Despite threats from U.S. President Donald Trump to impose sweeping tariffs worldwide, only China has truly stood firm. The European Union and Canada have also displayed tough attitudes, but Beijing has responded with two rounds of reciprocal tariffs against the United States, alongside nontariff measures such as export controls, the addition of new U.S. firms to China’s “unreliable entity list,” and antitrust investigations. Rhetorically, China has declared it will “fight to the end” against what it calls Washington’s unilateralism.
Beijing is under no illusion that this course of action will offend Trump. It understands well that to “fight to the end” may lead to a complete halt in bilateral trade—tantamount to an economic decoupling in practice. With current tariff rates now effectively nearing 150 percent, and exemptions limited to essential or irreplaceable goods, most trade is no longer feasible. Prior to diplomatic normalization, bilateral trade between the two nations was only around $2 billion. If trade today can be maintained at even 20 percent of pre-tariff levels, under these rules, it would be considered a success.
While trade with the United States only accounts for 2.5 percent of China’s GDP, the U.S. market remains China’s largest single-country export destination, comprising nearly 15 percent of its overall foreign trade. This conflict could slow China’s GDP growth by 1.5 to 2 percentage points. Given that China has set a 5 percent growth target for this year, such a hit would be significant. It could trigger a wave of shuttered businesses and mass unemployment. China’s economy is already under strain; this would be a further blow.
More than that, Trump’s tariff war could have serious geopolitical consequences for China. Because tariffs are Trump’s chosen weapon, other countries—particularly smaller economies in China’s periphery, such as those in Southeast Asia—may find themselves forced to pick sides. Their goods are often complementary to those of the United States but competitive with China’s. In choosing between the two giants, many are likely to tilt toward Washington. These nations, which once depended on China economically and the United States for security, may come to rely on the latter for both, if they’re not alienated by Trump.
So why has Beijing opted for a hard-line response instead of adopting a posture of insincere compliance to placate Trump temporarily? After China announced its 34 percent retaliatory tariff, Trump’s reaction made it clear that he was deeply angered—not simply by the retaliation itself but by the fact that Beijing had not first reached out to negotiate. The swift, unilateral response hurt his pride and authority.
But China’s leaders have a sense of pride of their own. The leaders, including both President Xi Jinping and others around him such as Premier Li Qiang, worry that if they call Trump and the tariffs are not lifted—or if Trump demands other harsh concessions in exchange for easing the pressure (both of which are highly possible)—then their own authority and dignity will suffer.
Beyond this clash of egos lies a more profound strategic calculation. Beijing believes that Trump’s tariffs are a deliberate attempt to corner China, to drive it into a position from which it cannot retreat. From Beijing’s perspective, U.S.-China relations have undergone a fundamental shift since Trump’s first term. Breaking China’s rise has become the top priority for U.S. foreign policy, regardless of who occupies the White House. This was true under Trump 1.0, under President Joe Biden, and now even more so under Trump 2.0.
After Trump launched his first trade war in 2018, Beijing still hoped that negotiations and compromise might preserve normal diplomatic and commercial ties. The two sides fought and talked, eventually reaching a “Phase One” trade agreement. But the tariffs were never rolled back. Under Biden, Washington went further, designating China as America’s top strategic competitor and reinforcing its containment policies.
Now, with Trump back in power, he has doubled down. Just over two months into his new term, he has slapped tariff after tariff. Beijing sees this as an existential escalation. In the Chinese leadership’s eyes, there’s nothing more to endure and nowhere left to retreat.
Recognizing this new reality—of fundamentally altered U.S.-China relations and a hostile external environment—Beijing has made sweeping domestic adjustments, building on patterns evident since the beginning of Xi’s rule in 2012. It has strengthened party control and tightened social oversight. Economically, it is aggressively advancing industrial upgrading, shifting toward a “dual circulation” model that emphasizes domestic demand and self-sufficiency in key technologies and supply chains. China is also expanding ties with third-party markets, especially through the Belt and Road Initiative, to deepen economic integration with the global south.
Years of structural reform are beginning to yield results. Though growth has slowed and unemployment has risen, social and political stability have largely held. The economy has weathered the trade war and the U.S. chokehold on advanced technologies, demonstrating increased resilience. China’s overall technological strength continues to rise. Notably, the emergence of DeepSeek has reignited confidence in China’s ability to narrow the artificial intelligence and semiconductor gap with the United States.
Meanwhile, China’s defense sector has seen explosive growth. Advances in military technology and weaponry have made Beijing more confident in its national security posture.
Another factor behind China’s firmer stance this time around is increased public support—ironically, thanks in part to Trump himself. Chinese public opinion on Trump is divided; both supporters and detractors exist in large numbers.
But many who once favored Trump have become disillusioned with his recent behavior: His expansionist ambitions, rapprochement with Russia, heavy-handed tactics on Ukraine—including attempts to force Kyiv into a cease-fire under economically colonialist terms—have alienated former fans, especially among China’s liberal circles. Today, Trump’s critics in China likely outnumber his supporters.
And since Trump is now targeting the entire globe with his tariff threats, anti-Trump sentiment in China has grown more widespread. Beijing is capitalizing on this discontent.
For many Chinese—fed by official messaging and viral content from Trump critics on social media—Trump appears arrogant, ignorant, and aggressive. His unrelenting tariff pressure on China has made many feel that the bullying has gone too far. After all, China is the world’s second-largest economy. It deserves respect.
Even those who are skeptical of or hostile to their own government now see Trump’s overreach as the real provocation—and so remain silent on, if not quietly supportive of, Beijing’s hard-line response. For nationalists, Trump’s tariffs and China’s retaliation are both welcome: They see decoupling not as a danger but a necessary liberation.
Beijing believes that it is on the right side of history—defending free trade, multilateralism, and globalization against Trump’s tariff bullying. It understands that most nations, for pragmatic reasons, will not openly side with it. But many smaller states may quietly welcome China’s resistance. That, Beijing hopes, will translate into moral capital in the international arena.
Beijing also wants to send a message to the United States and the world: It is no pushover. It will not be bullied. It may even be using this conflict to force negotiations from a stronger position. If the fighting drags on and both sides are compelled to talk, then raising the stakes could give Beijing more leverage.
Still, China is also preparing for the worst—that a trade war could escalate into a full-scale confrontation, possibly even a limited military one. In any case, its response reveals a new strategic posture toward Washington: tit for tat. You hit me, and I hit back—no more, no less.
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