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So you may have heard there's a trade war going on. Yeah, it's been a lot every day. It's different and it's definitely hard to keep up. I mean, so right now, tariffs on Chinese goods from the U.S. and tariffs on U.S. goods from China are at historical highs. And they basically amount to a trade embargo on each other. Lily Kuo is the Post's China bureau chief. And I've been covering the trade war for the last two weeks. It feels like it's been a year.
As it stands right now, U.S. tariffs on Chinese goods are at least 145 percent. Chinese tariffs on U.S. goods are at least 125 percent. And this has all evolved well beyond measured trade policy. It's actually gotten kind of mean. Here's Vice President J.D. Vance earlier this month.
We borrow money from Chinese peasants to buy the things those Chinese peasants manufacture. That is not a recipe for economic prosperity. It's not a recipe for low prices, and it's not a recipe for good jobs in the United States of America. Then China's top official overseeing Hong Kong affairs, Xia Baolong, bit back.
He said U.S. tariffs would backfire and that, quote, those peasants in the U.S. would wail in front of 5,000 years of Chinese civilization. Let the American peasants go to the people in front of the 5,000-year-old civilization of the Chinese nation.
So Beijing, you know, at every step of escalation from Trump, they've responded with pretty much an equal response, either in tariffs or other measures. But since Trump has just continued to escalate them, it seems like Chinese officials are now starting to be a little bit more spicy. And so they're casting the U.S. as an irresponsible, selfish global power that is wreaking havoc on the global financial system and global trade.
From the newsroom of The Washington Post, this is Post Reports. I'm your guest host, Chris Velasco, in for Colby Itkowitz. It's Thursday, April 17th. Today, how China views the trade war. I speak with Lily about how the trade relationship between the U.S. and China got so tense, how China thinks it can weather the storm, and what it means for the rest of the world. ♪♪
Lily, I really appreciate you joining to talk to me about this today, especially because you're in Taipei and I'm in California and the time zones do not align in any productive, enjoyable way. No, this is very productive and enjoyable. So, Lily, what's your sense of how we got here? Right. Like what is what did the escalation between these two countries look like?
So it's funny because this really started with Trump's first term and the first trade war that he launched against China. This has been long in the making. You've heard many, many speeches by me and talks by me and interviews where I talk about unfair trade practices.
At that time, the reason was China's trade surplus with the U.S. And that trade war eventually ended in what was called a phase one deal where China promised to buy more U.S. goods. Today, we take a momentous step, one that has never been taken before with China.
toward a future of fair and reciprocal trade as we sign phase one of the historic trade deal between the United States and China. Then the pandemic hit and China ultimately did not buy as much as it said it would. And so Trump sees China as not holding up its side of the bargain. And relations between China and the U.S. just continued to get worse during the Biden administration.
And then when Trump came in, he had campaigned on promises to target China and its unfair trading practices and to, you know, levy something like 60 percent tariffs. You're talking about 60 percent tariffs on Chinese goods. Is that in the cards? No, I would say maybe it's going to be more than that.
So in February, Trump started off with a 10% tariff on Chinese goods. And he said that this was punishment for what he said was a lack of progress in China's efforts to stop the flow of fentanyl from China to the United States. What's happening as you see this is the president fighting a drug war. This is not a trade war.
So China responded with a 15% levy on U.S. coal and liquefied natural gas. You know, there's further escalation where China then started to put tariffs on U.S. agricultural products. So that was chicken, pork and soy. And then the next step was that Trump announced his Liberation Day tariffs in April. So we're going to be charging a discounted reciprocal tariff of 34%. I think
In other words, they charge us, we charge them, we charge them less. So how can anybody be upset? So China came back with its own tariff of 34% on all products from the U.S. And so we get to where we are now, which is that China now has a tariff of...
at least 125% on all U.S. goods. And that's on top of the pre-existing tariffs that were on agricultural products or energy. And the U.S. has now put a tariff of at least 145% on all imports of Chinese goods. And that's on top of existing tariffs from the earlier trade war, which were on machinery parts and furniture and things like that.
So that's how we got to where we are now. So for the Chinese side, the tariffs are more than they expected and everything has happened faster than they expected. And it's a little bit worse than they expected. But also in a lot of ways, China's been preparing for this since the first trade war with Trump.
And when it comes to those really high tariffs the U.S. is putting on goods from China, we've sort of entered this weird phase where those tariffs don't even apply uniformly to everything that we're importing. Like, my day job is actually a tech reporter for The Post. And so I've been following how tariffs were supposed to affect consumer electronics, for instance, of which China produces maybe the most in the world. And it seems like that situation has shifted now, too. Yeah.
Yeah, it's like a lot of the back and forth in this trade war. It's a bit confusing and very fluid. The U.S. Customs and Border Protection had announced exceptions on things like semiconductors and consumer electronics like iPhones and smartphones. China is a big exporter of electronics and a big exporter of smartphones to the U.S.,
But then the Trump administration said that these exemptions would only be temporary and that the administration, in fact, is working on tariffs on those products and that they should come in about a month. But then to add a bit more confusion to the situation, Trump seemed to say on social media that there are no exceptions to these tariffs. So there's a lot of moving parts here.
