If China is angry about the United States imposing an additional 10% tariff on all Chinese goods, it is doing a good job of hiding it.

Both Canada and Mexico vowed to retaliate. Canadian Prime Minister Justin Trudeau declared, “We will not back down,” as he announced a 25% levy on over $100 billion (£81 billion) of American goods.

In response, US President Donald Trump temporarily paused tariffs on Canadian and Mexican imports after reaching separate agreements. However, tariffs on Chinese goods are set to take effect on Tuesday.

Beijing’s Measured Response

So far, Beijing has refrained from strong countermeasures. In 2018, when Trump launched the first wave of tariffs targeting Chinese imports, Beijing boldly stated it was “not afraid of a trade war.” This time, China is urging dialogue and seeking a compromise. Reports suggest that Trump and Chinese President Xi Jinping could have a call this week.

Despite the measured response, the tariff announcement will sting. The 10% levy adds to an existing slew of tariffs Trump imposed during his first term on billions of dollars’ worth of goods.

One reason for China’s restrained reaction is its concern over public sentiment. Many Chinese citizens are already worried about the sluggish economy. However, China’s economy is now less reliant on the US than before. Beijing has expanded trade agreements across Africa, South America, and Southeast Asia and is now the largest trading partner for over 120 countries.

Chong Ja Ian from Carnegie China believes the 10% tariff may not provide Trump with the leverage he seeks. “China will think it can probably endure 10%,” he says. “Beijing is playing it cool because if it’s not that significant, there’s no reason to escalate tensions with the Trump administration.”

Xi Jinping’s Strategic Opportunity

President Xi may see this as an opportunity. Trump is creating divisions within his own allies, even threatening to impose tariffs on the European Union (EU). His aggressive stance has left other US allies uncertain about their future.

In contrast, China aims to present itself as a stable and attractive global trade partner. “Trump’s America-first policy will challenge almost every country in the world,” says Yun Sun, director of the China Program at the Stimson Center.

“From a strategic competition perspective, a decline in US global leadership benefits China. While the situation may not favor Beijing in direct US-China relations, China will attempt to turn adversity into an advantage.”

China’s Growing Influence on the Global Stage

Since the end of the COVID-19 pandemic, Xi has traveled extensively, reinforcing China’s commitment to global institutions such as the World Bank and the Paris climate accords. Chinese state media portray these moves as efforts to build strong diplomatic ties worldwide.

When Trump halted US funding to the WHO in 2020, China stepped in with additional funds. Many expect Beijing to fill similar voids left by Washington, including foreign aid cuts that have disrupted programs in developing nations.

Tariffs and Trade Wars: China Is More Prepared

Trump’s tariffs hit China hard during his first term. However, this time, Beijing is better positioned to withstand economic pressure. China has diversified its economic partnerships, particularly in regions where US influence is waning.

John Delury, a historian at Yonsei University, believes Trump’s “America First” approach could further weaken US global leadership. “By imposing tariffs on major trade partners and freezing foreign aid, Trump signals to the Global South and the OECD that the US is not interested in global collaboration.”

Meanwhile, China’s “win-win” narrative takes on new significance as America retreats from the world stage.

New Alliances in the Indo-Pacific

While China seeks to benefit from US unpredictability, some nations remain wary. Countries like Japan, South Korea, the Philippines, and Australia are moving closer together to counterbalance China’s influence.

According to the Australian Institute of International Affairs, there is “gathering momentum” for a trilateral alliance between Australia, Japan, and South Korea, driven by concerns over both China’s assertiveness and the uncertainty of a second Trump administration.

Tensions in the South China Sea further complicate relations. China’s neighbors are concerned about its military activities and the potential for conflict over Taiwan. Most regional powers have relied on military alliances with Washington while maintaining economic ties with Beijing. However, as confidence in US leadership wanes, new Asian alliances may emerge.

The Calm Before the Storm?

Trump’s tariff announcement coincided with Chinese New Year, a time when families welcome prosperity into their homes. With many officials still away for the holiday, China’s initial response has been restrained. The commerce ministry has announced plans to challenge the tariffs at the World Trade Organization (WTO), but the WTO’s dispute settlement system has been largely ineffective since 2019 when Trump blocked the appointment of new judges.

As officials return to work in Beijing, key decisions will need to be made. Signs indicate that the Trump administration may seek to maintain stable US-China relations, especially after a “great phone call” between Trump and Xi last month.

For now, China is keeping its cool, likely hoping for a deal to avoid further escalation. However, both Republicans and Democrats increasingly view China as the US’s greatest foreign policy and economic challenge.

“Trump’s unpredictability, impulsiveness, and recklessness will inevitably cause significant shocks in US-China relations,” says Wu Xinbo, director at the Centre for American Studies at Fudan University.

“His team includes several hawks—some of whom are extremely hostile toward China. Serious disruptions in the bilateral relationship are unavoidable over the next four years.”

China’s Calculated Strategy

China is certainly wary of its economic ties with the US and the potential damage from a trade war. However, it also sees an opportunity to capitalize on America’s political volatility and expand its global influence.

As the world watches, Beijing’s next move will determine whether it continues its restrained approach—or escalates in response to Washington’s latest trade war maneuver.