With Donald Trump going full blown in his trade war over China, imposing heavy tariffs on imports from the world’s second largest economy, Jefferies top boss Christopher Wood has a word of caution to share in his latest Greed and Fear note. Wood flagged that the US has leverage over China on the tariff issue, meaning that Beijing holds the stronger hand in this war of tariffs.
“This is why Beijing has made it crystal clear that it will not cut tariffs unless the US makes the first move since it is the Trump administration which initiated this trade war,” Wood wrote in his latest newsletter.
As for its crisis control, Wood stated that the Trump administration is looking to isolate the dragon nation by signing off trade deals with friendlier allies like Japan and India. However, the case here also seems more tricky than it looks. While it puts nations like Indian and Japan at a better standing to far through the global trade war, it also gives the two countries an added advantage to negotiate better deals with the US than might otherwise have been the case.
Regardless, these New Delhi and Tokyo are likely to come up with a deal that does not threaten their trade relationship with China, Wood believes. This comes as part of Beijing’s threat last week, warning trade partners about retaliation against any country that negotiates deals with America ‘at the expense of China’s interests.’
Woods also holds the view that these threats showcase a reality about China’s growing domination over world trade as the country has turned out to be a more important trade partner than the US. “To be precise, a total of 143 or 71% of countries traded more with China than with the US in 2024, while 107 or 53% of countries traded more than twice the amount with China that they trade with the US, based on IMF’s data on international trade in goods by partner countries,” Wood quantified.
The rise of China’s dominance seems even more staggering when compared with data from 2001, when the country joined the World Trade Organisation. Back then, only 22% of countries traded more with China than the US and an even lesser, just 11% had more than twice the trade with Beijing than with Washington.
