Trump tests China’s nerves with tariff threats, but Beijing bets truce will

U.S. President Donald Trump has widened his tariff playbook, unleashing a string of warnings and policy moves that affect Beijing’s interests without directly escalating tariffs on Chinese goods.

But analysts are hopeful that the recent geopolitical turmoil is unlikely to unravel the delicate U.S.-China trade truce, as Beijing appears to be betting that Trump’s threats will not be enforced in ways that meaningfully harm China. Both sides are seeking to keep plans on track for an upcoming leaders meeting in April.

“Beijing is watching,” but is likely to respond cautiously to Trump’s latest tariff threats, said Deborah Elms, head of trade policy at the Hinrich Foundation. She said Trump is unlikely to follow through on threats, such as imposing 100% tariffs on Canada, or on many of his other warnings to trade partners.

“There is no reason to provoke any other reaction from Washington at this time [as] both the U.S. and China are trying to maintain the fragile truce through Trump’s planned visit to China in April,” Elms added.

Gabriel Wildau, managing director at consultancy firm Teneo, said Chinese leaders may doubt Trump will follow through on his latest tariff threats, given that he has largely retreated from earlier measures after backlash from financial markets and the business community.

Over the past month, the Trump administration has seized control of Venezuelan oil flows, a crucial source of crude for China, and threatened a 25% tariff on countries doing business with Iran, a move that could hit Beijing as Tehran’s largest oil customer.

Trump had also threatened to take over Greenland, raising concern in Beijing, which has sought to develop Arctic shipping routes and has shown interest in the island’s rare-earth resources. The American president later backed away from threats of force and tariffs but said there was “the framework of a future deal.”

Canada has emerged as the latest flashpoint. Trump warned he would impose a 100% tariff on Canadian goods if Ottawa moved forward with a trade deal with China, in a stark contrast to his previous comments that such a deal could be “a good thing.”

Prime Minister Mark Carney reached a trade deal with China — Canada’s second largest trading partner after the U.S. — following his trip to Beijing earlier this month. Under the deal, Ottawa would roll back 100% tariffs on Chinese electric vehicles while Beijing would lift retaliatory tariffs on Canadian canola seeds and meal.

Trump’s tone on the Canada-China deal shifted after Carney’s speech at Davos, when he urged middle-power…