With a potential resurgence of a US-China trade war on the horizon, China has strengthened its defences, ready to respond to any threats from a second Trump presidency.

Since Donald Trump’s 2016 election, China has been caught off guard by higher tariffs and stricter sanctions. Now, with new laws in place, Beijing can impose its own sanctions, blacklist foreign companies, and restrict access to essential resources, giving it greater leverage.

Key Measures to Counter US Pressure

1. New Sanction Powers: China’s "anti-foreign sanctions law" and "unreliable entity list" allow targeted responses to foreign companies that harm China’s interests.
2. Control Over Crucial Resources: China’s dominance in rare earths and lithium supplies means it can restrict access to these materials, essential to global technology sectors.
3. Targeted Sanctions: Recent actions included sanctions on Skydio, a major US drone maker, and potential restrictions on PVH, which owns Calvin Klein and Tommy Hilfiger, signalling China's readiness to hit back if necessary.

China’s Strategic Adjustments

China has been strengthening its supply chains and building trade relations with nations outside of the US influence. This strategy is essential as the Chinese economy faces slower growth and high youth unemployment, making it cautious about entering a full-scale trade war.

Analysts believe Trump’s protectionist policies might even drive other economies toward deeper trade ties with China. However, some experts caution that China’s retaliatory measures could ultimately impact its own economy.

With Beijing’s increased preparedness, a new phase of US-China trade tensions seems likely.

Source: (FT.com)