The global tariff war ignited by Donald Trump has drawn China’s strongest counter measures . Though China is a surplus economy and the US a deficit one, Beijing’s arsenal of strategic advantages—including diversified export markets, massive holdings of US Treasury bonds, control over critical minerals, and institutional resilience in crises—bolsters its ability to resist American coercion.
On April 15, the Financial Times (UK) analyzed that China’s leverage in the trade war stems from its ability to diversify import sources more easily than the US. Over 15% of China’s total exports flow to the US, yet economists note that China’s imports from America are concentrated in low-value-added agricultural products like soybeans, cotton, beef, and poultry. In contrast, US imports from China—such as electronics, machinery, and processed minerals—are harder to replace.
Marta Bengoa, Professor of International Economics at the City University of New York, stated that while mutual dependency remains high, the US is more vulnerable: “China can source agricultural goods elsewhere far more easily than the US can replace Chinese electronics and machinery.”
Julian Evans-Pritchard, Chief China Economist at Capital Economics, told the Financial Times that market reactions indicate greater pressure on Washington: “The US faces stronger incentives to return to negotiations.”
Since Trump’s first-term tariffs on steel, aluminum, solar panels, and washing machines (2018–2019), China has reduced reliance on US consumer exports. US government data shows China’s share of US imports fell from 21% in 2016 to 13.4% last year. Meanwhile, Chinese manufacturers have shifted production to Southeast Asian nations like Vietnam and Cambodia, leveraging cheaper labor and evading US tariffs. Exports to Vietnam surged 17% in March 2024.
Vietnam, now facing a 124 billion trade surplus with the US, risks a 46 percent “reciprocal tariff “, although it has been suspended for 90 days.
Alicia García Herrero, Chief Economist for Asia-Pacific at French investment bank Natixis and Senior Research Fellow at Bruegel, stated that the suspension “provides some breathing room,” but even if Chinese exports were strictly halted, it would not inflict catastrophic damage on China’s massive economy. Last year, China’s GDP grew by 5%, with 1.5 percentage points attributable to its nearly $1 trillion global trade surplus. “China is a large, resilient economy,” she emphasized.
Bloomberg (US) reported on April 14 that the US, as a consumption-driven economy, harms itself by taxing Chinese goods. Consumers—often overlooked but politically influential—could weaken Trump’s negotiating position. While deficit economies traditionally hold an edge in trade disputes, US reliance on “Made-in-China” goods which is often produced by US firms in China complicates this.
Tariff exemptions for smartphones, laptops, and memory chips highlight this interdependence. Apple, reliant on Chinese production, cannot withstand 145% tariffs.
The Financial Times noted that China’s vast US Treasury holdings—if sold—could destabilize markets, raise concerns about US asset appeal, and accelerate dollar depreciation, increasing import costs. Trump’s April 9 decision to suspend “reciprocal tariffs” for 90 days (retaining a 10% “baseline tariff”) may reflect fears of a Treasury selloff. Reuters reported surging US bond yields last week—the sharpest rise since COVID-19—as investors speculated that China and other reserve managers are reassessing their holdings.
China controls over two-thirds of global rare earth production and 90% of processing capacity—critical for electric vehicle batteries. Despite Trump’s exemptions for key minerals, supply chain risks persist. China’s recent export controls on seven heavy rare earths signal readiness to deploy “new economic weapons,” per analysts Evan Medeiros and Andrew Polk.
Bloomberg observed that Beijing’s calibrated countermeasures—combining tariff retaliation with principled negotiation—demonstrate resolve. On April 10, China’s Commerce Ministry spokesperson reiterated: “Talks are welcome, but only on equal terms. If the US chooses confrontation, China will respond in kind. Pressure and threats are not the way to deal with China.”
Deep Throat
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Trump wasted not one second after US forces grabbed Venezuelan President Nicolás Maduro. He made it clear that he was eyeing the country's oil riches. But here's the catch: America's biggest oil companies aren't biting. Industry analysts confirm what the companies won't say publicly—even if these firms wanted back in, Venezuela's crumbling infrastructure and chaos on the ground mean Trump's fantasy of quick oil profits is far from easy to come true.
