Trade War Monitor, April 14: U.S. Signals Optimism of Trade Deal With China, but Beijing Remains Vigilant

The ongoing U.S.-China trade tensions persist, but there are indications that both nations may aim to de-escalate. President Donald Trump remains optimistic about reaching a trade deal, with dialogue underway through intermediaries. Meanwhile, China urges the U.S. to abandon its "maximum pressure" approach and adopt equality and mutual benefit in negotiations. Hong Kong is positioning itself to become the top choice for U.S.-listed Chinese firms amid threats of forced delisting [para. 1][para. 2][para. 5].

China's export sector exhibited strong performance in March, with exports growing by 12.4% year-on-year, reaching a trade surplus of $102.64 billion. While exports benefit from global demand, including emerging markets, upcoming U.S. tariffs are expected to challenge this growth. Despite the complex trade environment, officials remain optimistic about China’s economic resilience [para. 4].

Hong Kong continues to attract U.S.-listed Chinese companies for secondary or dual-primary listings, supported by simplified regulatory processes. In the first quarter, the Hong Kong Stock Exchange raised HK$18.2 billion from 15 IPOs, a substantial increase from the previous year. These developments reflect firms' efforts to mitigate risks and remain closer to their primary markets in Asia [para. 5].

The semiconductor industry finds some relief as China exempts imported U.S.-designed AI chips manufactured outside the U.S. from retaliatory tariffs. This move mitigates potential disruptions in advanced semiconductor supplies, emphasizing China's reliance on foreign technology despite its aspirations for domestic advancement [para. 6].

Tensions remain in other sectors, with China suspending three U.S. companies from exporting poultry and bonemeal products after detecting salmonella. Simultaneously, Goldman Sachs highlights the economic drawbacks of the trade war, projecting a drag on China’s GDP and significant American reliance on Chinese products. These mutual dependencies could push both nations toward resolving the dispute [para. 8][para. 9].

Historically, China has overcome economic challenges through reform and opening up, which the country continues to advocate. By expanding global trade collaborations and stabilizing foreign investments, China aims to address current pressures while fostering mutual benefits globally [para. 11].

Temporary tariff pauses by the U.S. have encouraged Chinese exporters to reroute goods through third-party nations to reduce costs, reflecting adaptive trade practices during uncertainty. Furthermore, the suspension of higher U.S. tariffs temporarily benefits nations like Malaysia, which faces mixed implications for its semiconductor and export sectors due to ongoing geopolitical risks [para. 12][para. 13].

Globally, markets remain shaken following President Trump’s abrupt tariff policy changes, which risk exacerbating financial instability. Former U.S. Treasury Secretary Larry Summers warns that the combination of escalating tariffs, governmental debt, and international buyer dependency could precipitate fiscal turmoil. The situation underlines the urgent need for constructive dialogue to avert severe economic consequences [para. 15].