Investing.com — Donald Trump’s presidential victory raised fears that the U.S. was on a unavoidable path toward another trade war with China, but the president has refrained from coming out swinging against China, ING says, providing some hope that there could be a path, albeit a narrow one, for a trade war to be avoided.
“Markets avoided what would’ve been a worst-case scenario for risk assets on Donald Trump’s inauguration. The President indeed held back from enacting a national economic emergency and countrywide tariffs on China and the rest of the world,” ING said in a recent report.
Trump’s restraint in the early days of his presidency has opened up room for negotiations and avoided an immediate escalation of friction with China, ING added.
The bank highlighted several areas where cooperation between the U.S. and China could be possible, including addressing the fentanyl crisis and resolving the TikTok issue. On fentanyl, ING said this “is an area where there should be room for cooperation,” noting that chemical exports to Mexico and Canada accounted for just $2.8 billion in 2024, or less than 0.1% of China’s total exports.
The ongoing TikTok saga, meanwhile, could set the tone for U.S.-China ties, with the 75-day moratorium on TikTok’s ban setting up early April as a “potentially important time window to watch if negotiations do not proceed smoothly.”
ING cautioned, however, that while China appears ready to ramp up imports and open up market access, the path to avoid a more destructive trade war remains narrow.
“While China clearly would prefer to avoid trade conflicts, especially given recent economic sentiment, this decreased reliance on the US market and US suppliers does open up the possibility for more aggressive retaliation (such as export controls or more targeted tariffs on large US multinationals) from China if it is pushed into a corner,” ING added.