China well-prepared for Donald Trump's impending trade tariffs

As President-elect Donald Trump steps up his threats to impose trade tariffs on China, the Chinese government is actively moving to confront the incoming US president with its own restrictions and bring the US to the negotiating table before a full-blown trade war erupts, analysts told Reuters.

Armed with lessons from the recent trade war during Donald Trump’s first term, the Chinese government is seeking to build bargaining chips to start talks with a new US administration on contentious aspects of bilateral relations, including trade, investment, science and technology, and China is also concerned about the damaging effects of additional trade tariffs on its already fragile economy.

This week, China launched an investigation into US chip giant Nvidia over alleged antitrust violations, following its ban on rare earth exports to the US.

“We have to see this as an opening offer in what could eventually be a negotiation with the US rather than just a trade tariff and the end of it,” Fred Newman, HSBC’s chief economist in Asia, told Reuters.

“China is better prepared to deal with almost any trade tariffs, short of announcing a 60% trade tariff on all Chinese goods,” George Magnus, a research associate at Oxford University’s China Centre, told Reuters.