1 Trump’s tariff strategy against China shows early results
Trump wants trading partners to hemp in China
April 15
The Wall Street Journal reported that the Trump administration plans to use tariff negotiations with U.S. trading partners to pressure them into restricting their dealings with China, citing people with knowledge of the conversations.
The Journal added that the Trump administration is looking to get commitments from U.S. trading partners to isolate China’s economy in exchange for reductions in U.S. trade and tariff barriers. Measures include getting other nations to disallow China from shipping goods through their countries, stopping Chinese firms from locating in their territories to avoid U.S. tariffs, and not absorbing China’s cheap industrial goods into their economies.
The measures are meant to impact China’s “already rickety economy” and force Beijing to the negotiating table with less leverage before potential talks between President Donald Trump and Chinese leader Xi Jinping. Specific U.S. demands of trading partners could vary widely by country given their degree of involvement with China’s economy.
April 16
Bloomberg News also reported that the Trump administration is looking to pressure other nations to limit trade with China in negotiating U.S. tariffs. For instance, Trump’s top economic advisers are discussing asking representatives from other countries to impose so-called secondary tariffs (essentially a monetary sanction) on imports from certain nations with close ties to China, citing a person familiar with the matter. Other people said that the U.S. wants trading partners to refrain from absorbing excess goods from China, among other concessions on China.
A person familiar with the Mexican government’s thinking told Bloomberg that Mexican officials are expecting the U.S. to ask their country to increase tariffs on electric vehicles imported from China.
April 20
In a post on Truth Social, President Trump said that many world leaders and business executives have been asking him for relief from U.S. tariffs since they were announced. He added that the U.S. is serious on tariffs, and that “it won’t be easy” for world leaders and business executives to “right the wrongs of decades of abuse.” Trump also said, “for those who want the easiest path: Come to America, and build in America!”
In another post, Trump gave a list of “non-tariff cheating” measures, including:
- Currency manipulation
- VATs which “act as tariffs and export subsidies”
- Dumping below cost
- Export subsidies and other government subsidies
- Protective agricultural standards
- Protective technical standards
- Counterfeiting, piracy, and IP theft
- Transshipping to evade tariffs
Countries tighten export controls
April 4
The Singapore Customs and Ministry of Trade and Industry issued a strong warning to companies against using Singapore to circumvent other countries’ export controls on advanced semiconductor and artificial intelligence technologies. “The Singapore Government does not condone businesses deliberately using their association with Singapore to circumvent or violate the export controls of other countries. This applies to all our trading partners,” the advisory said.
April 11
Reuters reported that Vietnam is prepared to curb Chinese goods being shipped to the U.S. through its territory and tighten controls on sensitive exports to China to avoid U.S. tariffs, citing a person familiar with the matter and a government document. Three people familiar with the matter said that Vietnam is hoping to get U.S. tariffs reduced to the 22 percent to 28 percent range, if not lower.
April 13
Vietnam News Agency reported that Vietnam’s Ministry of Industry and Trade recently issued a directive requiring the strengthened management of raw material suppliers and stricter quality control over raw materials to prevent trade origin fraud.
In a meeting between U.S. and Vietnam trade representatives on March 14, both sides agreed to cooperate in building mechanisms to prevent fraudulent trade, trade origin frauds, and illegal transshipments.
April 20
The Cambodia-China Times reported that Cambodian deputy prime minister Sun Chanthol led a trade and investment relations working group to hold a first round of trade negotiations via video conference with U.S. Trade Representative Jamieson Greer on April 16. The article added that Cambodia hopes to persuade the U.S. to reconsider imposing high tariffs on Cambodian goods.
Casey Barnett, President of the American Chamber of Commerce in Cambodia, told the paper that the Cambodian government is currently developing new procedures and plans to prevent countries such as China from using Cambodia as a “transit hub” for exports to the United States.
April 21
1. The Korea Customs Service announced the discovery of multiple violations in the first quarter of 2025 where Chinese companies falsely labeled goods as “Made in Korea” for export to the United States. The total value of those illegal exports reached 29.5 billion won (about $20.81 million), with U.S.-bound shipments accounting for 97 percent of the total. This is compared with a total of 34.8 billion won worth of violations for all of 2024, of which U.S.-bound shipments accounted for 62 percent.
2. South Korea’s acting President Han Duck-soo said South Korea’s ministers of finance and industry are meeting US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer in Washington D.C. on April 24.
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South Korea faces a potential U.S. tariff of 26 percent after the 90-day tariff pause.
