The Chinese went all in — jacking up their tariffs, selling Treasuries, probably threatening to pull back from today’s regularly scheduled auction of new Treasuries. And Donald Trump blinked.
US President Trump offers to talk and meet with Chinese President Xi Jinping to negotiate tariffs.
Trump is playing his usual game of ‘gracious master’ after being wounded.
Reporter: Would you consider talking or meeting with Xi Jinping?
Trump: President Xi, I like him, I respect him. Everyone wants to make a deal actually
He further stated that he is not concerned about escalation between the countries because Xi is “one of the very smart people in the world.”
China is ready to resist, but Trump is grumbling. China knows there’s no country on this planet that can truly replace its production power. It also knows the U.S. won’t survive the long road of trying to rebuild manufacturing from scratch. As usual, Trump is playing mind games — but China sees right through them.
In others words Trump has backed down on his ridiculous disrespectful attitude towards China.
President Trump said he did not think he would need to raise them further and that he expected Xi Jinping, China’s president, to reach out about a deal.
“I can’t imagine it. I don’t think we’ll have to do it more,” he said of additional tariffs on China. “No, I don’t see that.”
China is not backing down. Xi Jinping has the Mandate of Heaven for a reason and it’s because he shows strength in the face of foreign adversaries, unlike his predecessors. The China Ministry of Commerce has issued a statement to say that it will “fight to the end if the US insists on new tariffs.”
Trump administration genuinely thought it could stick it to China only now it realises it can’t do so, so it wants to form a gang of allies to try and stand up to China. It’s truly pathetic and highlights just how weak and ineffectual the US is now. As we have said for several years, it is the emperor with no clothes.
China Unlikely To Blink First As Trump’s Trade War Enters Uncharted New Territory
Since Trump’s first trade war with China in 2018, Beijing has ramped up trade with other countries, making it less dependent on the US.
The opening shots seem like a distant memory. Back in January, US president Donald Trump threatened to impose a tariff of 10% on Chinese imports. Less than three months later, the rate is now 125%.
China has condemned the tariffs. As well as applying its own reciprocal tariff of 84% on US imports, Beijing has been fighting a war of words.
“When challenged, we will never back down,” said China’s foreign ministry spokesperson, Lin Jian. The commerce ministry said: “China will fight to the end if the US side is bent on going down the wrong path.” Further countermeasures have been promised by Beijing.
The tit-for-tat measures could spark fears of a race to the bottom, with ordinary people suffering as prices rise and a fears of a global recession grow.
But although China’s economy has in recent years been beset by its own challenges, when it comes to tariffs specifically, Beijing is unlikely to blink first.
“For President Xi, there is only one politically viable response to Trump’s latest threat: Bring it on! Having already surprised domestic audiences with a forceful 34% reciprocal tariff, any appearance of backing down would be politically untenable,” says Diana Choyleva, founder and chief economist at Enodo Economics, a forecasting firm.
One of the most helpful factors in Beijing’s favour is the fact that the US is far more dependent on Chinese imports than China is on the US.
The main items that the US imports from China are consumer goods, such as smartphones, computers and toys. Last week, analysts at Rosenblatt Securities predicted that the cost of the cheapest iPhone available in the US could rise from $799 to $1,142 – and that was when Trump’s China tariffs were just 54%. “Trump cannot credibly deflect blame on to China for these economic hardships,” Choyleva says.
In contrast, the goods that China imports from the US are industrial and manufacturing supplies, such as soya beans, fossil fuels and jet engines. It is much easier for price increases in these commodities to be absorbed before a consumer gets their wallet – or in the case of China, their smartphone – out to pay.
Plus, this is not China’s first rodeo. Since Trump’s first trade war with China in 2018, China has ramped up trade with other countries, making it less dependent on the US. Between 2018 and 2020, Brazil’s soya bean exports to China increased by more than 45% compared to the 2015-2017 average, while US exports declined 38% over the same period. China is still the largest market for US agricultural goods, but the market is shrinking, hurting American farmers. In 2024, the US exported $29.25bn of agricultural products to China, down from $42.8bn in 2022.
