US Tariffs, China’s Economic Strains, and Beijing’s Taiwan Calculus
Dr. Anudeep Gujjeti
The United States (US) recently escalated its trade war with a sweeping new tariff hike on Chinese goods, raising duties to an unprecedented 145% on many imports. Beijing swiftly denounced the move as “unilateralism and protectionism,” vowing to defend its interests. It retaliated in kind by slapping its own tariffs on US products, totalling about 125%. This reciprocity effectively erected duelling trade barriers between the world’s two largest economies. Chinese officials warned they would take “resolute and reciprocal” countermeasures to any US pressure, but also began bolstering alternative partnerships to blunt the impact.
Xi Jinping’s state visits to Vietnam, Malaysia, and Cambodia in mid-April 2025 were a core element of China’s strategic reply to the US tariffs. In each capital, Xi talked closer economic integration and denounced protectionism in careful terms. In Hanoi, he oversaw dozens of cooperation agreements signed, and called for tighter supply-chain links to withstand “disruptions” from US tariffs. Xi wrote in a Vietnamese party newspaper that “there are no winners in trade wars”, urging the two socialist neighbours to oppose unilateral bullying.
In Kuala Lumpur, alongside Malaysian Prime Minister Anwar Ibrahim, Xi touted Asian unity against “camp-based confrontation” and “excessive tariffs” while witnessing another round of trade and infrastructure deals. Anwar praised China as a “reliable” partner amid global uncertainty, a notable stance as Malaysia itself faced a new 24% US tariff on its exports (temporarily paused pending talks).
Xi’s final stop was Phnom Penh, Cambodia. There he lauded the “ironclad friendship” with Cambodia and pledged to “unswervingly support” its development. With Cambodia’s crucial garment exports have been hit by a steep 49% US import tax, Xi urged the Cambodians to “resist protectionism” in concert with China. Cambodia’s government trumpeted 37 new agreements signed during the visit. While some were non-binding memoranda with little immediate substance, the optics of Xi being warmly welcomed across Southeast Asia sent a clear message that Beijing is shoring up regional support.
China’s diplomatic outreach in Southeast Asia is a key part of its broader strategy to counter US trade pressure. Economically, strengthening ties with neighbouring Association of South East Asian Nations (ASEAN) markets helps Beijing redirect trade flows and find relief from US barriers. By bolstering supply-chain integration with Vietnam, Malaysia and Cambodia, China can mitigate some effects of decoupling, for instance, routing goods through these countries or co-producing there to avoid tariffs. Many Chinese manufacturers have already expanded operations into Vietnam to avoid earlier US duties, and Xi’s trip reinforced such moves. Beijing is also offering incentives, from infrastructure investment to importing more Malaysian palm oil and other products to keep these economies closely tied to China amid the uncertainty.
Geopolitically, Xi’s tour demonstrated Beijing’s determination to rally its neighbours rather than be isolated by Washington. By invoking an “Asian family” and calling for multilateral cooperation over “hegemonism”, Xi sought to position China as the region’s champion against outside economic coercion. Notably, China and Malaysia’s joint statement during the visit explicitly opposed unilateral trade measures, a thinly veiled rebuke of US tariffs. Taken together, Hanoi, Kuala Lumpur and Phnom Penh form a sympathetic sub-bloc in ASEAN that Beijing can cultivate to blunt any united front against China. Ensuring these countries remain amicable frustrates US attempts to recruit regional allies for its pressure campaign. As one analyst observed, countries economically reliant on China “don’t want to pick a side” in the superpower standoff. Xi’s high-profile outreach leveraged that ambivalence, signalling that Southeast Asia is not lining up behind Washington in the trade war.
This quiet diplomacy extends beyond Asia. Beijing has been cautiously courting Europe and others to prevent a united front against China. Xi appealed to European leaders to “join forces” with China against protectionism, and EU officials have indeed opened talks with Beijing to ease trade frictions (for example, over tariffs on Chinese electric vehicles). Both sides even agreed to monitor trade diversion caused by US tariffs. By finding common ground with the EU and portraying itself as a defender of global free trade, China is attempting to dilute Washington’s leverage.
To sum up, Xi’s recent Southeast Asian tour signals that Beijing’s next moves will focus on diplomacy and coalition-building as a counterweight to US trade pressure. Rather than capitulating, China is doubling down on regional alliances and outreach to partners like Europe. The message: Beijing will seek strength in numbers to withstand Washington’s tariffs, using proactive diplomacy to signal its resolve and chart an alternative path in the face of economic coercion.
Dr. Anudeep Gujjeti is Assistant Professor at the Center of Excellence for Geopolitics and International Studies, REVA University, Bengaluru.