PRC response to US trade deals at China’s expense
April 21
A spokesperson for the PRC Ministry of Commerce said in response to a reporter’s question about reports that the Trump administration is planning to pressure other countries during trade negotiations to limit their dealings with China:
- America’s action is “pursuing hegemonic politics and unilateral bullying under the guise of ‘reciprocity’ in the field of international trade.”
- China respects the efforts of all parties to resolve their trade disputes with the United States through equal and fair consultation.
- However, China firmly opposes any party making deals at the expense of China’s interests. Should such a situation arise, China will not accept it and will resolutely take reciprocal countermeasures.
- If international trade reverts to the law of the jungle, where the strong prey on the weak, all countries will become victims.
- China is willing to “strengthen solidarity and coordination with all parties, to jointly resist unilateral bullying, safeguard legitimate rights and interests, and uphold international fairness and justice.”
Final US tariffs on China to be lowered?
April 22
1. Bloomberg reported that Secretary Scott Bessent told a closed-door investor summit hosted by JPMorgan Chase in Washington that the U.S. and China cannot sustain the current tariff situation and that the current situation is essentially a trade embargo, according to people who attended the event.
Bessent also expressed optimism that tensions could lower in the coming months and bring relief to the markets, but a comprehensive deal between both sides could happen in two to three years. He added that China has stifled its consumer economy and favored manufacturing at America’s expense, and any agreement would require a rebalancing of trade that allowed the U.S. to increase manufacturing.
Bessent said that trade negotiations with China have not started yet.
2. When asked about Bessent’s comments, President Trump said that the U.S. was “doing fine” with Beijing and he did not anticipate a “hardball” negotiation.
Trump also said he would be “very good to China” and the final tariff would not be “anywhere near” the 145 percent level currently in place. “We’re going to be very nice. They’re going to be very nice, and we’ll see what happens. But ultimately, they have to make a deal, because otherwise they’re not going to be able to deal in the United States,” he said.
3. White House Press Secretary Karoline Leavitt said that 18 different countries had brought trade offers to the White House. She added that Trump’s trade team was meeting with 34 countries this week about possible agreements.
Leavitt also said that the U.S. was “doing very well in respect to a potential trade deal with China,” but sidestepped questions about whether Trump and Xi were talking.
April 23
Secretary Bessent told reporters on the sidelines of International Monetary Fund and World Bank annual meetings that the high U.S. and China tariffs would have to come down before negotiations can proceed, but Trump will not unilaterally cut tariffs.
“I think that has to be, because again, neither side believes that these are sustainable levels. As I said yesterday, this is the equivalent of an embargo and a break between the two countries in trade does not suit anyone’s interest,” Bessent said.
Bessent also said that the third quarter of 2025 is a “reasonable estimate” for achieving clarity on the final level of Trump’s tariffs.
Backdrop
1. President Trump raised U.S. tariffs on Chinese imports to 145 percent and tariffs on other countries to 10 percent pending trade negotiations as part of his “Liberation Day” levies. Meanwhile, the PRC increased Chinese tariffs on U.S. goods to 125 percent along with other retaliatory measures.
2. Xi Jinping visited Vietnam, Malaysia, and Cambodia in the week of April 14. Xi signed more than 100 cooperation documents with those countries and implicitly criticized the U.S. tariffs and trade actions.
Our take
1. The Trump administration’s tariff strategy has shown some initial success in getting countries to align themselves with the U.S. and block Chinese goods. Should the Trump administration succeed in getting countries to accede to the U.S. plan of curbing China through trade negotiations, the PRC will have increasingly fewer bargaining chips to use against the U.S. in ratcheting down the Sino-U.S. trade war.
There are several reasons why the U.S. is finding it easier to sway countries on the trade issue. The U.S. remains the world’s preeminent consumer market, with personal consumption expenditure accounting for nearly 70 percent of its GDP. This robust demand positions the U.S. as a critical export destination for numerous countries, underpinning global trade flows.
The U.S. sustains a substantial trade deficit, projected to reach approximately $1 trillion annually. A significant portion of this deficit stems from Asia, with the region’s trade surplus with the U.S. estimated at $600 billion to $650 billion in 2024. Key contributors include China, Southeast Asian nations (ASEAN), Japan, South Korea, and Taiwan. Notably, a considerable volume of Chinese goods is rerouted through other Asian countries, leveraging “trade origin laundering” to access the U.S. market.
