Trump Trade War Diary — Day 2
Trump surprised everyone with much softer stance against China. Today he announced that he considers a 10% tariff on Chinese imports, but only if Beijing does not agree a deal on TikTok. He also linked the tariff to fetanyl exports from China.
FT reports: link
Trump ordered investigation into US-China trade rather than immediately imposing threatened 60% tariffs; suggested 10% tariff related to fentanyl starting February 1
Markets reacted negatively: CSI 300 fell 1%, Hang Seng down 1.6%, offshore renminbi weakened 0.25%
Xi and Trump held first phone call in 4 years, discussing trade, fentanyl, and TikTok; China sent Vice-President Han Zheng to inauguration
Trump linked TikTok ownership to tariffs, suggesting 100% tariffs unless Beijing allows US entity to take 50% ownership
Chinese officials appear more open to negotiations about TikTok’s ownership, with foreign ministry indicating companies should decide independently
Economists remain cautious about avoiding trade conflict, noting Trump’s administration includes China hawks despite softer initial approach
Beijing considering broader deal potentially covering trade, TikTok, and other issues, but prepared to retaliate if relations deteriorate