May 16, 2025 • 9 mins
The US and China have agreed to slash import tariffs for 90 days to allow for further negotiations. The deal is a major pullback of America's trade offensive, and comes after Chinese President Xi Jinping has taken a defiant stance against Donald Trump. Bloomberg Opinion columnist Karishma Vaswani joins host Stephen Carroll to discuss.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:09):
I'm Stephen Caroll, and this is Here's Why, where we
take one new story and explain it in just a
few minutes with our experts here at Bloomberg. What a
difference a few weeks can make. This was on the
tenth of April.
Speaker 3 (00:23):
Well, we'll see what happens with China. They've really taken
advantage of our country for a long period of time.
They've grouped us off. How people stood for it, sitting
in my position is not even believable.
Speaker 4 (00:38):
Fast forward just over a month to the twelfth of May.
Speaker 3 (00:42):
We achieved a total resehit with China after productive talks
in Geneva. Both sides now agreed to reduce the tariffs imposed.
The relationship is very, very good. I'll speak to President
she may be. At the end of the week.
Speaker 2 (00:57):
After weeks of escalation, the United States and China agreed
to a ninety day truce, slashing tariffs on each other's
goods that had spiraled to over one hundred percent. The
Chinese president has struck a defiant tone ever since Trump
began raising US tariffs to their highest level in a century.
In contrast to other world leaders. Cheatingping has refused Trump's
(01:18):
repeated calls to get on the phone with him, and
speaking the day after the deal was announced, he wasn't
toning down his message.
Speaker 4 (01:27):
There are no winners in tariff wars or trade wars.
Bullying or hegeminism only leads to self isolation.
Speaker 2 (01:37):
So here's why China's trade war strategy is working. Bloomberg
opinion columnist Karorishima of Aswani joins me. Now for more, Karishma,
how would you characterize the approach that Cheatingping has taken
to Donald Trump since his return to the White House.
Speaker 1 (01:55):
I think it's been tough. I think it's been unflinching.
I think we've seen a lot of nationalists rhetoric out
of both governments, but in particular from China. When the
trade tariffs were first announced, we saw sort of tit
for tat action from Beijing in a way that at
the time most political analysts and economic analysts had sort
(02:17):
of said, oh, that won't happen, because China can't afford
the economic hit of consistently trying to match the tariffs
on the American side. Instead of a sort of more
conciliatory approach, we did see a very firm stance from
Sijenping and Chinese officials, and I think that's paid off
(02:38):
because I think what that's shown the Americans is that
the Chinese were not going to back down and were
not going to come to the negotiating table just because
there had been tariffs slapped on them by the US.
Speaker 2 (02:52):
When things were escalating rapidly. In April, you quite presciently
wrote that the Chinese president wouldn't blink first in the
trade war.
Speaker 4 (03:00):
What led you to that conclusion.
Speaker 1 (03:03):
I think that China in some respects has as much,
if not more, to lose when it comes to political
legitimacy and credibility with its own people. Both leaders are
playing to their domestic audiences, right. So in China, on
the one hand, you have a political system where the
Chinese Communist Party doesn't need to win elections like the
Republicans do, so even with economic pain that was foreshadowed
(03:29):
as a result of the trade tariffs, they could galvanize
and mobilize their people and citizens there and sort of
consistently hammer on that narrative that the US is trying
to keep China down. It's a really effective narrative. And
it's been used before. But I think the other reason
why I felt at the time that the Chinese wouldn't
blink first is because they see this as part of
(03:52):
a sort of historical arc, which is that it's China's
moment to rise while the West is in decline. And
that's something we've heard consistently from Chinese officials time and
time again, not just with regards to the trade war,
but other aspects of the geopolitical squabble between the two sides,
and I think had they backed down first, it would
(04:13):
have been counter productive to that narrative. We've seen measures
on the Chinese side to address prolonged economic issues in
a way to sort of prepare for the impact of
the trade war. I'm not saying that there aren't real
issues at play here, but I think that China is
more willing to sort of suffer the long term economic
(04:34):
costs in order to achieve political goals.
