President Trump tests China’s nerves with tariff threat, but Beijing bets on maintaining ceasefire

US President Donald Trump has broadened his tariff strategy, issuing a series of warnings and policy measures that affect Beijing’s interests without directly increasing tariffs on Chinese goods.

But analysts are hopeful that recent geopolitical turmoil is unlikely to lift the delicate U.S.-China trade truce, as Beijing appears to be betting that President Trump’s threats will not be carried out in a way that significantly harms China. Both sides are trying to keep plans on track for a summit scheduled for April.

Deborah Elms, head of trade policy at the Heinrich Foundation, said China is “watching” but is likely to react cautiously to President Trump’s latest tariff threats. He said President Trump is unlikely to carry out his threats, such as imposing 100% tariffs on Canada, and his many other warnings to trading partners.

Elms added: “There is no reason to provoke any other response from the U.S. government at this time, as both countries seek to maintain a fragile ceasefire through President Trump’s planned visit to China in April.”

Gabriel Wildow, managing director at consulting firm Teneo, said Chinese leaders may have doubts that Trump will follow through on his latest tariff threat, given that he has significantly reversed previous measures in response to backlash from financial markets and the business community.

Over the past month, the Trump administration has seized control of Venezuelan oil flows, a key source of crude oil for China, and threatened to impose 25% tariffs on countries doing business with Iran, a move that could hurt Beijing, Iran’s biggest oil customer.

Trump has also threatened to seize Greenland, raising concerns for Beijing, which is seeking to develop the Northern Sea Route and has expressed interest in the island’s rare earth resources. The US president later distanced himself from threats of military force or tariffs, but said there was a “framework for a future agreement.”

Canada has emerged as a recent flashpoint. President Trump has threatened to impose 100% tariffs on Canadian goods if Ottawa goes ahead with a trade deal with China, in stark contrast to his earlier comments that such a deal could be a “good thing.”

Following a visit to Beijing earlier this month, Prime Minister Mark Carney reached a trade agreement with China, Canada’s second-largest trading partner after the United States. Under the agreement, Ottawa will remove 100% of its tariffs on Chinese electric vehicles, and the Chinese government will lift retaliatory tariffs on Canadian canola seed and rapeseed.

President Trump’s tone on the Canada-China deal changed after Carney called on middle powers in Davos to unite against coercive tactics by the great powers. Carney later said Canada has no plans to pursue a free trade agreement with China and that the latest agreement is limited in scope.

As authorities prepare to renegotiate the U.S.-Canada-Mexico free trade agreement, Kurt Tong, managing director of the Asia Group, appears to have made it clear that President Trump is “going to be very tough on us if we go too far in China’s direction.”

The Chinese government said its trade agreement with Canada is “not targeted at any third party” and is in line with the two countries’ common interests.

David Mir, head of China at Eurasia Group, said while Chinese leaders may welcome the opening created by Secretary Carney’s engagement and trade deal, he sees limits to how far Canada can pivot away from its deep relationship with the United States.

Chinese officials have sought to stabilize relations with the United States after rising tensions in recent weeks.

Dong Yan, vice minister of China’s Ministry of Commerce, said at a press conference on Monday that the two countries have maintained regular communication since President Trump and Chinese President Xi Jinping met in South Korea in October.

Yang said China is willing to work with the United States to manage differences and deepen cooperation to ensure stable and healthy bilateral relations, while stressing that relations must be based on mutual respect and win-win cooperation.

Stephen Olson, a visiting senior fellow at the ISEAS-Yusof Ishak Institute, said the two countries appear to have adapted to a world in which they can “fire grenades at each other, or at least threaten each other, without disrupting plans for talks between the two leaders.”

He added that it is in the best interests of both sides to keep the April talks on track.

China’s restrained response also reflects its efforts to strengthen its position vis-à-vis the United States, while reassuring world leaders that its relationship with the United States is stable as China embraces new foreign leadership.

Several world leaders visited China this year, including Irish Prime Minister Michael Martin and South Korean President Lee Jae-myung. Mr Xi will hold talks with Finnish Prime Minister Petteri Orpo on Tuesday, while British Prime Minister Keir Starmer is also scheduled to visit China this week, the first visit by a British leader in eight years.

Separately, in a telephone conversation with Indian President Drupadi Murmu on Monday, Xi said Beijing and New Delhi are “good neighbors, friends and partners” and called for deeper cooperation.

Wildau said there is little indication that the Chinese government is planning concrete policy responses, such as sanctions, trade restrictions or military deployments, to counter President Trump’s recent broadsides.

“Beijing’s overarching strategy appears to be to maximize global distrust of the United States through commentary highlighting perceived US bullying, while presenting a contrasting picture of China as a proponent of restraint, multilateralism, free trade, and win-win cooperation,” Wildau said. He added that China could do so without directly undermining the ongoing detente with the United States.

“‘Never get in the way when the enemy makes a mistake’ seems to be (China’s) guiding principle,” he said.