Agencies
After retaking the White House last month, US president-elect Donald Trump celebrated his victory by attending an Ultimate Fighting Championship heavyweight bout with his friend and UFC president, Dana White, alongside billionaire ally Elon Musk.
Days later, Trump, the well-known fan of mixed martial arts, started to announce his pick of a group of diehard supporters for his "America first” agenda who are expected to come out swinging at China – America’s most consequential geopolitical rival – in his second term.
From Howard Lutnick, a Wall Street executive who has been vocal about tariffs, to Peter Navarro, a hawkish economist sanctioned by Beijing, choices made by Trump for his economic team signal that competition and conflicts between the world’s two largest economies are set to intensify, according to analysts.
And some say that China, which has maintained a stable team of loyalists to President Xi Jinping and gained experience with Trump in his first term, may respond with more composure – as demonstrated in the ancient Chinese martial art of tai chi – while trying to dissolve attacks from the United States.
Vice-Premier He Lifeng, who has been the "Chinese lead in US economic and trade talks” since last year, is expected to play a pivotal role in dealing with what looks to be shaping up as a fresh round of trade contentions.Unlike when Trump first entered politics and had to rely on the opinions of establishment Republicans, his strong return has elevated loyalty to his primary criterion for selecting candidates, aiming to minimise any constraints on presidential power.
"As for their stance on China, these individuals are generally tough and hawkish,” said Zhou Mi, a researcher with the Chinese Academy of International Trade and Economic Cooperation, a think tank affiliated with the Ministry of Commerce.
"Compared with the security and other teams, Trump’s economic team shows a bigger tendency to apply stronger pressure on China,” he said. "At the same time, they are less inclined towards engagement with China.” The Chinese team, however, is seen to resemble tai chi practitioners in the way that they tend to use softness and flexibility to overcome hardness.
"Regardless of external pressure or cooperative intentions, China has maintained a steady framework and approach,” Zhou said.
"At the global level, it adheres to multilateral rules and seeks solutions within multilateral frameworks,” he said. "On a bilateral level, it utilises laws, regulations, and policy measures to safeguard the legitimate rights and interests of businesses while creating a more favourable environment for all parties to grow in China.” Craig Chan, head of global currency strategy at investment bank Nomura, described the cabinet that Trump has announced so far as "extremely hawkish, extremely in the pro-tariff camp”.
Tariff hikes that Trump has threatened to impose on China and the rest of the world before and after his victory "will probably get implemented right at the start of his term”, Chan projected. "Last time, it was a year and a half of the trade war, this time, there’s the potential that it could be faster – maybe it’s faster with China.” Trump has named Lutnick, the Cantor Fitzgerald CEO with a bold vision of eliminating income tax and replacing it with tariffs, as his commerce secretary – a role that is crucial to Sino-American economic relations.
Heading one of the largest firms of interdealer brokers, the man believes that globalisation undermines US workers. "Tariff the rest of the world and keep them the heck out,” he once said.
Trump said Lutnick would "lead our tariff and trade agenda”, with special responsibility for the Office of the US Trade Representative, which is not yet officially part of the Commerce Department.
While it is still unclear how exactly Trump will organise the trade posts in his new administration, the nominee for the trade-representative role is also an advocate of trade protectionism.Jamieson Greer, an international trade lawyer, served as chief of staff to former trade representative Robert Lighthizer, the architect of Trump’s tariffs on some US$370 billion worth of Chinese imports during his first term.
Lighthizer was well known for his hostility toward Beijing and his protectionist views, as reflected in his book, No Trade Is Free.
As his protégé, Greer played an important role in negotiating with Chinese officials on the phase-one trade deal signed in January 2020. Under that deal, China committed to purchasing some US$200 billion worth of American goods over two years, which it failed to do.Chen Fengying, a senior researcher with China Institutes of Contemporary International Relations in Beijing, said that unlike during Trump’s first term, when the trade representative was parallel to the commerce secretary, it will now to be under the latter, signalling a tendency to play down negotiations.
Tariff hikes are not the end game for Trump, but rather the means to pressure countries held accountable for their social issues, she said.
Late last month, Trump vowed to charge Mexico and Canada a 25 per cent tariff on products coming into the US, on the first day of his administration, as retaliation for illegal migration from the American neighbours.
He also pledged to increase tariffs by 10 per cent above existing levels on Chinese goods until it prevents the flow of illegal drugs into the US."The status of the trade representative seems to be declining, but the goal to solve issues is becoming even clearer,” Chen said.
She warned that China should also watch out for the Treasury secretary nominee, Scott Bessent, who would be given broad authority over tax policy, public debt, international finance and sanctions, if approved by the Senate.
A disciple of George Soros, the head of New York-based hedge fund Key Square Capital Management helped Soros "break” the Bank of England in the 1990s. Bessent is also known for betting against the Japanese economy a decade ago.
"China needs to pay attention to the yuan and prevent it from being shorted,” Chen said.
Describing those people as "capable and ready to get things done”, she added that, "unlike the team in Trump’s first term that fell into chaos, it’s unlikely to see them fail this time”.
Trump replaced three chiefs of staff, three secretaries of homeland security and two secretaries of defence due to "disagreements” and other issues during his first administration.
Another key role on the president-elect’s economic team was given to Navarro, a fierce China hawk and long-time aide who was in federal prison for four months earlier this year after being held in contempt of Congress for defying a congressional subpoena.
After serving as director of the White House National Trade Council in the first Trump administration, the economist has been named "senior counsellor for trade and manufacturing”.On the other side of the negotiation table is a team of Chinese technocrats led by Vice-Premier He Lifeng, who also directs the office of the Central Finance and Economic Affairs Commission, a key decision-making body headed by the president.
The 69-year-old He has kept in contact with US Treasury Secretary Janet Yellen via a dialogue mechanism that launched in July 2023.