China better built for a trade war – and Trump knows it
Trump’s climbdown on 145% tariff is implicit recognition that China can play the long game while the US cannot
After months of tariff threats and combative posturing, Donald Trump this week made a rare concession. The 145% tariff on Chinese imports, he said, “won’t be that high… it’ll come down substantially.”
There are no formal talks, no breakthroughs, just a sudden shift in tone from the US president. And this shift speaks volumes.
Despite his bluster, Trump is coming to terms with a hard truth: China is structurally more insulated, strategically better prepared and ultimately more capable of enduring a prolonged trade conflict than the US.
The myth that tariffs would force Beijing into submission is being steadily dismantled by economic reality. China has not blinked. It has responded to US aggression with a calculated mix of resilience and flexibility—offering to talk but refusing to capitulate.
It doesn’t have to. Beijing has spent years quietly reducing its vulnerability to American pressure. Trump’s tariffs may bite, but they won’t break China.
For starters, China’s political system gives it a major advantage in a drawn-out economic contest. In Washington, trade wars are hostage to election cycles, interest groups and social media storms. In Beijing, policy is dictated from the top with strategic consistency.
This centralized control means China can absorb economic pain without flinching while deploying targeted stimulus, subsidies and countermeasures without delay or political fallout. It can play the long game. The US, under Trump, cannot.
Then there’s the trade balance. China ran a near-US$300 billion surplus with the US last year. About 15% of its exports went to American consumers, which sounds like leverage for Washington—until you realize how much of that trade is already being rerouted.
Since Trump’s first volley of tariffs on steel, aluminum and solar panels in 2018, Chinese exporters have shifted production to Southeast Asia.
Factories in Vietnam and Cambodia are now effectively part of the same supply chain but under a different flag. China’s 17% jump in exports to Vietnam in March is no coincidence. Nor is the fact that Vietnam now runs a $124 billion trade surplus with the US.
Trump may talk tough about slamming that “back door” shut with a 46% reciprocal tariff on Vietnamese goods—but even that threat has been quietly suspended. Washington doesn’t want a trade war on multiple fronts – and Beijing knows it.
More critically, while Trump talks tariffs, China is cultivating alternatives. Its Belt and Road Initiative has opened new trade corridors across Central Asia, Africa and the Middle East.
It has signed multilateral trade deals that exclude the US. The share of Chinese exports going to America is shrinking—falling from 21% of total exports in 2016 to just 13.4% last year. China’s US exposure is being managed and its diversification is working.
Contrast that with US dependency. American exports to China are dominated by low-value-added commodities like soybeans, cotton and beef. These are easily replaceable—Australia, Brazil and Argentina can all step in to fill the gap.
Meanwhile, many Chinese exports to the US, including consumer electronics, machinery and processed minerals, are not so easily swapped out. They are deeply embedded in US supply chains. Hitting them with tariffs hurts US manufacturers, not just Chinese producers.
And then there’s the rare earth card. China controls the lion’s share of global production of these strategically vital minerals, which are essential for everything from electric vehicles and smartphones to advanced military systems. It has never fully weaponized that leverage—but it could.
The mere threat is enough to unsettle global markets. No US countermeasure could match that kind of strategic clout.
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What we’re witnessing isn’t weakness from Trump—it’s recognition. He launched this tariff war with the swagger of a real estate dealmaker.
He now finds himself negotiating with a state that can’t be bullied or baited into concessions. The trade pain has boomeranged back into US inflation, supply chain disruptions and midwestern farmers, pitchforks in hand, staring at lost Chinese markets.
To be sure, Trump isn’t giving up. But the moderation in his language shows he’s recalibrating, looking for a way to declare victory without having to escalate further. China, meanwhile, is holding firm. Its strategy is clear: don’t provoke, don’t yield and wait out the theatrics.
That’s one of many reasons why Beijing is in a stronger position. It has diversified exports, reduced US dependency, insulated its economy with industrial policy and held its fire on rare earths bans.
The trade war may drag on, but China is built to outlast the US. Trump, for all his talk, knows that. And that’s why the first signs of retreat are coming from Washington, not Beijing.