China Reacts to Trump's Tariff War
Five experts with different backgrounds, each addressing a different audience and broadly reflecting prevailing views in China on the current trade war with the US.
Beijing’s official response has been resolute and defiant. The Ministry of Commerce declared on Tuesday that China will “fight to the end”. In a post on X, Ministry of Foreign Affairs Spokesperson Mao Ning affirmed that “we don’t back down”, accompanied by a video of Mao Zedong himself vowing to continue fighting in the Korean War for as long as was necessary. President Xi emphasised China’s strength: the country’s economy – a “great sea, not a small pond” – will withstand strong winds and rainstorms. Although officials acknowledge that US tariffs will be painful, they seek to reassure that, to use the People’s Daily’s chosen idiom, the “sky will not fall in“.
Chinese netizens are more concerned with what comes from the ground. Prices are expected to rise on goods made from agricultural products such as soybeans, of which the US is one of the world’s major exporters. Popular American brands will also become more expensive in China. Yet for some, there is a silver lining: an opportunity for Chinese consumers and business to buy and sell local.
Some Chinese scholars and analysts see other benefits to the tariff chaos, viewing it as an opportunity to turn American pressure into momentum for boosting the country’s long-sought domestic demand. Separately, semiconductor specialist Gu Wenjun judges that, despite some short-term disruption, the tariffs will accelerate the de-Americanision of China’s chip supply chains and further catalyse the boom of China’s semiconductor industry.
Others strike a much gloomier note. Prominent political scientist Zheng Yongnian disagrees with western media outlets such as The Economist, and some on Chinese social media, who argue that Trump is Making China Great Again (MCGA). He underscores the damage tariffs will do, and the importance of a response based on shrewd long-term thinking.
The basic form of this “MCGA” argument is that Trump’s tariffs will drive a wedge between America and its partners in Asia and Europe, pushing them closer to China. Some in the PRC agree: Gu sees an opportunity to centre tech supply chains on an imagined low-tariff bloc comprising the EU, China, South Korea and Japan. Others, such as international relations scholar-turned-opinion leader Jin Canrong, are highly sceptical of such an argument: America’s global clout is still unparalleled, and very few countries have seemed willing to stand up to it. Luo Zhiheng, an up-and-coming economist working in the private sector, notes that deepening trade ties with the world risk triggering a backlash if local markets are hit by a wave of Chinese exports. [Note: since the publication of these commentaries, Trump has lowered the tariffs back down to 10% for the next 90 days on most countries bar China.]
Amidst the market upheavals, some analysts are thinking about Trump’s next moves. What will follow the trade war? Historical parallels drawn with the trade wars of the Great Depression provide an alarming answer. Zheng, though, thinks that conflict with the US is “not to be feared”. It is more likely to precipitate America’s decline than China’s.
Paddy Stephens
Summary
Trump's tariffs have drawn sharp criticism in China for being poorly conceived and dangerously short-sighted.
Few believe they will achieve their intended goals; on the contrary, many expect them to backfire. As a result, time is said to be on Beijing’s side.
Echoing official rhetoric, talk is now less about avoiding tit-for-tat retaliations, than about meeting the US head-on — though more moderate scholars may quietly disagree.
Unsurprisingly, Chinese analysts also highlight that their country remains open to negotiations with Washington.
Discussion of the economic and social toll the trade war may take on China is generally limited, if not deliberately downplayed. Potential damage to GDP growth is acknowledged, but overall confidence remains de rigueur.
Regularly identified as China’s foremost economic priority, boosting domestic consumption is once again front and centre in these discussions, with calls for Beijing to deploy all available policy instruments to achieve this goal.
Growing emphasis is being placed on the negative repercussions that China’s ballooning trade surplus is having—and will continue to have—on its relations with the rest of the world.
Although talk of US–China decoupling has intensified, the consensus still points towards a partial, albeit deeper, form of separation.
Whatever the outcome of these tariff hikes, there appears to be broad consensus that China should continue reducing its overall reliance on the US as it deepens ties with the Global South.
If anything, the current trade war seems to be accelerating pre-existing trends, such as China’s ongoing drive towards greater economic self-reliance and security.
Name: Zheng Yongnian (郑永年)
Position: Founding director of the Institute for International Affairs and X.Q. Deng Presidential Chair Professor, Chinese University of Hong Kong, Shenzhen
Sources: GBA Review (7 April) and Xiake Dao (9 April)
No country has ever become wealthy or maintained prosperity through tariffs.
However, it is important not to underestimate the vitality (活力) of American society, which has been reshaped by some of Trump’s policies, and to consider how they impact the country more broadly.
