On April 2, 2025, American President Donald Trump imposed a 10 percent tariff on all imported goods to the United States, as well as further individualized tariffs on dozens of countries. Named “Liberation Day,” the purported purpose was to “level the playing field and protect America’s national security.” But over the last month, American consumers have mainly faced a melange of economic volatility, plunging stock markets, and looming trade wars.
In mid-April, bowing to market volatility, the Trump administration recalibrated, scaling back its ill-considered tariffs for all countries except China for 90 days. But the damage had already been done. Not only did global stock markets experience their worst period since the COVID-19 crisis, but the US’s relationships with its trading partners and allies have also been greatly damaged. Now, after three months of insulting, threatening, and tariffing some of the US’s closest allies, the Trump administration is finding that most of its long-term allies and trading partners are not responding to the negotiation strategy as expected. Instead of conceding or agreeing to pay the US “a lot of money on a yearly basis,” as Trump stated was his goal, many countries are planning to retaliate by reducing security dependence or – most overwhelmingly – finding alternative trading partners to the US.
In light of this response, the country most likely to benefit from “Liberation Day” is the very country the Trump administration was attempting to target: China. Economic tensions between Washington and Beijing have been on the rise since 2018, but the first few months of Trump’s second term have seen major escalation. Sky-high tariff rates on both countries earlier this year created stress on both countries domestically, as well as significantly straining the global economy. For American consumers, it fueled concerns of higher costs and impending supply shortages at home; for the world economy – global economic downturn, sharp price hikes, and fears over a global recession. The US economy shrank by 0.3% in the first quarter, and China has experienced a slowdown in commerce.
With the world’s two largest economies on a collision course, representatives from both countries met in Switzerland over the weekend of May 10th in an attempt to reach an economic truce. Following these talks, the US agreed on Monday to cut its tariff rate from 145% to 30%, and China from 125% to 10% for the next 90 days. Global markets have reacted positively, but even US Treasury Secretary Scott Bessent – who negotiated the agreement announced Monday – has acknowledged that it will take much longer to properly reset the US-China trade relationship. At a time when industries, businesses, and consumers are looking for consistency, both countries now have 90 days to attempt to reach a more permanent resolution.
Trump and his allies have hailed the agreement as proof that his aggressive tariff strategy will pay off, but others view it as a capitulation – a vacillation in Trump’s tariff strategy that has done little to assuage the uncertainty that has impacted investors, consumers, and entire countries alike. The mutual reduction in trade measures is most certainly a step in the right direction, but it is not the all-out victory the Trump Administration claims it to be. It does not reverse the damage already inflicted by increased costs, disrupted supply chains, and weakened US credibility.
Over the last few months, Trump has alienated many of the US’s allies. Now, even as China’s economy flutters, Beijing is strategizing. With many countries looking for alternatives, China is taking advantage of the US’s faltering relationships, working to position itself as a stable partner in sharp contrast to the US and Trump’s flip-flopping policies.
Stephen Collinson, a senior reporter for CNN Politics covering the White House, explains that “a unified North American trading powerhouse” has historically been one of the US’s strongest bulwarks against China. The US’s relationships, especially in the Indo-Pacific region, therefore hold a great deal of significance in the competition against its main economic rival. At the end of March, US Defense Secretary Pete Hegseth highlighted this importance when he toured the Indo-Pacific, pledging his support for US allies in Asia. However, it was only a week later that Trump declared economic war on some of those very same countries.
So, even as Trump tries to turn his global trade war into a one-on-one confrontation with China, he is finding that, without the support of these key allies, the US will not hold the same influence in the region, nor be able to boost its position in a fight against China.
All the while, Chinese President Xi Jinping is making economic and strategic moves in the Indo-Pacific and beyond. While Washington is promoting a message of protectionism and “America First,” Beijing is doing the opposite. “In the face of external uncertainties,” Lin Jian, a Chinese foreign ministry spokesperson, stated in a press briefing, “China will insist on shaking hands rather than shaking fists, tearing down walls instead of building barriers, [and] connecting instead of decoupling.”
In other words, China is working to expand its circle of trading partners and diversify ties.
As part of this approach, China is embracing its neighbors. At the end of March, China, South Korea, and Japan held their first economic dialogue in five years as they sought to facilitate regional trade. Xi also kicked off a three-nation tour of Southeast Asia on April 14th, meeting with officials in Vietnam, Malaysia, and Cambodia – three countries facing tariffs up to 46%, 24%, and 49%, respectively. Beijing has made even wider overtures of friendship, instigating dialogue with countries such as Australia and Canada, in addition to the European Union. These countries may be considered traditional US allies, but they were not left out of Trump’s effort to “level the playing field,” facing tariffs as high as 26%.
The poorest and weakest countries in the Global South had already been greatly impacted by the cutting off of US humanitarian aid. But the imposition of US tariffs has caused countries all over the world – especially in Asia and Europe – to lose confidence in their ability to trust the US. “If our partners can’t rely on us,” former US diplomat Wendy Cutler argues, “Guess what? These other countries, including China, look more attractive.”
The relationship between the US and China has been changing considerably since Beijing’s top diplomat, Yang Jiechi, declared in 2021 that the US could no longer “speak with China from a position of strength.” A shift in the balance of power between the US and China is underway, and with steady advancements in China’s industrial, technological, and military capabilities, this change is rapidly becoming more and more evident. China was already working to expand its alliances due to this shift, but as the US’s capacity and credibility erode due to his policies, Trump has just expedited this process.
In the past, China has not necessarily been considered a paragon of unity and certainty in the Indo-Pacific. The country has come under a great deal of criticism in recent years for fueling trade tensions and provoking its neighbors. But rather than working with Japan, South Korea, Singapore, and other countries that have been impacted by what Trump describes as China’s unfair trade practices, the US has instigated an economic “war” against its friends, “crippling our ability to deal effectively with China,” as former US national security advisor John Bolton said.
Vina Nadjibulla, the vice president of research and strategy at the Asia Pacific Foundation of Canada, explains that, while the “US is preoccupied with competing with China, it is ceding ground and losing influence by essentially making China the only possible alternative for many of these economies.” China now has the opportunity to play the foil to the US, and, by going on a “charm offensive,” many countries are facing an impossible – or for some, all too simple – choice.
Trump seems to believe he can be cavalier in his policies because he assumes that other countries cannot afford to turn their backs on the US. But with Beijing shaking hands while the US shakes fists, this belief comes under strain. If the US’s trade war with China continues in any form, it’s going to need partners. Ultimately, the balance of American and Chinese international influence depends more on each countries’ relationship with the rest of the world than it does on US-China bilateral relations. Even as the two countries meet over the negotiation table, Xi is building up key relationships for China, engaging with countries to a degree that makes it clear that he is not going to stop in Southeast Asia. “If Trump had any sense,” Bolton argues, “he would be doing the same thing.”
