China's Low-Tariff Strategy vs. Trump's Trade Wars

Global trade dynamics are shifting dramatically as two economic giants pursue diametrically opposed strategies. While US President Donald Trump has threatened additional tariff increases in recent months, China has quietly executed a contrasting approach that is reshaping international economic relationships.

The divergence represents more than just policy differences—it reflects fundamentally different philosophies about how to wield economic influence in an interconnected world. One path involves raising barriers; the other focuses on lowering them to build strategic advantages.

The contrast between these two approaches has become increasingly stark. US tariff increases under the Trump administration have roiled global markets and strained America's alliances across multiple continents. The uncertainty created by these trade barriers has sent shockwaves through supply chains and investment decisions worldwide.

Meanwhile, China has maintained a steady course toward trade liberalization. Rather than raising barriers, Beijing has kept import duties low and even pledged further cuts. This strategy represents a calculated effort to secure strategic resources while simultaneously building diplomatic and economic bridges.

The numbers tell a compelling story. China's average effective tariff rate—calculated by dividing total duties raised by the value of imports—has demonstrated a clear downward trajectory. This metric, which provides a comprehensive view of trade barriers, has fallen steadily over the past decade.

By 2025, this rate had reached just 1.3 per cent, representing one of the lowest tariff environments among major economies. This figure stands in sharp contrast to the escalating duties being discussed and implemented elsewhere.

China's low-tariff approach serves multiple strategic objectives simultaneously. By maintaining minimal import barriers, Beijing creates an attractive market for resource-rich nations seeking stable export destinations. This becomes particularly valuable when traditional buyers are implementing protectionist measures.

The strategy focuses heavily on securing strategic resources—commodities and materials essential for economic development and technological advancement. Lower tariffs reduce costs for importing these resources, making Chinese manufacturers more competitive globally while ensuring supply chain stability.

Consider the broader implications:

• Resource-exporting nations gain reliable market access
• Chinese industries secure essential inputs at lower costs
• Developing economies find new partners for trade
• Global supply chains adapt to reduced friction

This approach has allowed China to position itself as a stable trading partner during a period of increasing global trade uncertainty. While other nations debate protectionist measures, China has doubled down on openness.

The low-tariff strategy extends beyond immediate economic benefits to encompass broader diplomatic objectives. By offering preferential trade terms, China is actively strengthening relationships across the developing world—regions that have often felt marginalized by traditional economic powers.

These trade relationships create foundations for deeper cooperation in infrastructure, technology, and investment. When nations become accustomed to favorable trading terms with China, they develop economic interdependencies that can translate into diplomatic alignment.

The timing of this strategy is particularly significant. As US alliances face strain from tariff disputes and trade tensions, China's open-door policy provides an alternative pathway for nations seeking to diversify their economic partnerships.

Keeping import duties low and pledging further cuts as a way to secure strategic resources and build ties across the developing world.

This approach represents a long-term vision of economic statecraft, where trade policy serves as a tool for building lasting international relationships rather than merely extracting short-term concessions.

The divergent strategies have created noticeable market dynamics. While tariff threats generate volatility and uncertainty, China's consistent low-tariff policy provides predictability that businesses value highly.

Global markets have responded to these contrasting approaches. The US tariff increases have contributed to market turbulence, affecting investor confidence and complicating corporate planning. Companies must navigate shifting trade barriers and potential retaliation.

In contrast, China's stable, low-tariff environment offers a predictable framework for international businesses. This predictability becomes a competitive advantage, attracting investment and trade flows that might otherwise seek more stable jurisdictions.

The effective tariff rate of 1.3 per cent in 2025 represents more than just a number—it signals China's commitment to maintaining an open economy despite global headwinds. This commitment has tangible effects on trade volumes, investment decisions, and economic growth patterns.

The contrasting strategies highlight a fundamental choice in international economic policy: whether to use trade barriers as leverage or to employ openness as a tool of influence. China's approach demonstrates that low tariffs can be strategically advantageous, particularly when other nations are raising barriers.

As global trade tensions continue, the effectiveness of these divergent approaches will become clearer. Will China's strategy of openness yield the strategic resources and diplomatic ties it seeks? Can the US achieve its objectives through tariff threats?

What remains certain is that the global trade landscape is undergoing significant transformation. The choices made by major economies today will shape international economic relationships for years to come, affecting everything from supply chains to diplomatic alliances.

The coming months and years will test whether trade liberalization or protectionism proves more effective in achieving national economic and strategic objectives. For now, China has clearly chosen its path.