What Are the Two Sessions? New Trump Tariffs on China Set to Take Effect

Happy Monday!

We are zooming in on the Two Sessions that are to be held this week. (Was this newsletter forwarded to you? Please sign up here to get it directly to your inbox).

Beijing is set to hold its most important annual policy gathering, the Two Sessions, which includes the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC). Each year, these meetings bring together over 2,000 delegates from across China to outline the country’s economic, foreign policy, and social agenda for the year ahead.

This year, the focus is on U.S.-China trade tensions, particularly the Trump Tariffs, the growing competition in technology, and the potential for new stimulus measures to counter economic headwinds.

Technology competition, including AI, biotech, and semiconductor Chips, is continuing to draw attention.

The Two Sessions are held amid an escalating U.S.-China tariff war.

U.S. President Donald Trump has announced an additional 10% tariff on Chinese goods, effective March 4, following a previous round of 10% tariffs already imposed on imports from China.

In its previous response, China has implemented targeted countermeasures, imposing tariffs on select U.S. agricultural products and restricting exports of key minerals critical to global supply chains.

The countermeasures China takes in the face of the new round of tariffs will be closely watched.

Further escalating economic tensions, Trump also issued the America First Investment Order, which:

• Restricts Chinese companies and other adversarial nations from listing on U.S. stock exchanges.
• Tightens auditing standards for already-listed Chinese firms, increasing financial scrutiny including audits.

The stakes have reached the highest for China as it struggles to regain economic momentum following the pandemic. The government is expected to unveil new policy measures during the Two Sessions aimed at stimulating growth.

Although details remain undisclosed, previous stimulus efforts have focused on:

• Incentives for the technology sector to strengthen domestic innovation.
• Boosting domestic consumption to reduce reliance on exports.
• Increased government spending on infrastructure and key industries.

China-Europe Trade Relations Amid Shifting U.S. Foreign Policy

The European Union has been navigating uncertainty following a major shift in U.S. foreign policy under President Trump, particularly regarding its traditional European allies and relations with Russia. This geopolitical realignment has intensified discussions about the future of China-EU trade relations.

Tensions escalated further after the White House meeting between Trump and Ukrainian President Zelenskyy, deepening the rift between Washington and Europe. Against this backdrop, China is seeking to strengthen economic ties with Europe, even as it faces pushback from the EU over the rapid influx of Chinese electric vehicles (EVs) into European markets.

In response, China is actively diversifying its trade strategy, expanding into Europe, Latin America, and Southeast Asia to reduce its reliance on the U.S. market. Additionally, China’s fast-growing innovation sector—particularly in technology and green energy—is positioning it as a competitive force in global markets, including within the EU.

With mounting external pressures from U.S. trade policies and internal economic challenges, this year’s Two Sessions will play a crucial role in shaping China’s approach to international trade and economic resilience.

(Comments, email me at brianhxyang @yahoo.com)