In contrast, China’s domestic consumption is contracting, signaling a potential sharp decline in its import capacity. This downturn is likely to reduce China’s demand for raw materials, impacting supplier nations. Given the unrivaled scale of the U.S. market, other countries are unlikely to pivot away from it, reinforcing America’s leverage in global trade negotiations.
By contrast, domestic consumption in China is contracting, which means that China’s demand for imports is significantly declining. At the same time, the downturn in China’s exports is also reducing demand for raw materials, thereby affecting supplier countries.
Meanwhile, the U.S. tariffs have created an opportunity for export-oriented companies to seize China’s share of the U.S. market. China historically dominated as the world’s manufacturing hub, leveraging sophisticated supply chains and technological expertise that other nations struggled to rival. However, since the trade war began in 2018 and following supply chain disruptions during the pandemic, many production networks have shifted from China to other regions. Chinese manufacturers, seeking to circumvent tariffs through “trade origin laundering” and reduce tax burdens, have increasingly invested in other countries.
The latest round of U.S. tariffs further incentivizes non-Chinese manufacturing to replace or diminish China’s dominance in global markets. By aligning with U.S. interests, countries can secure lower tariffs while simultaneously strengthening their domestic manufacturing sectors. Ultimately, the PRC will end up on the losing side if the Trump administration’s tariff strategy bears fruit.
2. The PRC commerce ministry’s strong reaction to the Trump administration’s tariff strategy hints at Beijing’s pessimism about its prospects in the Sino-U.S. trade war. While the CCP claims that it is interested in “strengthening solidarity and coordination with all parties” to resist “unilateral bullying,” other countries would have weighed that they have more to gain by aligning themselves with the U.S. (see point 1) in isolating China than vice versa. Most countries would also have been spooked by Beijing’s “wolf warrior” diplomacy in recent years and are becoming more wary of the CCP threat. That being said, the PRC is not likely to be completely isolated as some nations look to hedge against U.S. hegemony.
3. The effectiveness of Trump’s China tariffs would take time to manifest given the 90-day tariff “pause” and the progress of ongoing trade negotiations between the U.S. and other countries. During this period, Chinese companies are likely to seize the opportunity to accelerate exports to the U.S. through transshipment.
As Sino-U.S. negotiations continue to stall and as more countries reach trade agreements with the U.S., economic decoupling between the two countries will hasten and new Cold War-style blocs could emerge around trade ties. The Beijing-aligned bloc, however, will be increasingly disadvantaged the longer the trade war drags on. In particular, the CCP will struggle to retain its influence over raw material-producing nations in the bloc because China’s demand for raw materials and commodities will wane over time with the outflow of manufacturing from China and the reshoring of manufacturing elsewhere.
4. The Trump administration’s remarks indicating a future de-escalation of Sino-U.S. trade tensions are likely intended to stabilize the markets, ease concerns about Sino-U.S. decoupling, and lure Beijing to the negotiating table. The administration is also likely looking to buy more time to rebalance global trade by reaching trade agreements with other countries and attracting manufacturing back to the United States.
Secretary Bessent and Trump’s comments signal to the PRC that trade relations between the two countries are not entirely irreconcilable and put the ball back in Beijing’s court. The CCP authorities could potentially latch on to the opening provided by the Trump administration to make inroads in trade talks with the United States and gain some breathing space.
2 How the ‘Xi losing power’ narrative detracts attention from the CCP threat
Former deputy propagada chief prosecuted
April 18
The Supreme People’s Procuratorate announced that Zhang Jianchun, the former deputy head of the Central Propaganda Department, has been formally prosecuted for bribery involving an “especially large amount” of money.
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Zhang Jianchun, 59, spent the bulk of his career in the Organization Departments of Shandong Province, Beijing Municipality, and at the central government. In November 2018, Zhang was promoted to deputy head of the Central Organization Department. From 2020 to 2024, Zhang would serve as deputy head of the Central Propaganda Department.
On June 21, 2024, Zhang Jianchun was placed under investigation by the Central Commission for Discipline Inspection. On Dec. 10, the CCDI announced that Zhang had committed serious violations of Party discipline and the law. He was accused of being “disloyal and dishonest to the Party,” “resisting organizational review,” “using public office for personal gain and engaging in power-for-money transactions,” and “illegally accepting massive sums of money and property.” Zhang was subsequently expelled from the Party and dismissed from public office, stripped of his delegate status to the 20th Party Congress, and handed over to the judicial authorities for prosecution.
