China must carefully measure its response to US tariffs: WSJ’s Jonathan Cheng

China must carefully measure its response to the latest 25% tariffs imposed by the US on steel and aluminium imports, according to Jonathan Cheng, China Bureau Chief at The Wall Street Journal. While China has many tools to retaliate, the real question is not just what it can do but what it should do—and at what pace.

“You don’t want to use all your ammunition so quickly,” Cheng cautioned. Given that this may only be the early stages of a prolonged trade war, China needs to be strategic about how it escalates without exhausting its options too soon, he said.

China has already used regulatory measures against US companies and imposed its own tariffs on American imports. However, this latest round of tariffs affects multiple countries, not just China. Beijing must now determine how strongly it should react, considering both its economic interests and broader geopolitical strategy.

Steel has long been a crucial pillar of China’s economy, particularly through its real estate sector. However, with construction slowing down, the new tariffs add pressure to an already strained industry. Cheng points out that China must also consider domestic concerns like employment and economic stability while crafting its response.

The current 25% tariff is only the latest in a series of US trade actions against China. Cheng noted that during his campaign, Donald Trump spoke about imposing tariffs of up to 60% on all Chinese goods. “You are only about a third of the way there,” he said, suggesting that Beijing must prepare for a prolonged economic confrontation.

Amid rising tensions, Cheng highlighted that discussions are underway for a possible summit between Donald Trump and Xi Jinping in June. While the summit is not confirmed, such a meeting could involve significant trade negotiations.

Unlike the first trade war, which primarily targeted China, the latest US tariffs also impact traditional American allies, such as Canada and the European Union. This shift presents China with an opportunity to collaborate with other affected nations to push back against US trade policies.

If the trade dispute drags on, global supply chains and economic stability could face serious disruptions. Cheng underscored that both sides have much to negotiate and that China’s response will be shaped by a complex mix of economic, political, and strategic considerations.

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