Wang Huiyao on “Liberation Day” tariffs
April 05 , 2025CCG President talks to Associated Press on how will the latest additional 34% tax affect China-U.S. trade and relations.
The Trump administration announced an additional 34% tax on imports from China on Wednesday, April 2, part of the tariff feast of “Liberation Day” affecting nearly all U.S. trading partners. Combined with the additional 20% tariffs already imposed by Trump, the total additional levies on Chinese goods will reach 54%, since the second Trump administration, on top of existing tariffs before January 20, 2025.
Chad Brown, senior fellow at the Peterson Institute for International Economics and former chief economist at the State Department under the Biden administration, told Reuters that the average U.S. tariff on Chinese goods will rise to 76%.
China has just confirmed its retaliatory measures today that it would impose a 34% tariff on all U.S. imports starting April 10.
Below is the trade parts of a transcript of an interview with Wang Huiyao, conducted by the Associated Press (AP) on Thursday, following the drastic tariff hike. Some of his remarks have been cited in a latest AP report:
Trump’s decision to sharply raise tariffs on countries spanning the globe is “self-defeating,” Wang Huiyao, president of the Chinese think tank Center for China and Globalization, said in an interview.
The latest tariffs impose heavy burdens on some countries in Latin America, the Middle East, Africa and Asia.
It’s a trade war with the world, Wang said, while China’s strategy is to trade more with Southeast Asia and Latin America, with Europe, the Middle East and other developing nations.
“The likely outcome is that China will become the largest trading nation and its economy will be trading more with other nations and the U.S. may … become more isolated,” Wang said.
AP
So the first question is, I want to understand the tariff correctly. So for China, for all exports from China to the US, the tariff will be 20% plus 34%, and that doesn’t count the 25% on steel and aluminium products, right?
Wang Huiyao
My understanding is that we have 20% that President Trump levied since he took power—twice 20%—so now they added 34%, as he announced yesterday. So that adds up to 54%. On top of that, there are, of course, the other tariffs on aluminium and steel, which, I think, are part of this 54%, right? I mean, because that was already levied. So he was talking about all categories—he’s going to levy 34%. So if there’s another 25%, it’s already within this 34%—that’s my understanding.
Whether the first Trump administration tariff is included in this 34% or not is not clear; it was not well stipulated. But we know now that maybe this 20% he levied and then the 34% could be included. But let’s say it’s not included—that would be 54%.
AP
So there will be more information in the future.
Wang Huiyao
That depends on the U.S. government. Right now, it’s not very clear. So, we will just assume that the 20% may not be included, and we have 34%. It could be included too, so we will see. As far as I understand, we can interpret it now as 54% for the time being.
AP
I think China’s government hasn’t given a response on how China is going to retaliate. But what do you think—what strategy can China take?
Wang Huiyao
Well, there are many things. First of all, Trump’s new trade tariff is counterproductive and probably self-defeating as well, because the U.S. is only counting the goods deficit they have. They are not counting the huge service trade surplus they have. You know, they have $300 billion or even more in service trade surplus. So if you subtract that from the goods deficit, that reduces tremendously the U.S. goods trade deficit. Service trade is always in surplus.
And then you have the whole world trade payment system in U.S. dollars, and the U.S. has a big premium having these U.S. dollars. Also, they attract all the investment to the U.S. The U.S. stock market is hitting an all-time high. So there’s a huge flood of capital to the biggest economy in the world.
So, you can see they have a lot of benefits, not just the goods trade deficit. They have a surplus in service trade. They have a surplus in financing. They have a surplus in investment. They have a surplus in talent. You know, they just harvest everywhere except goods trade because the goods trade is heavy-duty, labour-intensive, manufacturing-dirty, and environmentally unfriendly. That the U.S. has abandoned for a long time, or maybe deliberately gotten out of that. It should not be regarded as something bad.
So, it’s about competitive advantages. China and India have a lot of labour. ASEAN has a lot of labour. So all the labour-intensive things are in those countries. Now the U.S. is saying, “Oh, we’re going to move back all the labour-intensive manufacturing or something.” I don’t think that’s going to happen. Like the auto and some other industries, even though there’s some automation going on, they are still quite labour-consuming. I think the strategy the U.S. is using is not right.