Western critiques of Trump’s policies are too often biased and beside the point. Economists in particular misunderstand the US’s economic problems.
Zheng: “If economists were truly capable of diagnosing and solving these issues, American society would not have deteriorated to its current state. In fact, the economics profession bears considerable responsibility for the situation in the US today.”
Trump may well have been aware of the potential for an escalatory cycle in the trade war he initiated.
Zheng: “Perhaps it is the outcome he desired, and this is only the beginning. Although many view Trump as reckless or even ignorant, his actions are not devoid of logic. Every move he makes in this game needs to be observed calmly, and no hasty conclusions should be drawn.”
The more concerning question is what will follow this tariff war.
Zheng: “The ‘reciprocal tariffs’ are Trump’s chosen method to address what he perceives as America’s problems. But if this method fails to resolve those problems or worse, exacerbates them, what will Trump do next? If the Tariff Act of 1930 led to the Great Depression and then to war, where will Trump’s ‘reciprocal tariffs’ lead?”
Direct confrontation between the two superpowers needs to be controlled, but is “not to be feared” [并不可怕]. The US seems afraid of a military conflict with China, and would be more likely to suffer a total decline [彻底衰落] were one to occur.
Zheng: “Even in the worst-case scenario — a direct conflict over Taiwan — the US would find it difficult to bear the cost of such an asymmetric confrontation, because for the US, Taiwan is merely a geopolitical pawn representing the interests of a small group; for mainland China, it is a war of sovereignty, representing the will of the entire people.”
In the short term, China has no choice but to retaliate against the US’s provocations. However, it should avoid copying their negative-sum strategy, which sees damage to one’s own side as acceptable so long as the other side’s losses are greater.
China must look beyond the current trade war with Trump and think long-term about Sino-US competition.
Zheng: “Since Trump is employing a ‘comprehensive deal’ [总体交易] approach, we too should adopt a systematic assessment of China–US relations and the future of the international order. [...] Just like Trump’s strategy, ours must also extend beyond economics and trade.”
First, China must not depend on international markets.
Zheng: “From Trump’s first-term trade war with China, people and firms [who believed they could rely on international markets] have learned painful but essential lessons. Today, neoliberal economic thinking no longer finds any market in China.”
Second, China must maintain its comprehensive and diversified manufacturing sector. The UK and US made a serious strategic mistake in abandoning manufacturing in favour of finance and services.
Zheng: “When a country ceases to manufacture, decline is what awaits. [...] China, by contrast, will neither make the same flawed judgements as the UK and US, nor repeat their strategic mistakes.”
The Cold War shows the importance of long-term economic resilience in a competition between two nuclear powers.
Zheng: “Once we recognise [this], then building a modern industrial system will inevitably become the highest priority in the next phase of national development.”
Western media coverage wrongly portrays the tariffs as a boon for China.
Zheng: “There are also quite a few in China — especially on social media — who feel we have already ‘won big’. This is very dangerous. If we succumb to such thinking, we will be misled by the West, manipulated [被牵着鼻子走], and ultimately make strategic errors. [...] We must think clearly about this [一定要有清醒的认识]. Trump will not ‘make China great again’ — only we can do that”.
Name: Luo Zhiheng (罗志恒)
Position: Chief Economist and President of Yuekai Securities’ Research Institute; Part-time researcher at Renmin University of China and Tsinghua University
Co-authors: Ma Jiajin (马家进) and Sun Wenting (孙文婷)
Source: Yuekai Zhiheng Macro (6 April)
Trump’s tariff hikes are driven more by the political significance to his base of American manufacturing decline than by any economic logic.
Luo: “Trump’s tariff hikes are not grounded in economic rationality [并非基于经济理性], but rather in political considerations related to votes and personal power ambitions.”
Economic factors such as high labour costs, inadequate industrial chains [产业链配套不足] and elevated environmental protection costs make the reindustrialisation of the US unrealistic. As this becomes more apparent, Trump is likely to double down on his approach.
Luo: “It is precisely due to this divergence between goals and outcomes that Trump is likely to intensify the global tariff war. The inevitable result is that the trade war will be long-term and severe.”
China should apply three principles in its response. First, it should apply the principle of “seeking unity through struggle” [以斗争求团结]. This means forcefully countering US protectionist policies while maintaining channels for dialogue open and striving for cooperation.
China should respond with precise and forceful countermeasures.
It should also establish alternatives to any US imports it is dependent on through import substitution and increased domestic R&D. In areas such as agricultural goods, this dependence is already declining, and there is scope for increased tariffs.