Trump promises Big Oil will pour billions into Venezuela. The oil giants say they never got the memo. AP Photo
Minutes after the military operation wrapped, Trump stood at a press conference making promises. Major American oil companies would pour into Venezuela, he declared, investing billions to fix the country's shattered oil infrastructure "and start making money for the country". Meanwhile, he reiterated that the US embargo on all Venezuelan oil remains in full effect.
Those sanctions have crushed Venezuelan exports into paralysis. Documents from Venezuela's state oil company and sources close to the situation confirm storage tanks and floating facilities filled up fast over recent weeks. Multiple oil fields now face forced production cuts.
White House Courts Reluctant Executives
Reuters revealed the Trump administration plans meetings this week with executives from major US oil companies. The agenda: pushing these firms to restore and grow oil production in Venezuela following the military action. The White House sees this as a critical step toward getting American oil giants back into the country to tap the world's largest proven oil reserves.
But Trump's eagerness hasn't translated into corporate enthusiasm. Several major US oil companies are taking a wait-and-see approach, watching Venezuela closely. ExxonMobil, ConocoPhillips, and Chevron all denied any prior communication with the White House about Venezuela. This directly contradicts Trump's claim over the weekend that he had already met with "all" US oil firms both before and after Maduro's capture.
Venezuela sits on roughly 17% of the world's proven oil reserves—first place globally. Yet US sanctions and other pressures have gutted its production capacity. Current output runs around 1 million barrels daily, barely 0.8% of global crude production.
World's largest oil reserves, strangled by US sanctions. Trump's quick-profit scheme hits a hard reality. AP Photo
Only One Company Stays Put
Chevron remains the sole major US oil company still operating Venezuelan fields. The firm has worked in Venezuela for over a century, producing heavy crude that feeds refineries along the Gulf Coast and beyond. A company spokesperson said on the 3rd that the current priority centers on "ensuring employee safety, well-being, and asset integrity," adding they "will continue to operate in accordance with laws and regulations."
ExxonMobil and ConocoPhillips previously invested in Venezuela. In the 1970s, the Venezuelan government nationalized the oil industry, reopened to foreign investment by century's end, then demanded in 2007 that Western companies developing oil fields form joint ventures with Venezuelan firms under Venezuelan control. ExxonMobil and ConocoPhillips pulled out. Neither company has responded to Trump's latest remarks about US capital entering Venezuela.
One oil industry executive told Reuters that companies fear discussing potential Venezuelan business at White House-organized meetings due to antitrust concerns.
Benefits Flow to First Mover
Francisco Monaldi, director of the Latin America Energy Program at Rice University's Baker Institute for Public Policy, expects Chevron would likely benefit first if Venezuela opens oil projects to the US. Other oil companies, he notes, will watch Venezuela's political situation closely and observe the operating environment and contract compliance before making moves.
Mark Christian, business director at an Oklahoma energy consulting firm, lays out the baseline: US companies will only return to Venezuela if they're certain of investment returns and receive at least minimal security guarantees. Lifting sanctions on Venezuela stands as a prerequisite for US companies re-entering that market.
Reality Check on Oil Profits
Even with sanctions lifted, the Trump administration won't find making money from invasion-acquired oil that easy.
Industry insiders admit large-scale restoration of Venezuelan oil production demands years of time and billions in investment, while confronting major obstacles: dilapidated infrastructure, uncertain political prospects, legal risks, and long-term US policy uncertainty.
Peter McNally, global head of industry analysis at Third Bridge, said, "There are still many questions that need to be answered about the state of the Venezuelan oil industry, but it is clear that it will take tens of billions of dollars to turn that industry around." He then added that it could take at least a decade of Western oil majors committing to the country.
Ed Hirs, an energy expert at the University of Houston, pointed to a pattern: US military invasions of other countries in recent years haven't delivered substantial returns to American companies. The history of Iraq and Libya may repeat itself in Venezuela.
