US plans to use tariff negotiations to isolate China

The Trump administration plans to use ongoing tariff negotiations to pressure U.S. trading partners to limit their dealings with China, according to people with knowledge of the conversations.

The idea is to extract commitments from U.S. trading partners to isolate China’s economy in exchange for reductions in trade and tariff barriers imposed by the White House. U.S. officials plan to use negotiations with more than 70 nations to ask them to disallow China to ship goods through their countries, prevent Chinese firms from locating in their territories to avoid U.S. tariffs, and not absorb China’s cheap industrial goods into their economies.

Those measures are meant to put a dent in China’s already rickety economy and force Beijing to the negotiating table with less leverage ahead of potential talks between Trump and Chinese President Xi Jinping. The exact demands could vary widely by nation, given their degree of involvement with the Chinese economy.

The White House and Treasury didn’t respond to requests for comment.

U.S. officials have broached the idea in early talks with some countries, people familiar with the discussions said. Trump himself hinted at the strategy on Tuesday, telling Fox Noticias he would consider making countries choose between the U.S. and China in response to a question about Panama deciding not to renew its role in the Belt and Road Initiative, China’s global infrastructure program for developing nations.

One brain behind the strategy is Treasury Secretary Scott Bessent, who has taken a leading role in the trade negotiations since Trump announced a 90-day pause on reciprocal tariffs for most nations—but not China—on April 9.

Bessent pitched the idea to Trump during an April 6 meeting in Mar-a-Lago, said people familiar with the discussion, saying that extracting concessions from U.S. trading partners could prevent Beijing and its firms from avoiding U.S. tariffs, export controls and other economic measures, the people said.

The tactic is part of a larger strategy being pushed by Bessent to isolate the Chinese economy, which has gained traction among Trump officials recently. Debates over the scope and severity of U.S. tariffs are ongoing, but officials largely appear to agree with Bessent’s China plan.

It involves cutting China off from the U.S. economy with tariffs and potentially even cutting Chinese stocks out of U.S. exchanges. Bessent didn’t rule out the administration trying to delist Chinese stocks in a recent interview with Fox Business.

Still, the ultimate goal of the administration’s China policy isn’t yet clear.

Treasury Secretary Scott Bessent

Bessent has also said there is still room for talks on a potential trade deal between the U.S. and China. Such talks would have to involve Trump and Xi. White House press secretary Karoline Leavitt read a new statement from Trump during Tuesday’s press briefing suggesting a deal with China isn’t imminent.

“The ball is in China’s court. China needs to make a deal with us. We don’t have to make a deal with them. China wants what we have…the American consumer,” Leavitt said when reading Trump’s statement.

It is also not clear that the anti-China line has entered into negotiations with all nations. Some countries haven’t heard demands from U.S. negotiators related to China, say people familiar with the talks, though they acknowledge that negotiations remain in early stages. Many expect the Trump administration to raise China-related demands sooner or later.

Bessent has shown his desire for anti-China pledges from U.S. trading partners before. In late February, he said that Mexico had offered to match U.S. tariffs on China as part of negotiations over Trump’s tariffs on Mexico imposed because of the fentanyl trade. Bessent called Mexico’s offer a “nice gesture,” but the idea didn’t find much traction with the administration.

Since then, Bessent has taken a more central role in trade negotiations, assuming a lead in talks over reciprocal tariffs after Trump announced his 90-day pause on April 9. The Treasury secretary is slated to meet with Japan’s economic revitalization minister as soon as Wednesday and has laid out a list of nations he believes could soon reach deals with the U.S., including Japan, the U.K., Australia, South Korea and India.

China is conducting its own trade diplomacy. This week, Xi traveled to Vietnam—a major U.S. trading partner hard-hit by Trump’s tariffs—and signed dozens of economic pledges with the Hanoi government.

China views Trump’s reciprocal trade gambit as an opportunity, Peter Harrell, the former senior director for international economics on Joe Biden’s National Security Council, said on a panel discussion at Georgetown Law on Tuesday.

But China’s ability to counteract U.S. trade policies is limited, Harrell said. While the U.S. remains a “massive net importer,” China is reducing its imports from the rest of the world and focusing on self-sufficiency.

China “isn’t going to replace the U.S. as a source of demand for the products that a bunch of these developing countries…make,” Harrell said. “So the economics of this are going to prove challenging for China, but I think we see them playing the politics of this reasonably savvily.”

Write to Gavin Bade at gavin.bade@wsj.com and Brian Schwartz at brian.schwartz@wsj.com