Speaker 4 (04:37):
But does that approach, Krishma have limits?
Speaker 2 (04:39):
Is there a place where the risks of the Chinese
economy could be too great if this strategy is pursued
long term?
Speaker 4 (04:45):
Well?
Speaker 1 (04:46):
Indeed, and I think the outcome of the weekend's discussions
will be seen as productive on both sides, and it's
something that the Chinese definitely wanted as well. And the
fact that it happened in sort of neutral place they
could save face. You know, they're not going to the
United States in any way. Now you also have comments
(05:07):
from US officials saying we don't necessarily wanted decoupling. That's
a huge win for the Chinese because that's something they've
kept saying from the start and throughout this entire trade
war during the Trump administration, this one and the previous
Trump administration when you know, arguably all of these tensions
first began. The Chinese have consistently said that they are
(05:28):
the champions and upholders of the multilateral rules based order.
Speaker 4 (05:32):
And given the.
Speaker 1 (05:33):
Fact that you know, Trump imposed these tariffs not just
on the Chinese, but on other countries as well, that's
a really easy argument to believe in. I mean, I've
spoken to lots of Asian diplomats, you know, in the
past couple of weeks, and there's a real degree of bewilderment,
Stephen about why the Trump administration would go after all
(05:53):
countries and not necessarily just target China the way that
we have seen in the Biden administration, so Beijing has
been able to win and score rather i should say,
political points with its neighbors as well, not just trying
to create that narrative back at home.
Speaker 2 (06:09):
Should we expect a shift in tone because neither the
US nor China have are particularly nice about each other
over the past couple of weeks and months. But now
that we're into a further negotiation phase, when this pause
is in place, should we expect the tone of those
comments to change.
Speaker 1 (06:27):
I think you will see some of that. A lot
depends on what happens in the next ninety days. You know,
there is some speculation that these charps will just keep
getting postponed, and that allows the Trump administration to say
they're consistently talking and trying to get to some type
of deal or negotiation. But you know, tariffs are higher
than they were when before Trump became president, so that
(06:50):
is something that will definitely have an impact. I think
going forward as well, there are going to be key
issues that you will see as part of the negotiations
become fact is in whether this deal unravels or not.
One of the things I'm quite focused on in the
next couple of days is the fentanyl agreement or you
know what that actually means, because there are still tariffs
(07:12):
attached to the negotiations on fentanyl tariffs side that I
think the Chinese would like to see removed. But you know,
Beijing consistently says that it is not to blame for
the US drug epidemic, that it's done as much as
it can, and it feels that the US needs to
address this problem at home on the American side. They
see this as another way that the Chinese sort of
(07:36):
using what they have in terms of, you know, not
clamping down on Chinese chemical companies that are using back
door ways to get into the US via Mexico and
selling drugs that they believe are killing, which are killing
thousands of Americans. So that's one thing I think that
will become a key focus going forward in the trade talks.
Speaker 2 (07:55):
Are there lessons to be learned from for other countries
on how to handle Donald try from the way that
China has approached this.
Speaker 4 (08:02):
Could anyone else pull this off?
Speaker 1 (08:04):
Not in Asia? And nobody has the might and scale
of the Chinese economy. Nobody has the ability to politically
or economically withstand these tariffs. The way that the Chinese do,
and I think you've already seen that with the flurry
of meetings and politicians wanting to meet with Donald Trump
(08:26):
and negotiate in some way these trade negotiations, and from
India to Japan to South Korea, all of these countries
have to some extent been lining up to try and
get a better deal. And I think that is the
harsh reality of geopolitics and the way economies work. The
(08:46):
Chinese can do this, but not anybody else.
Speaker 2 (08:49):
Okay, Korashimavaswani, Bloomberg Opinion columnist, Thank you very much for
joining us, and you can read Karashima's latest work at
Bloomberg dot com slash opinion. For more explanations like this
from our team of three thousand journalists and analysts around
the world, go to Bloomberg dot com slash explainers.
