securing the US withdrawal they prefer.