In terms of Chinese countermeasures, you have the U.S. launching the trade war this term, but you remember the U.S. already did that in the first term of the Trump era. But it’s really counterproductive because China’s trade with the U.S. used to count for about 20% of total China’s trade. Since the trade war in the first term, this only counts for about 11% or 10% now. It’s almost half-reduced. Yet, U.S. trade with China, since Trump launched the trade war in the first term, has gone up 20%. It’s not reduced. It has even gone up 20%. You can see it wasn’t really affecting China that much.
But this time, with the new round of tariffs, not just at China, now aiming at the world, that is going to really affect not just China, but the EU, Canada, Mexico, Latin America, the Middle East, and ASEAN, many countries. That is going to really drive all those nations—the other 80 or 75% of global GDP—to trade more among themselves. Forget about the U.S. or maybe trade less with the U.S. That is really bad for the U.S. economy in the long run.
Maybe they could have gained in the short term, but I think even in the short term, it can greatly disrupt the global market and produce uncertainties. You know, businesses like certainty. They want to invest in a stable environment. So, now everybody is holding their money tightly to their chest, and then nobody’s going to invest or maybe even divestment is happening. This is going to be very bad.
Because China is buying a lot less from the U.S. now, I don’t think it can do a lot on trade measures. For example, when President Trump launched a 10% tariff and added another 10% on all categories of Chinese products, China only launched countermeasures on about 100 categories—not on all categories, just 100 categories.
So, you see, China’s strategy is to trade more with ASEAN and Latin America, and I see China-EU trade going to be another boom. China also trades more with Belt and Road countries. Now, half of China’s trade is with Belt and Road countries, and 70% of China’s trade is with non-G7 countries. Also, China’s largest trading partner is ASEAN.
So, I’m quite cautious but also stably maintained. I think that China will pass this trade disruption that is caused by the U.S. administration, and I think the likely outcome is that China will become the largest trading nation with more countries, and the U.S. may be suffering in the end, becoming more isolated and maybe even repeating 1927 Recession that affected the whole world. I mean, that could lead to disaster.
So, it is very important for China not to follow this trade war, not to race to the bottom. Let’s race to the top. While the U.S. is raising tariffs on a number of countries. China has reduced tariffs to zero for 43 countries. So, let’s race to the top. China is doing that. I think, in the end, this will pay off for China.
AP
I think China has to do something in response. Do you think the countermeasures will go beyond trade policy?
Wang Huiyao
Because it is a little bit insane for the current US administration to launch this kind of devastating and destructive move in the global trading practice and trading system. Make America Great Again, you know, is basically going back to the law of the jungle, with everybody just protecting their own interest. It’s not Make the World Great Again, but just Make America Great Again. That’s really going to have a huge impact on the rest of the world.
What I think China can still do a few things selectively. But furthermore, what China can do is to diversify China’s trade with many other countries, as China is already doing, and it’s going to push Chinese companies to go global ahead of schedule. You know, in the future, it will not be Made in China—it will be Made in the World, for China, for the world.
Another thing is that from the Two Sessions we just finished last month, it is clear that China is going to do more on domestic consumption and domestic circulation. Furthermore, China is doing very much in AI, new quality productive forces, and green power transition. This is going to put China in a more favourable position.
So I think China doing well in the world is the best way to counter these trade tariffs and the trade war.
AP
How will this affect China-U.S. relations?
Wang Huiyao
I think this is going to affect China-U.S. relations because, after all, China and the U.S. are still the two largest economies and the two largest geopolitical powers in the world.
I can see President Trump is consolidating North America. He’s doing more with Canada, Mexico, Greenland, Panama—basically, North America is consolidating—and even making a great union of North America. That is not popular with Europe.
I can also see that China will greatly improve relations with the EU, Japan, South Korea, and India—you know, all these neighbouring countries…
AP
…
So there’s a guess that Trump launched that tariff against China because he wants to have further negotiations with China. People would think that Trump would like to take tariff as a bargaining tool. Do you agree with this idea?
