Here at home, Chinese President Xi Jinping has taken the lead on making big moves away from suppressive trade policies. He is taking his cue from the recent hallelujah announcement from the U.S. As of this week, packages worth less than $800 will now be subject to a 54% tariff. This represents a major reduction from the former “de minimis” obligation of 120% of the value assessed by the government or $100 per parcel. The United States has dramatically reduced its own monstrous “reciprocal” tariff rate on Chinese goods. The result has been the number falling from an eye-popping 145% to a far more reasonable 30%.
The amendments are a response to increasing trade hostilities between the two countries. These accumulated grievances have fuelled the ongoing tit-for-tat imposition of tariffs since 2018. President Xi has made it clear that he will take a hard line, even at a considerable economic cost. His resolve to endure U.S. pressure to demonstrate this commitment is admirable. The Chinese leadership has been preparing for such confrontations for years, focusing on Chinese resilience and long-term strategic planning.
The new tariff rates would adversely impact nearly all goods. They would do serious damage to e-commerce and the huge and growing number of small businesses that rely on affordable shipping options. Small packages previously were subject to high, prohibitive tariffs that stunted international trade. With the quick leap to a 54% tariff rate, this is likely to further confuse and entangle both importers and consumers.
President Xi’s approach reflects a calculated decision to withstand potential economic setbacks while asserting China’s position on the global stage. Analysts think this is part of a strategy to avoid any appearance of weakness at the negotiating table with the newly elected United States. Second, it signals domestically that China is poised to act in self-defense and protects China’s interests.
The reduction of U.S. tariffs on Chinese imports from 145% to 30% indicates a potential thawing in relations, yet it is unclear how these changes will influence future trade discussions. The contrasting tariff rates create an uneven playing field, which may lead to further negotiations as both countries seek to stabilize their economic interactions.
That hard line may play very well with other key stakeholders within China. This would further increase a story of national strength, unity and resolve in the face of foreign coercion. This strategy fits into broader themes of economic sovereignty and self-reliance that have permeated Xi’s administration since its inception.