China has other measures up its sleeve. On Tuesday, two influential nationalist bloggers published identical lists of possible Chinese retaliations, based on sources. China’s foreign ministry declined to comment on the articles but did not deny their content either.
The suggestions included suspending cooperation on fentanyl control, investigating US companies’ intellectual property gains in China, and banning Hollywood films from China. On the final point, a top-down embargo may not be necessary. China has in the past allowed online nationalists to whip up grassroots boycott campaigns. In 2017, Chinese consumers participated in a mass shunning of the South Korean supermarket chain Lotte, in response to the conglomerate’s involvement in a deal that allowed a US missile defence system to be installed in South Korea, which China saw as a security threat. Nearly half of the company’s more than 100 stores in mainland China were forced to close.
China’s strategic advantages do not make it totally immune from a trade war. The stock markets in China and Hong Kong are falling. Beijing has not yet figured out a way to meaningfully boost domestic demand, something that economists say is essential to truly tariff-proof the economy.
The political impact of Trump’s tariffs, coupled with the fear that the US is trying to turn other countries against China, is pushing US-China relations to an all time low. “I do not remember ever being this pessimistic about the trajectory of US-China relations,” wrote China analyst Bill Bishop in a newsletter. “The trade relationship is the linchpin between the two countries, and as it breaks we should probably expect other areas to see more stress.” But as the Trump administration talks of “Chinese peasants” and suggests that China is playing with a weak hand, Beijing is unlikely to back down anytime soon.
US ‘Madman Theory’ vs. Chinese Preparation
There are no such constraints this time, with a Trump fan club in place of a government. Trump can now apply the “madman theory”, a foreign policy strategy associated with former US president Richard Nixon consisting of making interlocutors believe the man in the White House is capable of anything.
Washington has also decided, in its mad dash for all-out tariffs, to take particular aim at countries – such as Mexico and Vietnam – that Chinese exporters used as intermediaries to get around the tariffs in 2018.
But Trump is taking on a rival which is better prepared than in 2018. “China has had a lot of time to prepare for a resumption of the trade war. They were caught a bit off-guard in 2018. But once it became apparent, especially under the Biden administration, that a lot of these tariffs were going to be left on, it really signified to Beijing that we need to start preparing our defences for when the situation might accelerate,” Lanteigne said.
Over the past seven years, China has succeeded in diversifying its export base. “China’s export reliance on the United States has been reduced significantly. Back in 2018, exports to the US accounted for around 20 percent of China’s total exports. Now that figure has been decreased to around 14 percent. So, even though this time, the tariff rates are much higher compared with 2018, China is relatively better prepared,” Xin said.
“China’s trade with Global South countries has actually overtaken its trade with the G7,” added Petry. “Compared to ten years ago, they’re not as sensitive anymore to US tariffs.”
Many experts believe China probably also has more ammunition than the US to limit the economic damage of a trade war. “The Chinese government has a lot of fiscal and monetary room to manoeuvre,” said Petry. “They can go down with interest rates. They can spend more money. The central government can issue more debt. Government debt in China, for instance, is not as high as in the US.” In the US, on the other hand, the deficit has risen from just under 4 percent in 2018 to over 6 percent in 2024. The US government knows that in the event of a recession, it will not have the same reserves as it had in 2018.
Alienating Allies Gives China A Win
China also has more options to increase the economic pain on its competitors and adversaries, and that can extend to the sphere of rare earth minerals critical for electronics, optics and other high-precision sectors. “China can impose export controls over a wider range of rare earths because currently China only imposes bans on rare earths for certain elements, but not all of them,” said Xin. “If tariffs – the trade wars – escalate even further, it’s a possibility that China could apply export controls over a wider range of rare earths.”
The main US option for maintaining the initiative in the escalating trade war would be, apart from imposing ever-higher customs duties, to impose financial and economic sanctions similar to what was done for Russia or Iran, notes Petry. But while the prospect cannot be ruled out entirely, experts interviewed by FRANCE 24 believe it would be a measure of last resort.
“Had Trump not also placed tariffs on, for example, the European Union, Japan and Korea, he probably could have convinced these countries to link resources and put even more pressure on China. I don’t think that’s going to happen under current circumstances. I think that it’s going to be very difficult for the US to get partners and allies to deal with China under the current situation,” said Lanteigne.