Wang Huiyao
Absolutely. Trump is a businessman and is very transactional, which is fine. I mean, if a businessman is running the country, being more transactional is perfectly understandable. When he launched the trade war, hopefully, that would not cause too much damage and put people back at the negotiating table. That was what he did in the first term. I remember Lighthizer, Mnuchin, and Vice Premier Liu He were frequently travelling between the two countries to reach the trade deal, the Phase One deal. So let’s continue Phase Two, Phase Three.
Trump is talking about the 20% over the fentanyl crisis. I think this is low-hanging fruit. You know, China has done so much on fentanyl. The former Assistant Secretary of the State Department under the Biden administration already published in an op-ed not too long ago, saying that in 2024 the death rate in the U.S. from fentanyl has dropped 27%, and they have cooperated well with China during the Biden administration. Of course, things can improve, but they have already shown a lot of good results.
I think Trump should really engage in frequent dialogues again, and the Secretary of Homeland Security should continuously have dialogues so that the 20% tariff over fentanyl can be easily solved. If the U.S. can tell us, for example, which cartel is buying the original elements for making fentanyl, where it is located, and which country it is from, and share intelligence, China would stop anyone selling that and punish those actions. So, I think, the two countries need to collaborate on that, rather than just using that as an excuse to levy the taxes.
So, I think, certainly, China-U.S. relations can be improved. We see President Trump invite President Xi to his inauguration. Chinese Vice President Han Zheng went there, and then President Trump said he wanted to have a phone call with President Xi or invite President Xi to the U.S., which is great. We see many occasions, whether it be the June Summit or the UN’s 80th anniversary of peace for World War II. Also, China will celebrate, on September 3, the 80th anniversary of the World War II victory against the Japanese invasion. I’m sure many world leaders will come for that. If President Trump is interested, I’m sure he would be welcome, too. So, there are many occasions where I think that both presidents can meet, and head-of-state diplomacy is always the best practice for China-U.S. relations. And, if not, next year we have the APEC summit in China. I’m sure President Trump will come again. So, there are many occasions to improve bilateral relations.
AP
So, you’re saying China is willing to get back to the negotiation table. What’s the sentiment do you sense from the Chinese government? What’s China’s approach towards the trade tariffs?
Wang Huiyao
As I said, the Chinese government is doing many things. It’s not just one policy. For example, China has selected some retaliatory targets, as it did with the 20% tariffs in the past. It could, of course, select a few more. I think there are always tools in the box to do that. But of course, China does not rely on that. China also relies on stimulating domestic consumption, strengthening economic self-reliance, and trading with other nations, as has already been done. And then, Chinese companies can make products in the world now—in Europe, ASEAN, the Middle East, and Latin America. So, this tariff will push Chinese companies to go global ahead of schedule.
I think China has a combination of diversifying trade, relying on the domestic economy, and, of course, targeting a few areas where China can make an impact on the U.S., like rare earths, which are still China’s most demanded goods around the globe. China still has a dominant position on that. So there are many, many measures China could take to offset this tariff.
AP
So, I think you just mentioned how the tariff could impact China-U.S. relations. I still have a question: if you could elaborate more, focusing on China-U.S. relations?
Wang Huiyao
I think China-U.S. relations in Trump’s second term will probably get better. The reason for that is, this term, Trump is not just aiming at China—he’s aiming at the world. Now, he’s called April 2 “Liberation Day,” and he says the world has ripped the US off. He’s seeking what he calls “reciprocal treatment” for the rest of the world; China is just part of this.
In his first term, he really concentrated on China and built up a consensus on China. But since his election, Trump has said 30 to 40 times good things about China—President Xi is a good friend, we have a good relationship with China, China’s education system is better than ours—all those good things. And you don’t hear too much about negative things. So, I do think, like President Trump said, “China and the United States can together solve all the problems of the world.”
I think the U.S. also needs China. For example, the U.S. is playing a key role now in this Russia-Ukraine war, and they are having peace talks now. The U.S. has made it very clear that it will not send any troops on the ground in Ukraine, and the U.S. Defence Secretary said it has to be the European troops and non-European troops. I heard him say that at the Munich Security Conference. So, if we are talking about non-European troops, who are they? You have India, you have Brazil, and then you have China.