Can you give us a sense of how big a deal this is, right? Like, I feel like there is, for many of the people I speak to, just a general sense that this entire trade situation is confusing and very bad. But how important is China to the U.S. as a trade partner? And how dependent are these two countries on each other to function economically? Yeah.
I think this is a very big deal. China is the world's largest exporter and trade between China and the U.S. is at its peak, it was about 700 billion. So for the U.S., this means that costs are going to go up because China is such a dominant producer in a lot of different sectors like toys, furniture, electronics. And so that means that U.S. importers, they're not going to be able to find alternatives in the short term and they will have to pay those tariffs.
For China, this is a big deal because China really relies on its exports, especially right now when the economy is growing slower than it has been. So China exports about $500 billion worth of goods to the U.S. every year. And China's economy right now is too weak to absorb all of that.
Lily, I'm so curious. You're the Post's China bureau chief. What is your sense of how Chinese leadership has been making decisions on how to handle these tariffs? There's been a lot of attention on like the deals that other countries have tried to strike with Trump or want to strike with Trump to avoid the tariffs that he promised to levy on them. But China was pointedly not one of those countries. Can you kind of peel back the curtains on the thinking there? So, you
You'll often hear Xi Jinping described as China's strongest leader in decades. And so a big part of his legacy is that he's going to transform China into this major global power. This is called the rejuvenation of the Chinese nation, which, you know, curiously similar to, in some ways, to Trump's make America great again. And so that means he can't afford to look weak to other countries and he can't afford to look weak at home. The other part of their calculation is that
They feel like they can wait it out and that they only need to wait it out for a little bit longer. So Chinese officials have definitely been watching the last few weeks of market turmoil and seeing some cracks in the support for Trump's tariffs. And increasingly, they think that they just need to wait a little bit longer for backlash to build and then transform.
Trump will be more willing to come to the table to negotiate and China will also be in a better position to bargain. The idea of Xi Jinping as this historical strongman type is fascinating to me, but it prompts me to think about the Chinese economy, right? Like, is the economy strong enough to withstand these tariffs or does it have to sort of reevaluate its relationship with the U.S. kind of overall? Yeah.
Yeah, that's the big question. Can the Chinese economy withstand it? Obviously, the Chinese side says that they can. They say that the Chinese economy relies more on domestic consumption, domestic spending, and that they have diversified their exports so that they don't just rely on the U.S. market. But the problems in the Chinese economy are still there. I mean, they're still dealing with a property market slump. They still have high youth unemployment that isn't going to get better once the tariffs bite. And growth is slower.
So I want to talk a little bit more about how things are unfolding at the ground level in China with the manufacturers and the sellers there. Our colleague, Christian Shepard, who's a China correspondent based in Singapore, he's been speaking with manufacturers in China. And he sent us some voice notes about a trip he recently took to Shenzhen to attend a big event.
e-commerce expo just before the tariffs kicked in. So I want to play that tape. And just so you're aware, that water sound in the background, that's actually a fountain in the office of someone Christian spoke to.
So at the expo, there was really almost anything you could think of. You know, there were vendors who were selling toys. They were, you know, Cybertruck design toys. There were people selling fake plants, lunchboxes, clothes. And then there was also, you know, fairly...
niche products, things that were designed purely for an American audience. These included things like infrared, night vision, rifle scopes, and those would not be sold in China. And I was there trying to speak with people about how they're feeling about tariffs. And I met this one guy, Liao Changyi, who was one of the biggest
sellers of fake nails in southern China. And we got to chatting about his business. And Liao was reasonably upbeat initially. And he was kind of saying how Chinese e-commerce vendors, including
His business, they're very good at adapting and he was looking to expand into lots of different markets. And he was saying things like we can open a store or send a batch of goods to Spain or Mexico. The cost is not actually very high.
For example, we open a store or ship goods to Spain or Mexico. Yes, in fact, its cost is not very high. We are willing to try. If it is a good country, it may bring a new growth to our company's business.
And when I followed up with him later after the tariffs had risen into the triple digits, he said it was going to be tough, that...
there aren't really any markets that can match the US size and that even if they are able to expand elsewhere, it's going to be a difficult year. But now, like a lot of the other vendors I spoke to, they all tended to be pretty on the side of what the government was doing.
to think that it made sense for China to hit back and not to bow down to pressure from the United States. It sounds like from the people Christian spoke with that they say they're feeling good about China's response to all this, but the trade war will still make things tough for them. Lily, is that your sense of things, too?
I think that people are feeling very nervous about the tariffs. One manufacturer that we talked to, he said that in the last three days, as China and the U.S. kept ratcheting up their tariffs, that he had lost 80% of his orders. So this person is a family-owned business and they export shoe material to the U.S. And then he had to let go pretty much all of his staff.
What's your sense of just how this narrative is unfolding and landing with people in China, right? Not even just manufacturers and product suppliers, but regular people kind of living their lives and hearing what the Chinese government has to say. How is this all being portrayed to them? So this is being portrayed as the U.S. being…
The U.S. triggered tariff storm sweeps the globe.
