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The world order of the last few decades may be over — what emerges could include China

Trump levies 125% tariffs against China, further escalating tit-for-tat trade war

As U.S. President Donald Trump antagonizes pretty much the entire globe with tariffs, and as the trade war between the two largest economies exponentially escalates, there are questions around whether the world order has irrevocably collapsed, and which countries could emerge as new leaders.

"The world order of the last 80 years as we know it is dead," said Cameron Johnson, a senior partner with Shanghai-based supply chain consultancy Tidalwave Solutions.

As countries everywhere grapple with their responses to Trump's sweeping tariffs — now on pause at the baseline 10 per cent for 90 days except for China — some analysts say the world may have no choice but to look toward Asia to bolster trade and co-operation, especially as the U.S. regime appears to be increasingly unpredictable.

Consequences of a tit-for-tat

On April 2, Trump slapped on a blanket 10 per cent tariff rate on nearly every country, with many getting hit harder. China was one of them, at 34 per cent. 

That move set off a full-on tit-for-tat with Beijing that has rapidly ramped up.

And despite many countries attempting to negotiate with Trump, there aren't any indications there's an end in sight, at least to the unpredictability. 

In fact, quite the opposite. There's the latest pause. Then there's the escalation with China, currently facing 125 per cent tariffs, while a Chinese foreign ministry spokesperson vowed the country will "fight to the end" if the U.S. doesn't back down. On Wednesday, China's tariff rate for U.S. imports was 84 per cent. It also placed export restrictions on rare earth elements, critical to electric vehicles, weapons and computer chips. 

Johnson, an American based in Shanghai, says Trump's recent actions will only "cement Chinese influence in supply chains in Asia and Africa." 

"Nobody, at least in this region, feels the U.S. has shared values with them any longer," he said. 

"The whole world is shifting here. And if you're not on that train, you're going to get screwed and your people are going to get screwed, and that's not good."

China has made inroads

That's especially as the exhaustive list of countries hit with tariffs includes those the U.S. was trying to court, like Vietnam, strategically placed to bridge supply chains between the U.S. and China. 

 

WATCH | China's retaliation: 
 

 

China is hitting the U.S. in a vulnerable spot as the trade war escalates between the two. Then, Andrew Chang explains why the math used to determine President Donald Trump’s global reciprocal tariffs is misleading.

Conversely, China, for years, has been positioning itself as a country with which others can do business and trade, making inroads into several continents, most notably with its massive Belt and Road Initiative, a series of global infrastructure projects designed to bolster its economic and political footprint. In many ways, the reshaping of the world order arguably began long before Trump's second term.

China has become Africa's largest trading partner in the last 20 years. Since 2009, it has also been the largest trading partner of the Association of Southeast Asian Nations (ASEAN) countries.

"[China is] the only country with the money, people and technology that can assist developing nations," Johnson said, pointing out the U.S. has pivoted to demanding investment in its own country, like in autos, as opposed to expanding its overseas markets. 

Practically, countries who want investment and technology could presumably be forced to turn to China, as a tech leader and the world's second-largest economy.

Emotionally, countries hurt by U.S. tariffs could look for other options. 

"This sets up China as the long-term winner," said Johnson. 

Asian countries as a whole could stand to benefit; China, South Korea and Japan recently held their first meeting in five years.

China and Europe

There is speculation China and European countries could also grow closer as the drama unfolds, despite frosty relations, marked by recent anti-dumping investigations.

On Tuesday, Chinese Premier Li Qiang and European Commission President Ursula von der Leyen held a phone call stressing the "paramount importance of maintaining the continuity and stability of EU-China relations," according to the commission.

Negotiations are set to resume on the EU's tariffs on Chinese-made electric vehicles, imposed last fall. (There's still no word on whether Canada intends to keep its 100 per cent tariff, modelled after the Biden-era U.S. levy, on EVs from China.) 

In March, British Energy Secretary Ed Miliband visited China for the two countries' first formal climate meeting in almost a decade. 

WATCH | Trump's defence of his strategy: 

Despite growing backlash at home and abroad, U.S. President Donald Trump defended his plans for tariffs on Tuesday, including slapping 104 per cent tariffs on China after it refused to lift retaliatory levies on American goods.

However, a thaw between China and Europe would likely be tenuous. 

Of note — von der Leyen, in the phone call this week with Premier Li, said she was concerned about Chinese goods flooding Europe in the face of the U.S. tariffs, which could drive the regions further apart.

Canada's low-risk strategy

Some analysts say Canada also should consider strengthening ties with China.

In March, Prime Minister Mark Carney stepped away from the campaign trail and headed to Europe last month, his first international trip after being sworn in. 

"They're focusing on a low-risk strategy," said Gregory Chin, an associate political economy professor at York University in Toronto. 

Later that month, when asked about China's ambassador to Ottawa discussing boosting trade ties, Carney said he was wary. 

A close-up view of U.S. President Donald Trump's face.
Trump looks on during a meeting with Israeli Prime Minister Benjamin Netanyahu (not pictured) in the Oval Office at the White House in Washington on April 7. (Kevin Mohatt/Reuters)

 

"There are partners in Asia that we can build deeper ties [with]" — but that doesn't include China, he said.

Courting China may come with added pressure for Western countries. 

"It's quite difficult, actually, to deal with a country that has a completely different industrial policy and economic structure," said Dan Wang, China director for consulting firm Eurasia Group.

However, Chin said Canada needs to consider it. "It would be foolish to ignore [China]," he said.

"This idea of the West … leading the way it traditionally has, the world has already moved on," he said. "We're in a multipolar world. We've been there for a decade now, if not more."

Risks in closer ties with China

However, Chin acknowledges the inherent risks.

China has been accused of putting up trade barriers making it difficult for other countries to export goods there. The EU lists 31 types of of them, among the highest in the world, including burdensome administrative procedures.

An annual U.S. report details 50 pages of alleged trade abuses.

Dan Trefler, a professor at University of Toronto's Rotman School of Management, says China has been "very arbitrary in its actions against Canada."

He says Trump may abandon his tariff quest once he realizes it likely will not accomplish his goal of bringing manufacturing and jobs stateside. 

"A move to the middle is not impossible," he said. 

What will emerge if and when the dust settles is far from clear, but many analysts like Wang say the U.S.-China relationship, at least, is "beyond salvation." 

"There is a chance for a full breakdown," she said. 

It could mean there's now more of an opportunity for China to play an even bigger role in the world. The West may have no choice but to accept it. 

Author: Lisa Xing · CBC News

Source: CBC News:

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