Speaker 4 (09:06):
I'm Stephen Carol. This is here's why. I'll be back
next week with more. Thanks for listening.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:09):
I'm Stephen Caroll, and this is Here's Why, where we
take one new story and explain it in just a
few minutes with our experts here at Bloomberg. What a
difference a few weeks can make. This was on the
tenth of April.
Speaker 3 (00:23):
Well, we'll see what happens with China. They've really taken
advantage of our country for a long period of time.
They've grouped us off. How people stood for it, sitting
in my position is not even believable.
Speaker 4 (00:38):
Fast forward just over a month to the twelfth of May.
Speaker 3 (00:42):
We achieved a total resehit with China after productive talks
in Geneva. Both sides now agreed to reduce the tariffs imposed.
The relationship is very, very good. I'll speak to President
she may be. At the end of the week.
Speaker 2 (00:57):
After weeks of escalation, the United States and China agreed
to a ninety day truce, slashing tariffs on each other's
goods that had spiraled to over one hundred percent. The
Chinese president has struck a defiant tone ever since Trump
began raising US tariffs to their highest level in a century.
In contrast to other world leaders. Cheatingping has refused Trump's
(01:18):
repeated calls to get on the phone with him, and
speaking the day after the deal was announced, he wasn't
toning down his message.
Speaker 4 (01:27):
There are no winners in tariff wars or trade wars.
Bullying or hegeminism only leads to self isolation.
Speaker 2 (01:37):
So here's why China's trade war strategy is working. Bloomberg
opinion columnist Karorishima of Aswani joins me. Now for more, Karishma,
how would you characterize the approach that Cheatingping has taken
to Donald Trump since his return to the White House.
Speaker 1 (01:55):
I think it's been tough. I think it's been unflinching.
I think we've seen a lot of nationalists rhetoric out
of both governments, but in particular from China. When the
trade tariffs were first announced, we saw sort of tit
for tat action from Beijing in a way that at
the time most political analysts and economic analysts had sort
(02:17):
of said, oh, that won't happen, because China can't afford
the economic hit of consistently trying to match the tariffs
on the American side. Instead of a sort of more
conciliatory approach, we did see a very firm stance from
Sijenping and Chinese officials, and I think that's paid off
(02:38):
because I think what that's shown the Americans is that
the Chinese were not going to back down and were
not going to come to the negotiating table just because
there had been tariffs slapped on them by the US.
Speaker 2 (02:52):
When things were escalating rapidly. In April, you quite presciently
wrote that the Chinese president wouldn't blink first in the
trade war.
Speaker 4 (03:00):
What led you to that conclusion.
Speaker 1 (03:03):
I think that China in some respects has as much,
if not more, to lose when it comes to political
legitimacy and credibility with its own people. Both leaders are
playing to their domestic audiences, right. So in China, on
the one hand, you have a political system where the
Chinese Communist Party doesn't need to win elections like the
Republicans do, so even with economic pain that was foreshadowed
(03:29):
as a result of the trade tariffs, they could galvanize
and mobilize their people and citizens there and sort of
consistently hammer on that narrative that the US is trying
to keep China down. It's a really effective narrative. And
it's been used before. But I think the other reason
why I felt at the time that the Chinese wouldn't
blink first is because they see this as part of
(03:52):
a sort of historical arc, which is that it's China's
moment to rise while the West is in decline. And
that's something we've heard consistently from Chinese officials time and
time again, not just with regards to the trade war,
but other aspects of the geopolitical squabble between the two sides,
and I think had they backed down first, it would
(04:13):
have been counter productive to that narrative. We've seen measures
on the Chinese side to address prolonged economic issues in
a way to sort of prepare for the impact of
the trade war. I'm not saying that there aren't real
issues at play here, but I think that China is
more willing to sort of suffer the long term economic
(04:34):
costs in order to achieve political goals.
Speaker 4 (04:37):
But does that approach, Krishma have limits?