Second, it should “unite all the forces that can be united” [团结一切可能团结的力量] by strengthening international cooperation against these tariffs.
China should reduce tariffs, if not remove them, on countries other than the US and take the lead in establishing a new low-tariff trade system among them.
It should also diversify its exports and avoid significant disruption to these markets, which could make such countries hostile to China.
China must strive to replace the US as the world’s biggest buyer.
Third, China should focus on “doing its own thing well” [“做好自己的事”]: intensifying reform efforts, stabilising economic growth and maintaining social stability.
In the short term, demand should be boosted through increased government spending, cuts to interest rates and reserve requirement ratios. Export industries will also require government support during such times of need.
In the long-term, China should aim to develop the world’s largest consumer market. Through reforms to the tax system and other institutions, the share of national income going to low and middle-income groups should increase.
Name: Gu Wenjun (顾文军)1
Position: Chief Analyst at ICWise, a well-known semiconductor research firm in Shanghai
Source: ICWise Research (8 April)
The duration and intensity of Trump’s tariff policy will depend on how hard ordinary Americans are hit by inflation and their tolerance for it.
China’s semiconductor industry will ultimately benefit from this trade war, particularly upstream segments such as equipment and components.
In certain areas, such as mobile phone chips, US companies already face stiff competition in the Chinese market. In 2024, MediaTek accounted for around 40% of the market for mobile phone chips in China. Tariffs will likely reinforce this trend.
Apple, which designs and uses its own chips, has been particularly hard hit.
Gu: “Since its manufacturing bases are mainly in mainland China, Vietnam and India, Apple is now being squeezed by tariffs from both sides of the trade war and Apple’s market position may decline.”
Tariffs will accelerate the replacement of American legacy chips by Chinese alternatives. Chinese companies can now compete with US products in multiple areas, and are eroding American market share thanks to lower costs and “localised support” [本地化支持].
Gu: “[Trump’s] tariffs now provide these products with a certain competitive edge, which will clearly accelerate the replacement of American chips in these areas.”
Globally, the tariff war between the US and China will accelerate the de-Americanisation of Chinese supply chains, creating more opportunities for non-US firms aiming to increase their exports to China.
China should work to create a low-tariff market with the EU, Japan and South Korea, which would offer a larger scale for international tech companies than the US.
Gu: “Currently, Europe, Japan and South Korea all possess deep semiconductor expertise and powerful semiconductor companies. If China leverages its market advantage to cultivate more “MediaTeks” from Japan, Korea and Europe, it could break the monopoly of American chip companies. In this way, the United States, in its pursuit of manufacturing, would have to forgo some of its higher-margin tech industries and surrender part of its technological hegemony.”
Ultimately, China’s semiconductor industry will benefit from the tariff war. China already has a fairly complete, and therefore resilient, chip supply chain.
Gu: “Just as previous sanctions by Trump spurred rapid growth in China’s semiconductor industry, this tariff war will also promote its development towards higher quality.”
Gu: “Our generation is fated to witness the century-defining reshaping of the global order. The days ahead may be hard today, even harder tomorrow, but the day after tomorrow will be beautiful. Every era has its own responsibilities. All we can do is face the oncoming storm with calm resolve [坦然迎接暴风骤雨的洗礼].”
Name: Jin Canrong (金灿荣)
Position: Vice Dean and Professor, School of International Studies, Renmin University of China (RUC); Deputy Director, Centre for American Studies, RUC
Source: Jinjin Ledao Editorial (7 April)
Trump’s tariff hikes mark the end of the era of free trade [自由贸易时代将因此终结]. The intensity of this “round” of the trade war will far exceed that of the previous round.
However, if economic turmoil were to unfold in the US, Trump might ultimately be compelled to scale back his tariffs [Note: this was written before Trump’s recent tariff U-turn].
Jin: “Trump is known to bully the weak and fear the strong; if one shows weakness, he will take advantage and escalate further, but if met with firm retaliation, he may restrain himself.”
The Chinese government’s measures to counter the Trump administration were therefore necessary.
However, China cannot assume that countermeasures will lead Trump to cancel his tariff hikes; the PRC—particularly its export sector—faces a period of hardship.
China has gradually been reducing its dependence on the US market, so a hit of this kind to China’s US-bound exports is unlikely to bring down the Chinese economy [不会对整体经济造成颠覆性影响].
It is unrealistic to expect that China will be able to leverage America’s current trade tensions with other countries to form a united front against US hegemony.
Jin: “The United States remains the most powerful [综合实力最强大] and influential [掌握主导权] country in the world. Although its tariff policy has drawn verbal criticism from many countries, apart from China and a few European nations, most have already bowed down. Under such circumstances, it would be extremely difficult for China to establish a unified international front against America.”
