President Trump’s long-promised trade war with China got going in earnest only last week, and he’s already botched it.
Mr. Trump and his sycophants brag about his deal-making artistry. So they are presumably familiar with some of the basic principles of business negotiations: Have a clear and attainable goal, know your adversary’s pain points (and don’t reveal your own), and make sure you don’t box them in so aggressively that they have no choice but to dig in their heels and retaliate.
Mr. Trump seems to have forgotten these things. His ill-conceived and amateurishly executed tariff war with China has now spiraled out of control, threatening world trade and badly damaging America’s global image. And it is far from certain that he will prevail.
Mr. Trump’s main problem is that he and his team evidently — and wrongly — assumed China was so desperate to protect its exports to the United States that it would simply bend to his will.
China exports more to the United States than to any other country — $438 billion worth in 2024. The staggering tariffs that Mr. Trump has imposed and that Beijing has matched in retaliation will hurt, coming at a time of weak Chinese consumer demand and investment and a struggling real estate market. But China is in some respects better prepared today to hold its ground than it was during Mr. Trump’s first term.
After years of trade tension, tariffs and general decoupling, China is not as economically tied to the United States as before. Many American companies have reduced their presence in China by shifting manufacturing and sourcing to other countries. In 2017, before Mr. Trump began imposing tariffs, 21.6 percent of goods imported into the United States came from China. That fell to 13.4 percent last year. Some of that may be because of the rerouting of Chinese products and components through third countries before they reach the United States, a loophole that the Trump administration is looking to close.
But China has been diversifying its export markets to reduce its dependence on the United States: The value of direct Chinese exports to the United States last year was roughly the same as a decade ago; its exports to the European Union, meanwhile, soared in that period. China also has reduced its overall reliance on trade: Exports as a percentage of China’s gross domestic product declined from 36 percent in 2006 to 19.7 percent in 2023, according to World Bank data.
China under President Xi Jinping has spent years preparing for this expected trade confrontation with the United States, through its messaging at home and by prioritizing technological self-sufficiency, economic security and industrial retooling. In recent months it has taken additional steps to strengthen the economy and promote domestic consumption and is once again embracing China’s leading private sector entrepreneurs, whose dynamism and prominence faded in recent years as the government pursued more state-led industrial development.
So far, it is Mr. Trump who has blinked. Last week he declared a 90-day pause in the steep “reciprocal” tariffs he imposed on other countries after they sparked fears of a recession, crashed global financial markets and caused American business titans to publicly question the president’s approach. His admission that he backed off because investors were getting “yippy” was unwise, showing that he might waver again if the standoff with China persists.
The Chinese government has a range of policy tools it can wield to ease the pain of a prolonged trade war, including billions of dollars’ worth of state funds that can be quickly pumped into China’s capital markets. But Mr. Trump’s negotiating position will weaken by the day as U.S. consumers feel the sting of rising inflation, investors watch their stock portfolios suffer and chief executives see the business outlook darken.
China’s leaders are simply not as vulnerable to domestic pressure as Mr. Trump. This has deep historical, cultural and social roots. Recurring periods of hardship in Chinese history have embedded in the nation’s psyche a capacity for endurance and fortitude. The phrase for this is “chi ku,” or to “eat bitterness.” Younger Chinese today are accustomed to more comfortable consumer lives than previous generations, but chi ku still runs strong.
My grandparents’ generation was hardened by war, famine and social turmoil — memories that have been passed down and remain fresh for most Chinese today. I was born in China in the 1990s, before the country reached its current levels of prosperity. As a child, I lived in a cramped 200-square-foot single-room apartment with my parents; kitchen and restroom areas were shared with more than 20 other households. Our family was considered better off than most.
Instead of voicing worry, most Chinese I know are simply annoyed at the United States and fully support the Chinese leadership’s decision to dig in. In the public eye, Mr. Trump’s assault has only validated the years of official warnings that China needed to prepare for this.
Both China and the United States are trying to change their economic models. China produces too much and wants to shift toward more consumption; the United States consumes too much and wants to produce more. Both transitions are tricky. But it is easier for the Chinese, conditioned to endure hardship, to shift toward producing less and consuming more than for a consumer-centric economy like the United States to move the other way.
Mr. Trump says Beijing “played it wrong” by retaliating against his tariffs. But he gave China no choice; showing weakness only emboldens a bully like him. A severe downturn in global demand caused by his tariffs would undoubtedly affect the Chinese economy. But he shouldn’t wait around for a call from Beijing pleading for a deal. Mr. Xi can afford to sit tight and blame any economic hardship on Mr. Trump.
Mr. Trump’s boorish, erratic approach has brought him no closer to achieving his unclear trade goals with China. What it has done is raise the risk of a world recession and make China appear like the more stable and reliable economic partner.
So much for the art of the deal.
Robert Wu (@robert_baiguan) is the founder and chief executive of BigOne Lab, a Chinese data-driven research company based in Shanghai. He also writes for his Baiguan and China Translated newsletters.
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