Markets are in panic. The so-called global beacon now puts America first. It slaps allies in the face, treats the world with predatory practices, and makes other countries pay for MAGA, pushing the fragile world economy over the edge and pitching itself against the whole world.
And so the U.S. is being portrayed as irresponsible. I got to ask, is that dramatically different from how China used to talk about the United States to its citizens? Yeah. No, that's the thing is that it's not actually different. It's just that now these messages resonate.
There's also a video that one of the spokespeople for the foreign ministry posted of Ronald Reagan talking about how trade wars are bad and they're bad for Americans, too. We should beware of the demagogues who are ready to declare a trade war against our friends, weakening our economy, our national security and the entire free world.
And so it's this way of the Chinese using this conservative icon to criticize the Trump administration's policies. I kind of hate to say it, but between those peasants should wail before 5,000 years of Chinese civilization and dropping Reagan bombs on us. Sounds like they're nailing us pretty good, y'all. After the break, how China plans to replace the U.S., both in trade relationships and in global influence. We'll be right back.
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So we mentioned that China has already put in place its own retaliatory tariffs on the U.S., but how else is it trying to defy Donald Trump? So because China exports so much more to the U.S. than it imports, it has to resort to other means to retaliate.
So that means China has put various U.S. companies on different trade blacklists. They have put in export controls to restrict U.S. access to critical minerals that are needed to produce high-tech products. Other measures that have been talked about are investigating more companies, more used companies operating in China or suspending U.S.-China cooperation on stopping fentanyl from going from China into the U.S. So
Does the fact that we're talking about China specifically kind of make its reaction to these tariffs different than what we'd see anywhere else? Like, what is it about the government and its control over the Chinese economy that makes all of this possible?
Yeah, I mean, you know, the Chinese economy is a state directed economy. And when the tariffs were first announced and, you know, markets in Asia were dropping, I mean, the Chinese government, they could put in these breaks into the stock markets on the mainland so that shares didn't fall that much.
And in the same token, they said that they're willing to spend a lot more in stimulus measures to support the economy. And they have these tools that they can use to insulate the economy. And the other thing that's important is that, I mean, the Chinese side is looking at the U.S. and they feel that
Trump is beholden to public opinion and that the more pain that American consumers feel, the more pressure that he will be under to lift the tariffs. And that's the kind of public pressure that Chinese leaders are not under because it's not a democratic system. That's so interesting. How else is China trying to protect its economy? So one method that Chinese manufacturers used starting with the first...
trade war that Trump waged is that they rerouted goods through third countries like Vietnam, Mexico, Canada. And so if the tariffs on these other countries, if they remain low, then China can continue doing that.
But a lot of analysts think that Trump's next target will probably be this method, which is called transshipment, and that the U.S. is going to try to cut off these back doors to the U.S. market. If the U.S. closes off those routes, then China can find new markets. It's saying that it has found new markets and that it can find more new markets, for instance, in Southeast Asia. But these countries are also worried about a huge glut of cheap Chinese goods.
So it sounds like China might have to expand its trade relationships with other countries to make up for the shortfall it's experiencing in the U.S. But is China also going to step up in other ways? Like, is China planning to take advantage of the fact that the U.S. has backed off from many of its other international obligations, like international aid, for example? Like, is this a moment for China to step further into the spotlight, I guess? Yeah.
Yeah, I think this is a huge opportunity for China. I mean, for years now, China's been trying to establish itself as a leader of the global south. And you see lots of investment and infrastructure and aid and development financing in developing countries from China. And so China has been trying to say we are responsible, dependable global power. And the trade war is a perfect chance for them to make that case.
But there's also a lot of distrust of China. It has a lot of territorial disputes in the region and Asia with many of its neighbors. That includes the South China Sea, Taiwan, disputes with Japan. And another interesting dimension is, you know, Chinese state media has been saying that Beijing has communicated to countries that they can do whatever they want in their negotiations with Trump. China respects their, you know, sovereignty in that regard. But if any of these countries
agreements come at the expense of China, as in there are tariffs put on China or other trade barriers, then there will be punishment. And so a lot of these other countries, especially in Southeast Asia, they're increasingly they're stuck between China and the U.S. and they're going to have to figure that out. Lily, thank you so much for talking to me about this today. Thank you for having me. Lily Kuo is The Post's China bureau chief. You also heard from Christian Shepard, a China correspondent for The Post.
On Thursday afternoon, Trump briefly addressed the press during a meeting with Italy's prime minister. Trump was asked why he wouldn't call Chinese President Xi Jinping to discuss trade. And Trump promised that he would reach a deal with China. Oh, we're going to make a deal. We'll have a deal. I think we have a—I think we're going to make a very good deal with China. He did not provide further details.
Today's episode was produced by Renny Svernovsky and Alana Gordon. It was mixed by Sam Baer and edited by Rina Flores. Thanks to Anna Fifield. If you love the show, help other people discover it by leaving a rating on Spotify or a rating and a review on Apple Podcasts. I'm Chris Velasco. Thanks to all of you for letting me guest host today. And we'll be back tomorrow with more stories from The Washington Post. I'm Molly Roberts. And I'm Drew Goins.
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