What if Trump imposes a 245% tariff? British media: Beijing holds three cards and can hold on! The US depends more on China.

The tariff war between China and the US is escalating, and the White House has recently announced that due to China's retaliatory actions, American goods imported by mainland China will be taxed up to 245%. The confrontation between the two major economies has attracted attention. The Financial Times reported that Beijing holds the following three cards in the tariff war, including trade, US Treasury bonds, and technology assets, which are sufficient to withstand the United States.

The report pointed out that China holds several cards. First, in terms of trade strength, China's trade surplus with the US last year was close to $300 billion, with about 15% of exports sold to the US. International economists analyzed that the mainland can find replacement imports more easily than the US.

Among the goods exported from the US to China, they are mainly concentrated in agriculture, including soybeans, cotton, beef, and poultry, so their added value is lower. In contrast, the US imports many goods from the mainland, including electronics, machinery, and some processed minerals. The situations of the two countries are exactly opposite.

Professor Marta Bengoa of the City University of New York emphasized that the US depends more on China. For example, Beijing has already purchased soybeans from Brazil, and ultimately the mainland will have more chips.

In addition, the mainland has long been prepared for contingencies. The dependence of China's exports on the US market has significantly decreased. According to US government data, China's share in US imports has dropped from 21% in 2016 to 13.4% in 2024. Moreover, China's production capacity has been repositioned in Southeast Asian countries such as Vietnam and Cambodia. Latest data shows that China's exports to Vietnam surged by 17% in March.

Elena Ianchovichina, chief economist of Asia-Pacific at French investment bank Natixis and senior researcher at the Brussels-based Bruegel Institute, predicted that even if China's exports were forcibly interrupted, it would not cause a disaster for China's vast economy.

The report believes that China also holds several cards, including US Treasury bonds and key minerals such as rare earths. China has accumulated a large amount of US Treasury bonds over the long term, holding a key chip. According to US Treasury data, China still held approximately $760 billion in US Treasury bonds as of the end of 2024, making it the second-largest overseas creditor of the US after Japan. China can sell these US Treasury bonds, which may cause concerns about the attractiveness of US assets and further accelerate the depreciation of the US dollar and US Treasury bonds, also increasing the cost of US import goods.

Thirdly, there is the card of critical mineral resources. The US depends on China's rare earth metals, such as electric vehicle batteries, because China controls more than two-thirds of global rare earth production and over 90% of processing capabilities, which is a key card.

Original source: https://www.toutiao.com/article/1829568866765002/

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