The responses of other countries towards the two global economic giants remain the main unknown factor in this new trade war. If the US succeeds in forcing other countries to put an end to their tariffs, and if they get behind it in the trade war against China, that would be a worst-case scenario for Beijing, notes Xin.
That’s one of the reasons China decided to react quickly and forcefully to the Trump tariffs. “It was to send a strong signal to everybody else that there is no tolerance from China about this kind of trade barriers and tariffs,” Xin said. “If anybody else would like to raise tariffs against China in a similar way [as] the United States, then they should be ready to face the consequences.”
Soya Beans: China Secret Weapon Against Trump’s Tariff Wars?
Here’s what to know about what a soya bean trade war could mean – and why it could be a big deal for the US, economically and politically:
Why is soya so important for the US?
Soya, in the form of whole beans, animal feed, or oil, is a cornerstone of the US agricultural industry and represents one of America’s biggest agricultural revenue earners.
It accounts for about 0.6 percent of GDP. The US has more than 500,000 soya bean producers, according to the Department of Agriculture’s Census of Agriculture. That includes at least 223,000 full-time jobs supported by the soya bean industry, according to a 2023 report for the National Oilseed Processors Association and the United Soybean Board.
The industry is worth $124bn in the US – that’s more than the entire economy of Kenya or Bulgaria.
Although local demand for soya in the US is growing, exports form the basis of the crop’s success. The US is presently the second-largest exporter of soya beans globally, selling more than half its yield to about 80 countries.
Who does the US export soya beans to?
Soya beans contributed more than $27bn of US annual exports in 2023, according to data from the Observatory of Economic Complexity (OEC), an open-source data visualisation platform.
That’s more than any other agricultural export.
China, which imports $15bn of US soya beans, is by far the most important market, followed by the EU – and especially Germany, Spain and the Netherlands, which buy about $2bn worth of the oilseed.
Yet, both China and the EU are now at the heart of a global pushback against Trump’s tariffs. They were both on the “worst offender” list of countries hit by a barrage of tariff hikes announced by Trump last week. The list included countries that Washington claimed were unfairly taxing US goods in their countries.
Will the EU and China retaliate with tariffs on soya?
Both entities appear to be targeting US soya, a soft spot for Washington, considering the importance of their markets to American farmers.
The EU earlier promised to target US goods worth up to €26 billion ($28bn) in retaliatory tariffs. A draft of the full list was leaked earlier but has not officially been released.
On Wednesday, the bloc voted on a surcharge of up to 25 percent on the list of targeted goods. A first set of tariffs will be enforced from April 15.
While those tariffs are expected to be enforced in phases, one of the products on the EU’s list is soya.
Meanwhile, US soya exports to China, its biggest market, are also facing a battering. China had earlier honed in on US food products, slapping a 15 percent duty on commodities like chicken, wheat and corn, while imposing a 10 percent levy on soya beans, meat and other farm exports.
On Saturday, China placed an additional 34 percent on all US goods, bringing the surcharge on soya, in particular, to 44 percent. A further 50 percent hike on all US goods will take effect on Thursday, Beijing has announced.
That means American soya beans will now face 94 percent tariffs in China.
Experts say China can afford to gamble with soya because it has increasingly turned to Brazil for its soya imports since 2017 when the first trade war began during Trump’s first administration.
US soya exports to China have fallen in the time since, while Brazil now holds more than half of the market share. In 2024, Brazil exported $36.6bn worth of soya to China while the United States exported $12.1bn worth of soya.
How are US soya farmers reacting?
American soya farmers have urged Trump to remove tariffs on China, the EU, and other top markets like Mexico. Most have emphasised China’s importance to US farmers.
“China bought 52 percent of our (soya bean) exports in 2024,” the American Soybean Association’s chief economist, Scott Gerlt, told the AFP news agency. Given the size of its purchases, China cannot easily be replaced, he added.
Some farmers say many won’t be able to hold out for too long if the trade spat continues, as their produce would become too expensive to be competitive on the global market.
“If this trade war lasts beyond the fall, you’re going to see farmers go out of business,” soya bean farmer David Walton told US news channel ABC.
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