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Some commentators in overseas Chinese-speaking circles linked Zhang Jianchun’s downfall to Xi Jinping’s confidant Chen Xi and Xi’s wife Peng Liyuan before interpreting the event as yet another sign that Xi has “lost power.” A summary of their arguments include:
- Chen Xi, who oversaw Zhang Jianchun’s promotion in 2018 while serving as Central Organization Department head, stepped down in April 2023. Since then, Chen’s influence allegedly declined rapidly, with several of his protégés being arrested and Zhang being the highest-ranking official linked to the so-called “Tsinghua Chen Xi Faction” to fall. The overseas Chinese commentators also believe that recent personnel reshuffles in the Central Organization Department are further evidence that Chen Xi’s faction is being purged.
- Because Chen Xi is “exceptionally close” to Xi — both were allegedly roommates at Tsinghua University — overseas Chinese commentators believe that Chen’s inability to protect his protégés is a sign that Xi’s grip on power is slipping.
- Zhang Jianchun hails from Yuncheng City in Shandong Province, and comes from the same hometown as Peng Liyuan. Overseas Chinese commentators claim that Zhang and Peng often traveled back to their hometown together during the Chinese New Year period when they were younger, and share a “close personal relationship.” Those commentators also believe that Peng played a key role in Zhang’s political ascent, with Zhang being her “eyes and ears” within the Central Organization Department.
- Overseas Chinese commentators believe that Zhang’s fall before the Third Plenum of the 20th Central Committee in July 2024 is a sign that “anti-Xi” forces are gaining momentum and Zhang is their first major target.
Zhang Youxia meets Indonesian defense minister
April 21
PRC foreign minister Wang Yi and defense minister Dong Jun, together with Indonesian foreign minister Sugiono and defense minister Sjafrie Sjamsoeddin, co-chaired the inaugural meeting of the China-Indonesia Foreign and Defense Ministers’ “2+2” dialogue mechanism.
April 22
Central Military Commission vice chairman Zhang Youxia met with Indonesian defense minister Sjafrie Sjamsoeddin in Beijing. Dong Jun also had talks with Sjafrie.
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Some overseas Chinese commentators interpreted Zhang Youxia’s meeting with Sjafrie Sjamsoeddin as a sign that Zhang has the authority to make decisions on behalf of the CMC and that he wields substantial control over the People’s Liberation Army.
Backdrop
1. Rumors, speculation, and commentary indicating that Xi Jinping has is “losing power” (失勢) or even “ceding significant authority” (大權旁落) have been circulating non-stop in overseas Chinese-speaking circles and beyond since the conclusion of the Third Plenum of the 20th Central Committee. Concurrently, those who believe that Xi is “losing power” to others are blaming him for the CCP’s failed policies — a contradiction because those who have allegedly “displaced” Xi bear the responsibility of continuing the failed policies.
2. The CCP propaganda apparatus continues to promote Xi Jinping’s various political theories and slogans, a sign that his grip on power has not diminished. Most recently, state broadcaster CCTV aired the first television documentary series to systematically explain “Xi Jinping Thought on the Economy,” and a related symposium was held in Beijing on April 22.
Our take
1. The various claims about Xi Jinping “losing power” or “ceding significant authority” lack persuasiveness in considering that the CCP propaganda apparatus is still actively promoting Xi and there are no tangible signs in the functioning of the CCP’s power structure that indicate any change to Xi’s paramount position.
There have long been rumors about CCP elite politics and factional struggle circulating in overseas Chinese-speaking circles. However, most of the rumors have been relatively short-lived and are quickly “forgotten” when new ones emerge. The staying power of the Xi “losing power” rumor (almost nine months at the time of writing) and its growing acceptance in some Western circles (which is usually very dismissive of Chinese-origin rumors of CCP elite politics) is therefore highly unusual and suggests something greater is afoot.
We see several possible and overlapping reasons for the persistence of the “Xi losing power” rumors:
- Xi Jinping is hugely unpopular among overseas Chinese and any narrative promoting the idea that Xi is being ousted would naturally gain traction and drive clicks to such content. The resulting self-perpetuating loop crystallizes the notion that Xi is “losing power” even though the original rumors, speculation, and commentary were based on incorrect assumptions and analysis of CCP elite politics and factional dynamics.
- “Anti-Xi” forces in the PRC and outside China could be involved in keeping the “Xi losing power” narrative alive for far longer than the lifespan of such rumors. This includes constantly getting “Party insiders” to “leak” information or issue commentary that “validates” the narrative, influencing prominent overseas media outlets or commentators to spread the narrative, and infiltrating overseas channels of information distribution (media outlets, self-media personalities, think tanks, etc.), to ensure the constant dissemination of the narrative.