I think maybe, we should go back to the UN peacekeeping force. I’m sure Russia doesn’t want NATO European troops on the border again because that’s the reason they started the war. If we have a UN peacekeeping force there, with forces from Germany, France, the UK, China, India, and Brazil, then you have a guarantee not only from NATO and the EU, but also from BRICS countries—China, India, and Brazil. That would be more acceptable for both sides, and peace could be made.
President Trump said during his inaugural speech that he wants to be a peacemaker and unifier. People say he wants to get the Nobel Peace Prize. I think that is his aim—he doesn’t want to launch any military wars. He’s cutting the Pentagon staff and streamlining the U.S. government. He wants to make a lot of reforms.
On the domestic front, he’s making reforms to attract foreign investment, lowering taxes as low as 15%. He said he welcomed Chinese companies to invest in the U.S. That could be another way of countering trade tariffs—Chinese companies going to the U.S. and investing there, just like Japanese companies did in the 80s and 90s, which quickly calmed down U.S. complaints.
So, I do see that China and the U.S. have huge cooperation opportunities. If Trump wants to be a president of peace for the world, he really needs China to provide the final balance cast on the Ukraine-Russia war. Russia also said they needed the UN, so the UN peacekeeping force would be the ideal way to solve this.
There are other issues too—Palestine and Israel, Iran, the Houthis, and North Korea. If Trump wants to solve or contain these issues, he needs China, like China brokered a peace deal between Iran and Saudi Arabia.
So I think that’s probably what Trump wants China to be—a great partner in all these global issues. If that’s the case, then China and the U.S. will have more stable relations.
People talk about the Nixon Effect, where Russia might get closer to the U.S. and turn against China. I really think that’s not going to happen because Russia has had a huge divide and distrust with Western countries for 80 years since World War II. Now, with the Ukraine war, this mistrust will deepen for another 5, 10, or even 20 years. I don’t think they’re going to quickly reconcile and get together.
Also, Russia’s economy, sanctioned by all Western countries, is relying now heavily on China. In 2024, Russia’s GDP growth reached 4.1%, which is very high in recent years—largely due to normal trade with China. So, I think Russia depends on China even more now, and their mistrust and divide with the West have deepened into a very bad situation because of the Ukraine war. I don’t think they will quickly get together and back-to-back against China. That is really wishful thinking.
In many ways, the U.S. needs China more than China needs the U.S. Now. President Trump wants to consolidate North America, and Europeans are against that. China is also not in agreement with the U.S. position on that. Also, the Panama Canal—China has put the sale on hold, or at least a review is underway. So. the U.S. needs to make deals with China. There are many things to discuss.
But I do think that fentanyl is an issue that is much smaller compared to the bigger world peace matters, where China and the U.S. can play very positive roles. As Graham Allison told me at the Munich Security Conference, at my event, by next February, one year from now, China-U.S. relations will be better than the current situation.
AP
But what’s China’s attitude so far?
Wang Huiyao
China is standing confident and steadfast. China is on the side of the majority of the world—anti-trade war, anti-isolationism, protecting and promoting free trade. China is supporting the United Nations, covering over 20% of its spending plan. China supports the WTO, WHO, and climate change efforts. The French Foreign Minister and Chinese Foreign Minister just announced last week that they would continue to support the Paris Agreement on climate change.
So, you can see how important it is that China, the EU, and the rest of the world work together to counter some U.S. bad behaviour that destabilises the multilateral system.
AP
I think that’s basically all my questions. Is there anything you want to add that I didn’t ask, but you think is important?
Wang Huiyao
In general, I’m also cautiously optimistic because the U.S. wants to achieve so many things—global peace, containing fentanyl, and other issues—particularly global peace because we are on the brink of war in many places. If the U.S. is really promoting peace, China can be a strong partner.
So, I think, in that sense, as the world’s two largest economies, they have common interests. They cannot let the world fall apart because of conflicts among different countries. They have a huge interest in working together to make this new multipolar world work, to sustain, improve, and enhance the new multilateral system, and to sustain global institutions like the World Bank, IMF, AIIB, WHO, and WTO.
So, I think there is a huge interest in the U.S. and China working together.
Note: The above text is the output of transcribing from an audio recording. It is posted as a reference for the discussion.
