SINGAPORE: From threatening a 60 per cent tariff on Chinese imports during his election campaign, to talking about a far lower rate of 10 per cent after his inauguration, then saying he would “rather not” impose them at all, just days later. 

What appears to be a softening of stance from US President Donald Trump, could merely just be a change in negotiation tactics, economists and analysts told CNA.  

“It's more like a change in tactic rather than Trump having a softer stance on China,” said Gary Ng, a senior economist and research fellow at the Central European Institute of Asian Studies. 

In Ng’s view, Trump secures partial victories merely by threatening tariffs - an approach designed to extract deals without necessarily going all-in on punitive measures.

“If we look at the way that he uses tariffs as a tool right now, he seems to achieve a lot of objectives before even using the tariff, because other countries would basically agree to talk to him.”

Indeed, Trump called tariff threats “a tremendous power over China” in an interview which aired on Jan 23, adding that “they don’t want them, and I’d rather not have to use it”.

But just two days before, he proposed 10 per cent tariffs on all Chinese imports, which could kick in as soon as Feb 1. 

Chen Qiheng, an affiliated researcher at the Asia Society Policy Institute’s Center for China Analysis, added that it is possible Trump could be “waiting for a legal foundation” before waging a full-out trade war. 

Trump has ordered an evaluation of US trade policy, which could pave the way for new tariffs, Chen warned. Federal agencies have until Apr 1 to submit their findings and recommendations. 

These will include analyses of persistent US trade deficits, unfair trade practices, and currency manipulation among partner countries, including China. 

The release of these findings “could lead to further escalations”, Chen adds. 

“We have a hanging sword … The trade war is brewing and how deep it gets will depend on tariff threats.” 

Others say the move could just be an opening salvo in a broader trade war that has been brewing between the world’s two biggest economies - one “very likely to intensify” under Trump that would place key industries like precious semiconductor microchips, squarely in the crosshairs.

HOW CHINA COULD RESPOND

At the same time, experts note that Beijing has its own toolbox - an extensive and also powerful one - at its disposal, should the trade war escalate. 

Beijing could “retaliate tit-for-tat” with tariffs on US goods, Chen says, but has so far held back, aware that trade wars can boomerang - especially in consumer markets.

“The most powerful weapon China (can use) to fight back is to stay open,” said Chen. “The sheer demand of its economy for foreign products and services will be a gravitational force to prevent even strategic competitors from straying too far apart.” 

Ng points to export controls on upstream resources or selective market restrictions - an approach that could affect everything from semiconductor manufacturing to electric vehicle (EV) batteries.  

Antitrust investigations are also part of that toolbox.  

According to China’s primary regulator the State Administration for Market Regulation, more efforts will be made in 2025 to “advance antitrust enforcement” and “safeguard economic interests and security”. 

“Protectionism leads nowhere. (A) trade war has no winners,” said Chinese Vice Premier Ding Xuexiang, addressing the World Economic Forum in Davos on Jan 21.

Analysts say Ding’s statement reflects Beijing’s cautious stance - that while it is prepared to defend its interests, it still does not seek a spiralling conflict.

“I think in some ways they (Beijing) are looking at possibly not retaliating, because they do have trade surpluses with the US, but they will be watchful for other measures,” said Tim Harcourt, chief economist at the University of Technology Sydney’s Institute for Public Policy and Governance, in a CNA TV interview on Jan 22.

He added that Beijing could be monitoring Washington’s moves “in respect to intellectual property… foreign investment restrictions, and also in terms of the demand for critical minerals”.

CRITICAL BATTLEGROUND: SEMICONDUCTOR CHIPS

While tariff talks continue to dominate global headlines, experts say the real flashpoint is technology, semiconductor microchips in particular which power everything from electric vehicles to smartphones, computers and satellites. 

The tiny but powerful chips have long been at the centre of the US-China trade war, fuelled by China’s push for semiconductor self-sufficiency and US efforts to block China’s access to advanced chip-making technology. 

“The US-China tech war will likely intensify as Washington tightens export controls and Beijing accelerates its push for semiconductor self-reliance,” said Jing Qian, co-founder and managing director of the Asia Society Policy Institute’s Center for China Analysis. 

Already, China has launched what analysts say might be its strongest retaliations against US restrictions on AI chip exports to China - antitrust efforts which were also used in Beijing’s high-profile probe against US chipmaker Nvidia.

On Jan 16, China’s commerce ministry began a probe into US chip exports that would examine whether US chip makers were being given unfair advantages through incentives and grants. 

“Companies have been exporting related mature-process chip products to China at low prices, harming the legitimate interests of the domestic industry,” a ministry spokesperson said. “The concerns of China's domestic industry are reasonable and they have the right to request a trade remedy investigation.”    The investigation was a direct and “calculated response” from Beijing to US policies, Jing said, one that “leveraged China’s vast market size and manufacturing capacity to assert itself as a negotiator of equal standing”.

“These actions are part of a broader strategy to unsettle US businesses and influence policymaker decisions,” Jing said, warning that they also came with risks. 

“Heightened compliance costs, regulatory unpredictability and fears of arbitrary enforcement may deter foreign investment and hinder technological collaboration, potentially undermining China’s long-term objectives,” he added. 

China’s antitrust laws have “grown stronger” in recent months, noted Chen.

“Antitrust investigations are meant to uncover and correct anti-competitive behaviors or violations of merger conditions,” Chen said. 

“Given that China has instituted procedures for conducting antitrust investigations, they must remain grounded in antitrust principles to avoid undermining transparency and shaking investor confidence.”

“Escalation only makes sense for Beijing if forceful responses deter further adversarial policies or add pressure for reversing current US measures,” he said, adding: “I do not believe China needs to tighten antitrust regulations to (put) foreign firms at a disadvantage.” 

Semiconductor firms have been readying themselves for a Trump 2.0 presidency, ramping up chip manufacturing while deepening trade ties with other regions like Europe and Southeast Asia. 

Chinese semiconductor plants currently only produce around 15 per cent of the world’s output, largely of lower-end commodity chips but its chipmaking capacity is projected to more than double in the next five to seven years, according to research from Barclays analysts reported by Bloomberg last January.

Despite ramping up antitrust measures and spending billions on equipment and infrastructure, Jing believes that China is unlikely to achieve full semiconductor self-sufficiency in 2025. 

“Bottlenecks in advanced semiconductor manufacturing and reliance on foreign expertise will persist … leaving China vulnerable to external supply chain disruptions,” Jing said. 

On the other hand, this push toward domestic innovation could also lead to an increase in Chinese tech products entering the market in 2025 - from consumer electronics to electric vehicles, Chen adds, further enhancing China’s presence in global technology markets.

“In 2025, we may hear more anecdotal stories about greater made-in-China content in chips or end devices.”