- Overseas Chinese media and self-media with strong “anti-CCP” leanings are more inclined to accept and spread rumors that portend the eventual demise of the Party and collapse of the regime. Their “anti-CCP” bias likely makes them more believing of political rumors that fit their narrative but run counter to actual developments that refute those rumors, as well as making them more susceptible to being influenced by “anti-Xi” forces who are looking to seed disinformation by playing to their bias.
The persistence of the “Xi losing power” narrative has several negative impacts:
- Increased attention on just Xi Jinping risks downplaying the overall CCP threat. We previously warned about this in analyzing the “Longer Telegram” and the implications of its proposed strategy.
- Businesses, investors, and governments who believe that Xi is on the verge of being ousted and that “reformers” could be taking over would lower their guard about the CCP threat and correspondingly increase their political risks.
- The international community could become less vigilant about Taiwan if they believe that the CCP will not use military force to achieve “reunification” with Xi seemingly on the way out. Since the founding of the PRC, the CCP has never renounced its intention to take Taiwan. As long as the CCP is in charge, Party leaders after Xi will keep insisting that the PRC will seek “reunification” with Taiwan, and by force if necessary.
- Xi Jinping could clamp down even more tightly on surveillance and censorship in mainland China and Hong Kong. Dissident groups in China with links to media outlets and self-media who continuously promote the “Xi losing power” narrative are at greater risk of persecution.
2. The effort by overseas Chinese commentators to link Zhang Jianchun’s downfall to Xi Jinping “losing power” is far-fetched. The issue gaining traction despite Zhang’s purge being a done deal appears to be directly connected to the persistence of the “anti-Xi” rumors.
An analysis of Zhang Jianchun’s career and standard CCP operations shows that the speculation about him, Chen Xi, and Peng Liyuan is unconvincing:
- The Central Organization Department typically has one head and seven deputy heads. Since Xi Jinping came to power in 2012, the Central Organization Department has replaced 13 deputy heads, including Zhang Jianchun. In other words, the reshuffling of Zhang out from the Central Organization Department in 2020 was likely a routine personnel adjustment and not a factional struggle move.
- Politburo Standing Committee member Zhao Leji (aligned with the Jiang Zemin faction), and not Chen Xi, was head of the Central Organization Department when Zhang Jianchun was transferred to serve as deputy head of the Beijing Municipal Organization Department in January 2014. Zhang later moved up to the central government a year after Chen replaced Zhao at the 19th Party Congress. This indicates that Zhang appears to have been groomed for higher position for some time with his transfer from the provinces to the central authorities, and is no “protégé” of Chen’s; Chen just happened to be in charge of the Central Organization Department when Zhang was systemically promoted upward. If anything, Zhang should be considered Zhao’s “protégé” because the latter oversaw Zhang’s experience-gaining appointments at the provincial level.
- The argument that Zhang Jianchun is from the Xi camp in part because of his alleged “connection” with Peng Liyuan is very unconvincing. For one, mutual interests are far more important than hometown ties in CCP factional networks, and there is no evidence that Zhang and Xi had much interaction when they were rising up the CCP ranks. Also, Peng, being the wife of a “second generation red” princeling and an official marked for higher office, cannot casually form connections with lower level officials like Zhang. Further, Xi would have been unable to influence Zhang’s career in the organization apparatus until he became Party boss because he lacked power and did not have his own faction until several years after taking office; this debunks the claim that Peng somehow played a key role in Zhang’s political ascent and that Zhang was her her “eyes and ears” within the Central Organization Department.
3. Zhang Youxia’s meeting alone with the Indonesian defense minister Sjafrie Sjamsoeddin in Beijing falls entirely within the standard diplomatic protocol and does not indicate any change in Zhang’s power or authority as what overseas Chinese commentators have claimed. Per usual procedures, Zhang’s meeting with Sjafrie would be reported to the CCP General Office and approval would have been given. Also, previous CMC vice chairs have met alone with the defense ministers of other countries without anyone speculating that they have somehow usurped control over the military from Xi.
While Xi Jinping is the CMC chairman, it is normal for him to delegate meetings with the defense ministers of other countries to the CMC vice chair given Xi’s higher rank in the CCP apparatus and diplomatic protocol. To draw a loose comparison, no one would argue that the President of the United States, who is also the commander-in-chief of the U.S. military, has “lost power” or is being sidelined when the U.S. defense secretary or joint chief of staff meets alone with the defense minister of another country.