Speaker 2 (04:39):
Is there a place where the risks of the Chinese
economy could be too great if this strategy is pursued
long term?
Speaker 4 (04:45):
Well?
Speaker 1 (04:46):
Indeed, and I think the outcome of the weekend's discussions
will be seen as productive on both sides, and it's
something that the Chinese definitely wanted as well. And the
fact that it happened in sort of neutral place they
could save face. You know, they're not going to the
United States in any way. Now you also have comments
(05:07):
from US officials saying we don't necessarily wanted decoupling. That's
a huge win for the Chinese because that's something they've
kept saying from the start and throughout this entire trade
war during the Trump administration, this one and the previous
Trump administration when you know, arguably all of these tensions
first began. The Chinese have consistently said that they are
(05:28):
the champions and upholders of the multilateral rules based order.
Speaker 4 (05:32):
And given the.
Speaker 1 (05:33):
Fact that you know, Trump imposed these tariffs not just
on the Chinese, but on other countries as well, that's
a really easy argument to believe in. I mean, I've
spoken to lots of Asian diplomats, you know, in the
past couple of weeks, and there's a real degree of bewilderment,
Stephen about why the Trump administration would go after all
(05:53):
countries and not necessarily just target China the way that
we have seen in the Biden administration, so Beijing has
been able to win and score rather i should say,
political points with its neighbors as well, not just trying
to create that narrative back at home.
Speaker 2 (06:09):
Should we expect a shift in tone because neither the
US nor China have are particularly nice about each other
over the past couple of weeks and months. But now
that we're into a further negotiation phase, when this pause
is in place, should we expect the tone of those
comments to change.
Speaker 1 (06:27):
I think you will see some of that. A lot
depends on what happens in the next ninety days. You know,
there is some speculation that these charps will just keep
getting postponed, and that allows the Trump administration to say
they're consistently talking and trying to get to some type
of deal or negotiation. But you know, tariffs are higher
than they were when before Trump became president, so that
(06:50):
is something that will definitely have an impact. I think
going forward as well, there are going to be key
issues that you will see as part of the negotiations
become fact is in whether this deal unravels or not.
One of the things I'm quite focused on in the
next couple of days is the fentanyl agreement or you
know what that actually means, because there are still tariffs
(07:12):
attached to the negotiations on fentanyl tariffs side that I
think the Chinese would like to see removed. But you know,
Beijing consistently says that it is not to blame for
the US drug epidemic, that it's done as much as
it can, and it feels that the US needs to
address this problem at home on the American side. They
see this as another way that the Chinese sort of
(07:36):
using what they have in terms of, you know, not
clamping down on Chinese chemical companies that are using back
door ways to get into the US via Mexico and
selling drugs that they believe are killing, which are killing
thousands of Americans. So that's one thing I think that
will become a key focus going forward in the trade talks.
Speaker 2 (07:55):
Are there lessons to be learned from for other countries
on how to handle Donald try from the way that
China has approached this.
Speaker 4 (08:02):
Could anyone else pull this off?
Speaker 1 (08:04):
Not in Asia? And nobody has the might and scale
of the Chinese economy. Nobody has the ability to politically
or economically withstand these tariffs. The way that the Chinese do,
and I think you've already seen that with the flurry
of meetings and politicians wanting to meet with Donald Trump
(08:26):
and negotiate in some way these trade negotiations, and from
India to Japan to South Korea, all of these countries
have to some extent been lining up to try and
get a better deal. And I think that is the
harsh reality of geopolitics and the way economies work. The
(08:46):
Chinese can do this, but not anybody else.
Speaker 2 (08:49):
Okay, Korashimavaswani, Bloomberg Opinion columnist, Thank you very much for
joining us, and you can read Karashima's latest work at
Bloomberg dot com slash opinion. For more explanations like this
from our team of three thousand journalists and analysts around
the world, go to Bloomberg dot com slash explainers.
Speaker 4 (09:06):
I'm Stephen Carol. This is here's why. I'll be back
next week with more. Thanks for listening.
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