Can Trump's confrontational economic diplomacy match Xi's more traditional style?

The contrast between President Donald J. Trump and President Xi Jinping in their styles of economic diplomacy could not be sharper. The contrast is most evident in US "reciprocal" and "national security" tariffs. But the contrast also appears in distinctive US and Chinese approaches to economic assistance and in their attitudes toward international institutions.

"Reciprocal" tariffs

Table 1 reports so-called "reciprocal" tariffs announced by the United States on 26 trading partners in July 2025, to take effect August 1, 2025. US "reciprocal" tariffs, announced under the International Emergency Economic Powers Act (IEEPA) of 1977, supposedly offset unfair foreign trade practices. They range between 20 and 50 percent on imports from the 26 countries, with a simple average of 30 percent.¹ In several cases, trade deals were subsequently announced that entail major tariff concessions by partner countries and 15 to 20 percent tariffs by the United States (see footnotes in table 1). Meanwhile, China's applied most-favored nation (MFN) tariffs on imports from the 26 countries generally averaged 7.2 percent in 2023.²

Table 1 also reports US and China 2024 merchandise imports from the targeted countries. China's 2024 imports from 13 of the 26 countries exceeded US imports, sometimes by a large margin. For example, China's imports from Brazil surpassed US imports by $72 billion, and China's imports from Malaysia surpassed US imports by $57 billion. Chinese and US imports from Japan were about the same, but China was the larger importer from South Korea.

"Reciprocal" tariffs, as defined by the Trump administration, bear no relation to actual trade barriers imposed by foreign partners. Rather, they reflect bilateral US merchandise trade deficits, on the unsupported assumption that unfair foreign practices generate deficits.

While Trump's "reciprocal tariff" agenda is certainly harsh, China has targeted economic sanctions against several countries (including neighbors) in recent years: Canada, Australia, South Korea, Japan, the Philippines, Mongolia, Lithuania, the European Union, and of course the United States. As well, China has deployed massive subsidies to dominate world trade in selected industries such as steel, solar energy, and electric vehicles and batteries. The combination of such policies means that China is not automatically regarded as a more friendly superpower than the United States.

"National security" tariffs

In addition to "reciprocal" tariffs, Trump has identified several sectors where imports are claimed to threaten US "national security": steel, aluminum, autos, copper, pharmaceuticals, semiconductors, and lumber. Currently, "national security" tariffs, applied under Section 232 of the Trade Expansion Act of 1962, are in place for steel and aluminum, and autos and parts. Others are pending.

Table 2 reports announced and possible US tariffs on each "national security" sector, and US and Chinese imports in 2024.

For all of the "national security" sectors, US applied and announced tariffs far exceed China tariffs. The United States imports far more than China does in four of the national security sectors, but the reverse is true for semiconductors and copper. Pre-tariff trade volumes imply that the sympathies of Asian semiconductor producers—Malaysia, Japan, South Korea, and Taiwan—will gravitate towards China as national security tariffs constrain the US market.³ The same may prove true of Chilean copper producers.

Economic assistance and international institutions

On the first day of his second term, Trump dismantled the US Agency for International Development (USAID) and folded the remnant into the State Department. For decades, USAID had been the leading US government agency for extending economic assistance worldwide. In fiscal year 2023 (the most recent data available), US foreign assistance totaled $72 billion to 177 countries, concentrated in humanitarian projects. USAID was the largest source, but not the only US provider, of funds to poor countries. Future USAID funds, even for emergency health needs, are in doubt.

In 2024, under the auspices of the Belt and Road Initiative, China's leading framework for economic assistance, the Chinese government and Chinese firms made contract commitments and new investments of $121 billion to 149 countries, concentrated in infrastructure and mining projects. The 2025 outlook is for a similar level of Chinese commitments and investments. Thus, while the United States dismantles a large part of its foreign assistance program, China is maintaining roughly the same level of outlays.

Along with dismantling USAID, the United States also pulled funding from the Agency for Global Media, which sponsors media programming in foreign countries, including Voice of America (VOA). Termination of VOA and kindred networks is widely viewed as an erosion of US "soft power" that has historically shaped global opinion. Meanwhile, China's state broadcasting network continues to serve multiple countries.

Finally, Trump has ordered investigations into whether the United States should continue supporting international institutions. He has shown no obligation toward tariff and other trade rules agreed in the World Trade Organization (WTO) or the United States-Mexico-Canada pact (USMCA). He is withdrawing the United States from the Paris Agreement on climate change, the World Health Organization, and other non-economic institutions. While Xi is not promoting China as a leader in international institutions other than the Regional Comprehensive and Economic Partnership (RCEP), he is maintaining China's position as a leading member.

Conclusion

Trump's aggressive approach has already delivered six unequal trade agreements, namely with China, the UK, Vietnam, Indonesia, the Philippines, and Japan. By these agreements, foreign partners will reduce their tariffs, often to zero, while the United States will maintain higher than pre-Trump tariffs rates, generally in the range of 15 to 20 percent (higher against China), but lower than the maximum tariffs Trump initially threatened. In addition, some foreign partners have agreed to purchase US products like aircraft and liquefied natural gas, and Japan has agreed to make substantial investments in the United States.

Clearly, in these six instances, with more coming, Trump's approach has delivered short-term market access benefits to US exporters while maintaining a significant tariff wall around the US market. It remains to be seen whether, on a global scale and over the long term, Trump's confrontational approach can match Xi's more traditional style of economic diplomacy, including continued economic assistance and membership in international institutions. The outcome will partly determine whether the "American century" in global affairs comes to an end. But China is handicapped by its own sanction and subsidy policies, meaning that a "China century" is far from a sure bet.

Notes

1. After a chaotic tit-for-tat trade war starting in April 2025, the United States lowered newly imposed tariffs on China to 30 percent. Moreover, the China tariff comes on top of tariffs imposed by Trump during his first term and largely retained by Biden, bringing total tariffs on US imports from China to about 51 percent.

2. This is the simple average of China applied MFN rates in 2023 from the UN Trade and Development (UNCTAD) Trade Analysis Information System (TRAINS) database, accessed through the World Integrated Trade Solution (WITS). Countries below are not World Trade Organization (WTO) members and therefore not entitled to MFN tariffs, even if in practice they receive MFN tariffs: Bosnia and Herzegovina, Serbia, Algeria, Iraq, Libya.

3. However, huge US subsidies to TSMC, Samsung, and SK Hynix for foundries built in the United States ensure that the firms will pay close attention to US demands.