China should use the pressure it is currently under to generate momentum. It must develop a unified national market, boost domestic demand and achieve high-quality economic growth.
To do this, policymakers should seek to increase household incomes and issue consumption vouchers, thereby helping reduce its reliance on foreign markets.
Fiscal and monetary tools should be used to stimulate the economy further. At the same time, China should adopt differentiated strategies to expand its trade in new markets across the world.
Name: Ren Yi (任意); aka Chairman Rabbit (兔主席)
Role: Influential political commentator
Sources: Personal blog (8th April) and Personal blog (10 April)
Ren: “From multinational corporations to small and medium-sized enterprises, losses are being incurred, alliances and partnerships are being damaged, the global economic order is being disrupted, the US may fall into recession, the hope of reshoring manufacturing (and creating jobs) is utterly unrealistic, and ultimately it will be American consumers who bear the pain.”
Trump’s tariffs are akin to an act of war—a “smokeless war” [不带硝烟的战争] that Trump has declared on both China and the rest of the world.
Ren: “Decoupling is not China’s objective, but it is a necessary response at this stage [脱钩绝不是中国的目标，但却是我们在现阶段必要的应对举措].”
Following the US’s further 50% tariff increase, China should respond with “precision strikes” [精准打击] rather than blanket tariff increases across all US goods.
Based on conversations with well-informed sources [笔者结合与消息人士的沟通], some combination of the following countermeasures is likely:
Suspension of fentanyl cooperation. Fentanyl cooperation relies on Chinese efforts and goodwill. China’s hard work on this issue has been ignored by the Trump administration.
• Ren: “Now that Trump is once again threatening increased tariffs, the foundation for fentanyl cooperation no longer exists.”
Further restrictions on the import of agricultural products into China. This will particularly affect farmers in Republican states, who constitute an important part of the MAGA base.
• Ren: “Trump is already under significant political pressure domestically. Targeting this portion of exports to China would be a very effective precision strike.”
Restrictions or prohibitions on the import of other goods from the US, such as films and poultry.
Targeting US-China trade in services. This could involve restricting American firms from participating in Chinese government procurement or limiting Chinese companies’ engagement with US consultancies.
Launching investigations into US intellectual property interests in China.
• Ren: “China has always been ‘unilaterally open’ in this regard and has never adopted any [restrictive] measures (such as those seen in Europe).”
China should also strengthen its “public opinion front” [打好舆论战线]:
This trade war is also a war of narratives and information.
China must maintain a “wartime” mindset in communication, aligning all sectors toward a unified external narrative [各界对外要朝向一个方向，一个目标].
Ren: “This is no trivial matter [这个问题绝非儿戏].”
Beijing should make its willingness to negotiate with Washington clearer. Indeed, this will help reassure markets and the general public.
It should also support industries reliant on the US market and stabilise the stock market.
Finally, China should focus on maintaining social stability, boosting domestic consumption and building stronger partnerships across the Global South and Europe.
Further Reading
The perspectives of two economists who shared their views on the state of China’s economy in a symposium presided over by China’s Premier Li Qiang (李强) on 9 April:
Tencent’s interview with Shen Jianguang (沈建光), Vice President and Chief Economist at JD Group (10 April).
Caixin’s interview with Zhang Bin (张斌), Deputy Director of CASS’s Institute of World Economics and Politics (9 April).
Lu Feng (卢锋), a leading professor of economics and Director of the China Macroeconomic Research Centre at Peking University’s National School of Development on “Why We Must Employ a Dual Approach to Counter the US Tariff War” (7 April).
Zhao Hao (赵浩), a professor of management at China Europe International Business School (CEIBS), on “Trump Tariffs 2.0: What Should China Do” (7 April)
A commentary by veteran pro-Beijing Hong Kong scholar and policy adviser Shao Shanbo (邵善波) entitled “Is Trump a Lunatic?” (7 April).
Zhang Ming (张明), Deputy Director of CASS’s Institute of Finance and Banking, on “A Self-Defeating Jungle Mentality — A Commentary on the Trump Administration’s Reciprocal Tariffs” (5 April).
Econ & Tech Experts on Trump’s Election
Earlier this month, Beijing announced a Rmb10tn ($1.4tn) fiscal package. The headline debt-swap programme will reduce financial pressures for local governments, turning “hidden debts” into formal government debts. This was not just a stimulus package, according to one expert close to the People’s Bank of China (PBOC), but rather “
Although Gu is not named, we are assuming he is the author of this commentary.