Beijing is going full tilt at President Donald Trump as his global tariff war has narrowed into a bilateral game of chicken between the United States and the Chinese Communist Party.
Trump has set tariffs on Chinese goods at approximately 125% in an effort to force the country to renegotiate a perceived trade imbalance — with an additional 20% slapped on top to punish the country for failing to curb fentanyl production.
The White House’s aggressive position was summarized in an all-caps post to social media stating, “DO NOT RETALIATE AND YOU WILL BE REWARDED.”
But the CCP did retaliate. It responded to America’s “unilateral bullying” with an 84% tariff on all U.S. goods, declaring its intention to “fight to the end.”
It’s an economic conflict that Chinese President Xi Jinping spent years preparing for, and the question now is whether the Chinese Communist Party’s efforts to diversify its markets and marshal new trading blocs will allow it to hold its breath longer than the U.S., the world economic superpower.
The first nation to flinch has a lot to lose.
“President Xi Jinping has spent his whole career preparing himself and perhaps preparing the Chinese political-economic system for exactly this moment,” Zongyuan Zoe Liu, senior fellow for China studies at the Council on Foreign Relations, told the Washington Examiner.
“Since he took power in 2013, he has been talking a lot about the unseen changes in the international system, and he also talked about the need to resist foreign coercion and never again being bullied by a foreigner,” Liu said. “So there’s a lot of ways that he and his generation is very well prepared for exactly this moment.”
This resistance to foreign coercion is championed in the rhetoric coming out of the Ministry of Foreign Affairs.
“We will not let anyone take away the Chinese people’s legitimate right to development. We will not tolerate any attempt to harm China’s sovereignty, security, and development interests,” spokesman Lin Jian said this week. “We will continue to take resolute and strong measures to safeguard our legitimate rights and interests.”
“We are Chinese. We are not afraid of provocations. We don’t back down,” spokeswoman Mao Ning said on social media, where she shared a video of People’s Republic of China founder Mao Zedong railing against the U.S.
But China cannot outlast the U.S. on its own. The very core of its economic structure requires a massive export market.
China’s economy is structured around overproduction and mass exports, commanding global contracts and commerce through manipulation of the trade system. It maintains near-monopolies in industries such as critical minerals processing, solvent extraction, and pharmaceutical manufacturing.
China also uses tactics such as trans-shipment and loose intellectual property enforcement to allow its goods to flood markets with their excess products.
But these practices don’t come without downsides.
“Industrial overcapacity is a feature and product of China’s strategy, and many countries’ reaction against the influx of cheap Chinese exports is also due to concerns about how Chinese overcapacity may hurt them,” Liu said.
She added, “Having a long-term strategy is different from whether the strategy can be successfully implemented with no unintended consequences. China has a long-term plan but may not be fully aware of the unintended consequences.”
China was a founding member of the BRICS group — an international trade organization that now also boasts membership from Brazil, Russia, India, South Africa, Ethiopia, Egypt, Indonesia, the United Arab Emirates, and Iran.
China is the most economically powerful of the 10 members, accounting for well over half the group’s total GDP. BRICS alone will not keep the Chinese export engine running.
Compounding Chinese economic concerns, the U.S. struck a deal with Panama on Wednesday securing “first and free” transit through the Panama Canal — a crucial passage for economic and military security.
The Chinese Embassy in Panama claimed the deal was the result of “blackmail.”
Adding insult to injury, Secretary of Defense Pete Hegseth took the opportunity to warn against “Chinese military presence” in the West.
“China firmly rejects vilification on China-Panama cooperation,” the Chinese foreign ministry announced following the deal. “The U.S. should stop finding pretexts for its attempt to control the Panama Canal. Compromise and concession does not protect sovereignty or win respect, but will only embolden the bully.”
Tensions have escalated enough that the Chinese Ministry of Culture and Tourism issued a travel advisory on Wednesday warning citizens to exercise caution while residing or traveling in the U.S.
“Recently, due to the deterioration of China-U.S. economic and trade relations and the domestic security situation in the United States, the Ministry of Culture and Tourism reminds Chinese tourists to fully assess the risks of traveling to the United States and be cautious,” the ministry wrote.
With its current trading blocs and export markets likely insufficient to carry its economy without the U.S., China is trying to make new friends wherever it can.
“The only way to stop the hegemonic and bullying behaviour of the U.S. in harvesting the whole world is to strengthen solidarity and collaboration, and to jointly resist,” Chinese Ambassador to Australia Xiao Qian said in a Sydney Morning Herald op-ed this week.
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“Under the new circumstances, China stands ready to join hands with Australia and the international community to jointly respond to the changes of the world,” he added optimistically.
The enthusiasm was not reciprocated.
“We obviously don’t want to see a trade war between China and the U.S.,” Australian Deputy Prime Minister Richard Marles said of the proposal, but he continued, “It’s about pursuing Australia’s national interests, not about making common calls with China.”
“I don’t think we’ll be holding China’s hand,” he added.
Siding with the CCP over the world economic power is a tough sell even in the volatile markets of the Trump era.
